Kazakhstan, China: Close Neighbours that Build Mutually Beneficial Ties

Kazakhstan’s ties with China have been growing exponentially ever since the two countries formed diplomatic relations in 1992. Today, bilateral relations between the two neighbours are flourishing. Whether in trade, commerce or diplomacy, Kazakhstan and China are key strategic partners. 

The foundation of the relationship remains its economic benefits. As both countries have enjoyed recent high growth, so economic ties between Kazakhstan and China have intensified. Chinese foreign direct investment (FDI) in Kazakhstan is one example. The value of Chinese FDI in Kazakhstan today is now more than $17 billion, placing it in the top sources of FDI in Kazakhstan. 

Energy is also a key area for cooperation. China’s growing economy requires raw resources to feed demand and Kazakhstan’s vast reserves of these materials makes it a valuable trade partner. China has invested heavily in building pipelines and in buying stakes in existing and new fields in Kazakhstan. For example, in 2014 KazMunayGas and the China National Petroleum Corporation signed an agreement to construct a $150 million plant to manufacture oil and gas pipes near Almaty. Looking ahead, Kazakhstan will launch more than 20 joint projects with Chinese companies, many of them focusing on the energy sector. Kazakhstan should welcome this investment and China’s commitment. It will provide new revenues and bring in new partners for our energy industry to add to those from Russia, Europe, the U.S. and India. 

Another area of growth has been infrastructure and capital projects. Just earlier this year, the two countries signed 33 deals worth $23 billion. This is on top of a $100 million project to construct a joint, full-service logistics terminal project in the Chinese city of Lianyungang that was launched during President Nursultan Nazarbayev’s visit to China in 2014. One area where infrastructure cooperation has really been thriving is Khorgos – a free economic zone on the Chinese-Kazakh border that enables citizens of the two countries to trade and enjoy local entertainment. 

Only last year Kazakhstan’s national railway company Kazakhstan Temir Zholy began the construction of a dry port in this zone.  Kazakhstan’s government has also made plans to invest $477 million in joint projects with China in the region. The importance of Khorgos to Kazakhstan should not be understated. It already acts as a strong driver of economic growth in the Almaty Oblast and Kazakhstan as a whole and will spur economic growth across the whole of Eurasia. As President Nazarbayev made clear during the presidential election campaign, industrialisation and economic growth based on diversification will be among the main pillars of Kazakhstan’s plan to tackle today’s economic challenges. Khorgos and other infrastructure projects with China will play a vital role in achieving this objective. 

But cooperation with China is not just about trade and investment. It is about shared values, reflected in the two countries’ foreign policy. At a time when regional instability and the rise of extremist views in the Middle East is causing mass uncertainty and panic, collaboration through the Shanghai Cooperation Organisation (SCO) is more important than ever. China, like Kazakhstan, has also been impacted by the so-called Islamic State, albeit in indirect ways. That is why Kazakhstan and China must work together to fight terrorism and protect the region against the spread of this abhorrent ideology. 

Bilateral relations between Kazakhstan and China are already at an all-time high. Nevertheless, Kazakhstan is keen to develop these ties even further. The official visit of President Xi Jinping to Kazakhstan on May 7 could open a new phase of cooperation between the two countries and lead to furthering ties in economy, trade and commerce, as well as foreign affairs. Working together will help both countries achieve their domestic and international ambitions.