Author: Anton Bugayenko（Republic of Kazakhstan）

Kazakh-Chinese relations hold a special place in the system of international relations in Central Asia. Over the past decades, the bilateral relations between the Republic of Kazakhstan and the People’s Republic of China have undergone a significant development. It is important to examine the main stages, key areas of cooperation, and prospects for further interactions.

Kazakhstan and China established the diplomatic relations on January 3, 1992, shortly after Kazakhstan gained its independence. In February 1992, a joint intergovernmental agreement was signed in Beijing, affirming both countries’ commitment to building neighborly relations based on mutual respect for sovereignty and territorial integrity and non-interference in each other’s internal affairs, equality, and mutual benefits.

Today, the world is experiencing a new era of geopolitical conflicts, exacerbated by the covid-19 pandemic, which has intensified divisions rather than fostering a unity. However, Kazakh-Chinese relations continue to show positive dynamics, serving as a key element of stability in the region and Eurasia as a whole.

Political Cooperation and Strategic Partnership

Since the early 21st century, the political cooperation between Kazakhstan and China has significantly strengthened. In 2013, during President Xi Jinping’s visit to Astana, a Joint Declaration was signed to deepen the relations and establish a comprehensive strategic partnership. During this visit, President Xi also introduced the Initiative to jointly build the “Silk Road Economic Belt”, marking a significant step in enhancing economic cooperation between the two countries.

Today, China is one of Kazakhstan’s largest investors. Numerous projects are being implemented under the frame of “Belt and Road Initiative”, covering energy, transportation, environmental protection, and other sectors.

During the events in January 2022, when Kazakhstan faced terrorist attacks, China provided strong supports for maintaining Kazakhstan’s independence and sovereignty. The conference, “30 Years of Diplomatic Relations between the Republic of Kazakhstan and the People’s Republic of China” held in December 2021, underscored the importance and prospects of the bilateral cooperation in the post-pandemic era. Participants emphasized the need to continue the mutually beneficial cooperation with China for Kazakhstan’s dynamic development.

Investments and Projects

China has become the largest foreign investor in Kazakhstan’s manufacturing sector. More importantly, Chinese companies are often the only significant investors in many regions of Kazakhstan where there is a lack of breakthrough projects. Chinese investments typically involve the construction or modernization of enterprises and the creation of new jobs. Kazakhstan views the Belt and Road transportation infrastructures as an opportunity to diversify the economy and create new developmental prospects.

In 2023, the Chinese investments in Kazakhstan totaled $13.8 billion, with $6.2 billion in foreign direct investment (FDI) and $7.65 billion in other types of investment. Although there was a slight decrease in the investment volume, the decline was not dramatic and was attributed to changes in investment classification, profit repatriation, and project completions. Net FDI growth amounted to $700 million.

The Chinese investments in Kazakhstan’s manufacturing sector are a key achievement under the Belt and Road Initiative. China ranks third among all the investor regions in this sector with a 13% share, and Hong Kong is the fifth. The total investment in manufacturing constitutes 38% of all the Chinese investments, which is equivalent to $2.9 billion, with $500 million in FDI and $2.4 billion in debt instruments. Most of these investments come from loans provided by the Development Bank of Kazakhstan (DBK) and other financial institutions, indicating a preference for financing projects over establishing new production facilities.

Thus, China remains as a crucial investment partner for Kazakhstan, focusing on mining, construction, trade, and information technologies, gradually increasing its presence in the manufacturing sector.

Since 2013, the structure of Kazakhstan’s international reserves has shifted significantly, with a move from currency assets to gold. In 2013, the currency reserves were $20.9 billion, decreasing to $12.9 billion by mid-2021. During this period, the share of Chinese assets in Kazakhstan’s international reserves increased from 1.1% to 2.8%, highlighting China’s growing importance as a reserve placement location.

In the past eight years, Kazakhstan’s accumulated investments in China have doubled, with a higher growth rate compared to overall foreign investments, increasing China’s share in Kazakhstan’s overseas investments to a record of 2.9%. The use of Chinese assets by the National Bank of Kazakhstan for international reserves has also increased since 2017, reaching record levels in the first half of 2020.

Trade

Over the past 30 years, the bilateral trade relations have evolved from informal consumer goods trading to a robust economic partnership.

By 2023, trade turnover between Kazakhstan and China reached $41 billion. Major exports to China included copper, ferroalloys, copper ore, oil, and zinc, with a trend towards increased metal exports and reduced oil exports.

In 2023, Kazakhstan’s exports to China totaled $13.16 billion. The share of China in Kazakhstan’s energy exports fell from 14% to 10%. In the chemical industry, China’s exports share in organic chemicals rose from 3% to 59%, while in inorganic chemicals, it fell from 42% to 22%.

In agriculture, Kazakhstan’s agro-industrial exports grew to 4% of the total exports, with notable increases in oilseeds (from 13% to 33%), oil (from 0% to 57%), and animal feed (from 3% to 39%).

Transportation and Logistics

Modernizing infrastructures is crucial for all the Central Asian countries, but especially for Kazakhstan due to its vast territory. China, providing essential resources as a key partner, is capable of making substantial investments in Kazakhstan, potentially forming the backbone of the country’s new economy.

The cooperation in transportation and logistics is fundamental for boosting trade and regional economic development in Central Asia. Since all the regional countries are landlocked, developing transportation corridors is critical for the regional economy.

Our region, particularly Kazakhstan, serves as a Eurasian land bridge connecting China with its trade partners in Europe, Russia, and the Middle East. Kazakhstan views transportation infrastructures as an opportunity to diversify and advance its economy. The Chinese initiatives have been timely aligning with Kazakhstan’s ongoing efforts in transportation modernization.

Over the years, Kazakhstan and China have developed an infrastructure network spanning Kazakhstan and linking to various regions such as Xinjiang of China, the Caspian Sea, and Russia. Some key components include the Khorgos and Dostyk transport hubs, the Western China-Western Kazakhstan Highway, the Aktau and Kuryk ports, and the railway line connecting the Chinese border to these ports. Kazakhstan has also become a crucial link in the rail transit between China and Europe, Iran, and Central Asia.

Energy Cooperation

China places a significant importance on Kazakhstan in its energy cooperation with Central Asian countries due to Kazakhstan’s rich oil and gas resources. The partnership between Kazakhstan and China encompasses numerous projects in oil and gas extraction and processing, as well as the development of renewable energy sources. The needs of Chinese companies account for 20-25% of Kazakhstan’s oil production, nearly matching the state-owned company KazMunayGas.

Chinese companies entered the Kazakh market in 1997 when the China National Petroleum Corporation (CNPC) acquired AktobeMunaiGas (Zhanazhol, Kenkiyak). In 2001, CNPC acquired a 50% stake in Buzachi Operating Limited (Northern Buzachi). In 2006, it bought PetroKazakhstan, and the China International Trust and Investment Corporation (CITIC) Group acquired a 50% stake in KarazhanbasMunai (Karazhanbas). In 2009, CNPC acquired a 50% stake in MangistauMunaiGas. In 2013, CNPC bought ConocoPhillips’ 16.8% share in Kashagan from KazMunayGas. CNPC has invested over $12 billion in Kazakhstan’s oil and gas extraction and another $6.2 billion in building pipelines within Kazakhstan to transport Central Asian resources to China.

Chinese companies are actively investing in the construction and modernization of Kazakhstan’s energy infrastructures, enhancing the energy security for both countries. Unlike other foreign oil companies, CNPC’s activities are largely focused on domestic infrastructures. Initially driven by the specifics of the company’s early assets, this focus has evolved into a strategy for developing local transportation, processing, and distribution infrastructure for energy resources.

Humanitarian Cooperation

Cultural and educational cooperation plays a significant role in strengthening Kazakhstan-China relations. Recently, there has been an active development in exchanges in culture, science, and education. Kazakh students study in Chinese universities through various exchange programs, while Chinese students come to Kazakhstan to learn Kazakh language and culture. These exchanges foster mutual understandings and friendship between the two countries.

To advance Kazakhstan-China cooperation, it is essential to humanize the projects by enhancing public engagement and informing people about bilateral activities and their benefits. Increasing transparency and explaining the socio-economic impacts of projects—such as job creation, social aid, tax contributions, and environmental policies—can help counteract corruption rumors and reduce sinophobia.

Cooperations in the Shanghai Cooperation Organization (SCO)

Kazakhstan values the role of the Shanghai Cooperation Organization (SCO) in enhancing international security and regional cooperation. Since its inception, the SCO has been a key platform for addressing security issues in the Greater Central Asia Region. After the collapse of the USSR, the Shanghai Five effectively resolved the demarcation of borders with China, which was a crucial step in the independence and recognition of Central Asian states.

The SCO has effectively become the main security guarantor in Central Asia, alongside Russia and China. The collaborative efforts within the SCO have prevented the anticipated competition for influence in the region, stabilizing the northern and eastern borders of Central Asia. Demilitarization has occurred, and there is now a gradual economic integration of these areas with Russia’s Siberia and China’s Xinjiang.

A major achievement of the SCO’s twenty-year’s development is the facilitation of Central Asian countries’ engagement with China, supported by Russia. Historically, the region was geopolitically marginalized and only a periphery of the Russian Empire and the Soviet Union. The SCO’s political engagement with China has prevented the chaotic situation that could have mirrored the southern borders of the region.

The SCO enables regional problem-solving without the third-party interference and has the potential to lead to a new security architecture in Eurasia. It provides a platform for creating joint solutions that consider both large and regional countries’ perspectives.

Kazakhstan and China actively collaborate on security issues, including counter-terrorism, extremism, and drug trafficking. Within the SCO framework, joint exercises and exchanges of expertise enhance regional stability and security.

In 2023-2024, Kazakhstan chaired the SCO for the fourth time, reflecting its growing international influence. President Kassym-Jomart Tokayev outlined priorities for the chairmanship, focusing on strengthening security across the SCO space. Kazakhstan proposed new approaches to countering terrorism, extremism, and cybercrime. Notable initiatives included the “Eurasia-Anti-Terror-2023” exercise and the establishment of a Cybersecurity Center in Almaty, highlighting Kazakhstan’s commitment to improving security and information exchange mechanisms.

Kazakhstan’s SCO chairmanship ended with the organization reaching a new developmental level. The SCO has showed an enhanced influence, improved member interactions, and addressed pressing international issues. The future of the SCO largely depends on balancing the common goals and individual interests of its members.

Future Prospects for Cooperation

According to Kazakhstan’s Foreign Policy Concept for 2020-2030, a key priority is the further development of a comprehensive strategic partnership with China. Both nations aim to enhance mutually beneficial cooperation fostering economic growth and regional stability.

Given the current trends and strategic interests, the prospects for Kazakhstan-China cooperation are promising. A key focus will be deepening economic partnerships under the Belt and Road Initiative. Additionally, both nations will continue to advance collaborations in energy, agriculture, logistics, and security.

Despite geopolitical challenges, the tradition of Kazakhstan-China cooperation remains robust and adaptable to new challenges. The relationship between Kazakhstan and China shows a positive development based on mutual respects and a shared commitment to the economic growth. Investment, trade, and large-scale infrastructure projects are crucial aspects of this partnership. Future cooperation are expected to deepen through the Belt and Road Initiative and explore new forms of interactions to strengthen strategic ties and stabilize the region.

(The article has been edited.)

（本文发布于《紫荆》杂志2024年9月号）