China's Economic Expansion Reaches Kazakhstan

By Henry Srebrnik, [Charlottetown, PEI] Guardian

Chinese President Xi Jinping calls it the project of the century: the $1 trillion infrastructure program known as “One Belt, One Road,” which aims to revive the ancient Silk Road and build up other trading routes between Asia and Europe to carry Chinese products to foreign markets.

Hence China’s economic entry into the landlocked central Asian nation of Kazakhstan.

Last year the China Ocean Shipping Company and the Jiangsu Lianyungang Port Company, together became the 49 percent owners of a piece of land in that country consisting of railway tracks and lined with warehouses. 

Close to the border with China, it is near the Eurasian Pole of Inaccessibility, meaning that nowhere on the landmass of Europe and Asia is more distant from the sea.

Yet China is taking a gamble that this will pay off by reshuffling global transport routes, by creating a transport hub known as the Khorgos Gateway, a “dry port,” which will handle cargo for trains rather than ships.

It takes 45 to 50 days to transport a shipping container with goods from Chinese factories to Europe by sea, but less than half that time by train through Central Asia. It may be more expensive but a lot faster.

The Chinese have built a new town, Nurkent, with apartments, schools, and shops to serve the railway workers, crane operators, and customs officials who will work at the dry port. Free housing is provided and there are plans to eventually house 200,000 people.

“Kazakhstan, through One Belt, One Road, is playing a key role in products coming from Western China, all the way to the Riga port and other places,” according to David Merkel of the U.S.-based think tank Atlantic Council. “They've been working on it for a while and they're starting to see real results from it being opened.”

There are currently more than 300 Kazakhstan transport companies providing freight services from China to Kazakhstan and to third countries. 

Kazakhstan’s new Caspian Sea ferry port, known as Kuryk, was also launched last year, funded in part by Chinese capital, and further strengthens the Kazakh section of the China-Europe transport corridor.

Kazakhstan was once one of the five central Asian republics of the Soviet Union. All gained their independence when the Communist giant collapsed.

As a counterweight, it has expanded ties with China. In fact it was Nursultan Nazarbayev, Kazakhstan’s president, who initiated the idea of reviving old the Silk Road trade route through his country. Xi then visited Astana, the Kazakh capital, in 2013, and welcomed the idea.

Completion of an oil pipeline between Kazakhstan and China nine years ago broke an export pipeline monopoly previously held by Transneft, Russia’s state-owned pipeline company.

China now accounts for 12 percent of total Kazakhstan exports and 17 per cent of imports. Their enterprises and financial institutions signed deals worth more than $8 billion during Xi’s visit to Kazakhstan last June. 

Both countries also agreed to make progress in cooperation in energy, mining, chemical industry, mechanical manufacturing, agriculture and infrastructure.

The Kazakh government announced on July 11 an agreement to cooperate on trade in grain and oilseeds with the Aiju Grain and Oil Industry Group based in Xi’an, in Shaanxi province of central China.

 Part of the agreement allows for Kazakhstan to supply 100,000 tons of oilseeds to China and create a storage facility for the crops along the national border.

Kazakhs are a Muslim people conquered by tsarist Russia in the 18^th and 19^th centuries. Some nationalists now worry that their country, having gained independence from Moscow, risks becoming a satellite of Beijing.

“Nationalist sentiments and enthusiasm for Chinese investment are living an uneasy coexistence but the ice is getting thinner and thinner,” remarked Daniyar Kosnazarov, of Narxoz University in Almaty.