02.04.2016 Author: Dmitry Bokarev

Russia and China in Kazakhstan: Balance of Power

34534544When visiting Kazakhstan in 2013, Chinese leader Xi Jinping talked about the New Silk Road project (NSR) envisioning it running across the entire Central Asia, making it not only the longest, but also the most lucrative transport route connecting Asia to Europe. According to Xi Jinping, participation in the project of the Republic of Kazakhstan—China‘s long-term dependable partner—would be extremely important.

Kazakhstan and China have historically shared many economic and cultural ties. And it is quite natural, since the two countries have a common (nearly 2 thousand km long) border. Besides, Kazakhstan’s geographic location affords it to serve as a link connecting China, Central Asia and the Middle East. The ancient Silk Road also passed through the territory of today’s Kazakhstan. Nowadays systems of railways and highways and networks of oil- and gas pipelines sprawling across Kazakhstan and China also interconnect them.

The goods turnover between the countries has reached $20 bn. China has also invested nearly $30 bn in Kazakhstan’s mining (Kazakhstan is extremely rich in mineral resources), transport and agricultural sectors of economy. Kazakhstan schedules to receive another infusion of funds of about the same amount pursuant to the agreement on industrial cooperation, signed in March 2015. All that makes China a major trade partner of Kazakhstan and one of its key strategic partners. Cooperation between the two countries will be tremendously reinforced if Kazakhstan participates in the NSR project. The Chinese party also forecasts that Kazakhstan’s participation will significantly improve its economy since the country will be exposed to the Asia-Pacific and European markets.

Kazakhstan was among first to embrace the Chinese project. A proposal to participate in it echoed the policy Kazakhstan adopted in 2014 introducing a new strategy “Nyrly Zhol—the Path to the Future” focusing on the intensified development of industry, energy sector and the transport infrastructure. Today, Kazakhstan and China actively discuss joint actions they could take to achieve the goals outlined by each country’s economic strategy. As has been said above, China is interested in funding Kazakhstan’s industrialization. A respective agreement was reached back in 2014, during the visit of Head of the Chinese Government Li Keqiangto to Kazakhstan. Kazakhstan’s strategy of industrial and innovation development implies intensified advancements in the heavy, oil, gas and food industries, as well as in other sectors of economy. China is going to participate basically in all these projects. The Ministry of Investments and Development of the Republic of Kazakhstan regularly holds joint meetings with representatives of the National Development and Reform Commission of the People’s Republic of China where Chinese and Kazakh experts carefully evaluate industrial projects singling out those worthy of being funded.

In March 2016, Ambassador of China to Kazakhstan Mr. Zhang Hanhui stated that the first steps the People’s Republic of China and Kazakhstan had taken toward the implementation of the New Silk Road project proved successful. For example, the construction of a highway connecting China to Western Europe, which runs through the territory of Kazakhstan, is coming to a close.

Kazakhstan will, undoubtedly, benefit from the cooperation of this scale and format. On the other hand, the fact that China is gaining access to the Kazakhstan’s key sectors of economy is somewhat alarming. Traditionally, Kazakhstan, a former Soviet republic, has been regarded as Russia’s sphere of influence. Kazakhstan is our important strategic partner and many Russian analysts express concerns over its affinity toward China. Kazakh-Chinese cooperation in the field of energy alerts. For example, at the end of 2011, Moynak Hydro Power Station was commissioned, and it was a Chinese company that played a key role in its construction. The launch of a new HPS has noticeably improved the supply of electricity in the southern parts of country. Russia, however, being a provider of solutions in the nuclear power industry, has always viewed Kazakhstan’s energy sector as the sphere of its particular interest.

And Russia puts high hopes on cooperation with Kazakhstan specifically in this field. Kazakhstan possesses vast reserves of uranium and leads the world in terms of its mining. Thus, nuclear cooperation with Kazakhstan looks very promising. First, it is extremely advantageous for Russia to have a source of uranium right across the border. Currently Rosatom is acquiring uranium deposits worldwide. But Kazakhstan’s uranium deposits remain unrivalled in terms of their volume, simplicity of mining (due to their shallowness) and effortless delivery to Russia. Second, presence of rich resources compels Kazakhstan to consider the development of its own nuclear power industry and build nuclear power plants. Russia is looking to participate in these projects by providing technologies and specialists. Joint projects in this domain could significantly strengthen the ties between Russia and Kazakhstan and bring abundant profits. Kazakhstan is also planning to increase its revenues from export of uranium by engaging in the manufacturing of nuclear fuel. Russia can be very helpful in assisting with this project as well.

But China also stakes on participation in the production of nuclear fuel from the Kazakh uranium. Perhaps the risk of competition in the vital for Russia domain of nuclear power motivated Rosatom to make some proactive steps aimed at consolidation of its position in Kazakhstan. In the same 2013, when the Chinese leader introduced his New Silk Road initiative to the Kazakhstan government, the subsidiary of Rosatom JSC Atomredmetzoloto acquired the majority interest in the Russian-Canadian joint venture Uranium Onе, the largest developer of uranium deposits in Kazakhstan. Some mass media immediately pointed out that in doing so, Russia took control over almost the entire Kazakh uranium mining industry.

Considering that export of uranium is one of the most important sources of Kazakhstan’s revenues, it would be safe to say that Russia has managed to preserve its position in Kazakhstan for the foreseeable future. Expansion of cooperation between Kazakhstan and China, therefore, does not pose a serious threat to Russia’s interests.

Dmitry Bokarev, expert politologist, exclusively for the online magazine “New Eastern Outlook.”

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