The construction of China's New Eurasian
Land Bridge through Central Asia has been
gathering speed in recent months and looks to make
even greater progress in 2013.
At the end
of 2012, China and Kazakhstan opened their second
major rail link at the Xinjiang-Kazakhstan border
city of Korgas. The new link comprises a
300-kilometer section in both countries that
connects their rail networks from Jiangsu Province
to the rest of Kazakhstan's rail system, which
itself is being expanded through enhanced
China-Kazakhstan cooperation.
On December
22, 2012, Kazakhstan Temir Zholy, the national
railway company of Kazakhstan, reported that
Kazakhstan and
China have started using the
new railway crossing of Altynkol-Khorgos. It is
expected cargo transportation will reach 10
million tonnes in 2015 and 15 million tonnes in
2020.
Industry observers expect the Korgas
Pass, which now connects China and Kazakhstan by a
railway, a highway and an oil pipeline, to handle
20 million tonnes of cargo per year by 2020 and 35
million tonnes per year by 2030. [1]
Riding the rails Until now, the
only railroad border crossing between China and
Kazakhstan was between Alashankow in China and
Dostyk station in Kazakhstan. This 460-km line to
Urumqi in Xinjiang and Alataw Pass, where it
connects to Kazakhstan's railways, represented
China's only currently operational rail link with
Central Asia.
The rail crossing at Alataw
Pass handles more than 15 million tonnes of
freight each year with almost twice as much cargo
moving westward from China as eastward. So far,
more than 150 million tonnes of freight have been
transported through the Alashankou/Dostyk crossing
since it began operation in 1991. On June 14,
2010, a freight train carrying 45 tonnes of
liquefied natural gas crossed the
Chinese-Kazakhistani border at the
Alashankou/Dostyk checkpoint en route to delivery
to the Dushanzi petrochemical plant in the
northern Xinjiang Uygur Autonomous Region. The
shipment marked the first time that China imported
energy resources from Central Asia by rail.
Last April saw the official opening of the
first transnational free-trade center in Central
Asia, located along the cross-border river near
the Xinjiang village of Horgos. This
China-Kazakhstan International Border Cooperation
Center occupies 3.43 square kilometers of land
inside northwest China's Xinjiang and 1.85 square
kilometers on the Kazakh side. The Horgos center
has been developed into a "free port" with tax
reimbursement for exports, duty-free purchases for
visitors and provisions for 30-day visa-free
stays.
This special economic zone supports
trade negotiation, financial services, commodity
display and sales, warehousing of goods,
transportation, hotels, restaurants, shopping,
entertainment and tourism. Additionally, border
crossing procedures have been improved in this
cooperation zone, making it easier and faster for
border inspection authorities and civilians to
navigate within this area.
Construction
also will begin this year on a high-speed railway
line between Kazakhstan's capital, Astana, and the
former capital Almaty, which is still most
important commercial hub, benefiting from its
proximity to China. Trains along this
1,050-kilometer line, which has many bridges and
elevated sections, are projected to travel as fast
as 350 km/h. This will reduce the travel time for
passengers to a four-hour journey. China's will
own a 30% share of this US$16 billion project.
Energy the driving
force Although security considerations
initially dominated Beijing's policies toward
Kazakhstan and its other newly-independent Central
Asian neighbors, economic and especially energy
concerns have become increasingly important.
Thanks to its energy riches, Kazakhstan
has become China's most important economic partner
in Central Asia. Commercial ties between
Kazakhstan and China were minimal during the first
decade of Kazakhstan's independence due to the
economic chaos in Central Asia following the
breakup of the integrated Soviet economy as well
as the legacy effect of the security barriers
erected along the sealed Sino-Soviet frontier
during the Cold War.
The overlapping
ethnic groups between the two countries helped
launch the initial commercial ties between
Kazakhstan and China, overcoming those original
barriers. During the last decade, Kazakhstan has
achieved rapid economic growth rates due largely
to the soaring value of oil exports. These
developments have raised the country's per capita
gross national income to around $12,000 and have
helped position Astana as a key Chinese partner.
In a 50-50 joint venture, the Chinese
National Petroleum Corporation (CNCP) and
KazMunaiGaz built an oil pipeline from
Kazakhstan's Atyrau port along the Caspian coast
to Alashankou in China's northwest Xinjiang
region. When it began operating on a limited basis
in December 2005, the delivery marked the first
eastward flow of Central Asian oil and China's
first receipt of imported oil by pipeline. Now,
one fifth of Kazakhstan's oil flows to China.
In 2010, the Central Asia-China pipeline
began transporting natural gas from Turkmenistan
through Uzbekistan and Kazakhstan to China. This
2,100-kilometer gas pipeline is expected to
deliver around 40 billion cubic meters (bcm)
annually by 2015.
In another joint
CNCP-KazMunaiGaz project, Astana has invested $130
million to augment a $1.8-billion loan from the
China Development Bank, to construct a 1,500-km
natural gas pipeline from Beyneu in western
Kazakhstan to Bozoi Shymkent. From there, the
50-50 owned Beineu-Shymkent Gas Pipeline LLP will
connect with the Central Asia-China gas pipeline
as well as provide gas to southern Kazakhstan, a
region that must currently import gas.
It
also plans to construct a Pipeline "C" that would
provide a third Kazakhstani gas pipeline into
China. When all three conduits are fully
operational in 2015, they will deliver up to 60
billion cubic meters of gas to China annually - or
about half of the PRC's anticipated demand for
imported gas then. At the end of 2012, the CNCP
opened the last section of its $22 billion,
8,704-km pipeline, which can carry as much as 30
bcm from Huoerguos on the China-Kazakhstan border
in northwest Xinjiang Uygur region to Shanghai,
Guangzhou and Hong Kong.
The volume of
Kazakhstan's trade with China now exceeds that
with Russia for the first time in centuries, and
China has been Kazakhstan's second-largest trading
partner since 2009. Two-way trade between the two
countries increased from $1.29 billion in 2001 to
$33 billion in 2012 - or almost one third of all
Kazakhstan's foreign trade.
At least for
now, China is surpassed by only the European
Union, which has almost a 40% collective share in
Kazakhstan's total external trade due to its
purchases of Kazakh oil. On December 8, 2012,
during discussions with visiting Chinese Vice
Premier Wang Qishan in Astana, President Nursultan
Nazarbayev said Kazakhstan will intensify its
efforts to finish the natural gas pipeline that is
being co-built with China by 2014 in order to
increase natural gas exports to China.
Bilateral economic ties should expand
further given that both countries regularly enjoy
some of the world's fastest economic growth rates
and China's growing demand for Kazakhstani's
rising exports of oil, natural gas and uranium.
When Kazakh Prime Minister Karim Masimov met with
Premier Wen Jiabao on April 9, 2008, he stressed
Astana's commitment to enhancing bilateral
commerce through infrastructure development,
specifically citing the need to improve
Kazakhstan's ports, customs and banking systems,
railways, highways and other commercial networks
involving China.
That month, the two
governments signed an Action Plan for Cooperation
designed to diversify bilateral trade beyond
commodities and included 20 development projects
in agriculture, new technologies, cross-border
trade, transportation and communication. [2] When
he visited Beijing in last June, Nazarbayev said
he "welcomes Chinese investment in the Central
Asian country's transport infrastructure, and
hopes that the pace of the trans-border railway
and highway projects between the two countries
will be quickened".
Three months later,
Premier Wen called for China and Kazakhstan to
accelerate their cooperation in trade,
infrastructure construction and other economic
areas. The two governments recently set the goal
of raising bilateral trade to $40 billion by 2015.
Given their expanding trade ties, it is
unsurprising that China's railroad building
efforts have primarily focused on expanding Kazakh
transit capacity. Beijing's ambitions, however,
extend far beyond that. China has been anchoring
the new 11,870-km Eurasian Land Bridge that
extends from Lianyungang city to Rotterdam, a
major West European port. Using this uninterrupted
railroad route through Central Asia, Russia and
Europe allows cargo to travel five times faster
from China to Western Europe than by ship.
Given its higher transportation costs, the
rail route is most suitable for high-value-added
freight such as electronic and mechanical goods.
Beijing has been using its leading role in the
Shanghai Cooperation Organization and other
multinational institutions to mobilize
multinational support behind these Eurasian
transportation and other infrastructure projects
as it tries to move up the value-added chain.
China and Kazakhstan also are major
players in the 8,700-km Western Europe-Western
China international transport corridor, which will
become the shortest road transport link between
Central Asian countries and Europe. Once completed
in late 2013, containers will take just two weeks
to move from China's eastern seaboard to Europe,
three times faster than if they went by sea.
The European Bank for Reconstruction and
Development, the World Bank, the Asian Development
Bank and the Islamic Development Bank are
providing millions dollars in funding for the
highway. More than 30,000 Kazakhstani workers are
helping construct a 1,734 km stretch that passes
through four regions of Kazakhstan (Aktobe,
Kyzylorda, Zhambyl and South Kazakhstan).
Nazarbayev called the highway the "construction of
the century" in his 2012 State of the Nation
address.
In his Kazakhstan-2050 national
development strategy announced last month,
Nazarbayev said the existing projects should
double the transit capacity across Kazakhstan by
2020 and set a new goal of increasing this
capacity 10-fold by 2050. Nazarbayev also declared
Kazakhstan should help develop key transit hubs
throughout Eurasia and beyond.
Remaining challenges China is
making progress in improving its transportation
links with Greater Central Asia. The existing and
proposed near-term connections between China and
its western neighbors will still service only a
small share of China's foreign commerce, which
will likely remain dominated by containerized
cargo shipping by sea. Much additional progress is
needed in this area to achieve the higher levels
of bilateral commerce sought in both Astana and
Beijing.
In addition to the underdeveloped
economic infrastructure connecting the two sides,
other impediments to expanded commercial exchanges
include unsupportive visa policies, special
regulations on Chinese consumer products, corrupt
commercial practices in both countries and
Kazakhstan's absence from the World Trade
Organization (WTO).
Ironically, one factor
discouraging Kazakhstan's rapid entry into the WTO
has been Kazakh concerns about having their
national industries devastated by Chinese
competition in the absence of protective barriers
- as happened with neighboring Kyrgyzstan.
Kazakhstan's close economic ties with
Russia also have disrupted some Sino-Kazakh
economic ties. On the one hand, much Russia-China
trade goes through Kazakhstan. On the other hand,
Russia has sought to prevent the newly implemented
Russia-Kazakhstan-Belarus Customs Union from
serving as a backdoor for the smuggling of cheap
Chinese goods into Russia by pressing Kazakhstan
to tighten controls at the Sino-Kazakh border
before Russia and Kazakhstan eliminated their
joint checkpoints.
Some Kazakhstanis
complain they can no longer buy cheap Chinese
imports and must now spend more to purchase often
inferior quality goods from Russia and Belarus.
Russian President Vladimir Putin's proposed
Eurasian Union, which Astana has said it will
join, could erect further economic and perhaps
other barriers between China and Kazakhstan.
Conclusion Both China and
Kazakhstan benefit from their cooperation in
trade, transport, and energy; however, these
developments do not portend a deeper, strategic
alliance between the two countries - both of which
are strongly committed to their independence.
The Kazakh government is especially keen
to maintain balanced relations between China,
Russia, Europe and the United States to avoid
domination by any single actor. Chinese leaders
also have been restrained about antagonizing
Russia by appearing to threaten Moscow's interests
in the region. In many cases, these coincide, or
at least do not conflict, with China's core
regional interests.
Yet, this harmony also
results from Kazakhstan and the rest of Central
Asia's being of lower strategic priority for
Beijing than for Moscow. China's expanding
interest in securing Central Asian energy and
economic opportunities could lead Beijing to
reconsider its policy of regional deference.
The Chinese authorities are still
developing their strategies, tactics and
capabilities to defend their growing foreign
economic assets, which in Central Asia include
energy pipelines and the foreign operations of
several major companies.
Central Asian as
well as Chinese and Russian policymakers would
prefer if Beijing could rely on the local
authorities, supported by Moscow, to protect these
assets, but the failure of these non-Chinese
actors might compel all parties to accept, if
reluctantly, a large and enduring Chinese security
presence in their region.
Notes: 1. The Korgas Pass
is 200 km from Astana, 670 km from Urumqi, and
less than 100 km from Yining, the principal city
in China's Ili Kazakh autonomous prefecture. 2.
Rouben Azizian and Elnara Bainazarova, "Eurasian
Response to China's Rise: Russia and Kazakhstan in
Search of Optimal China Policy," Asian Politics
& Policy, Vol. 4, No. 3, 2012, pp. 377 - 399.
Richard Weitz, PhD, is a Senior
Fellow and Director of the Center for
Political-Military Analysis at the Hudson
Institute in Washington, DC.
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