China Continues Its Central Asian Expansion
Kazakhstan is gradually becoming dependent upon China with concerns being expressed
Central Asia has long been in the sphere of interest of China, which over the past decades has been slowly pursuing its policy there, aimed at increasing its influence on the countries of the region. While Beijing says it does not impose anything on anyone, in one way its geopolitical actions do resemble a type of expansion, the main goal of which was has been the economic subjugation of its partners. This includes Kazakhstan, Kyrgyzstan, Uzbekistan, Tajikistan, and Turkmenistan.
The main principles of such activities are non-interference in the internal affairs of the countries, coupled with a focus on mutually beneficial trade and economic cooperation. At the same time, China chooses as instruments of interaction with its partners not only investments, but assistance in modernisation of the armed forces and the joint fight against terrorism, and in particular the destabilizing effect on Western China that problems in Afghanistan and Pakistan are capable of creating. This policy is bearing fruit, but it is still controversial from some points of view in Central Asia.
It is well known that China’s interests in Central Asia are diverse. These include natural resources, primarily oil and gas, and the transit of goods along one of the routes of the New Silk Belt and Road Initiative, new markets, and including the military-political component. Beijing’s attempts to gain a foothold in the region are understandable, while the Chinese authorities are following this course quite successfully. In addition to direct investments and loans, China periodically allocates money to its partners on a gratuitous basis. For example, in January 2022, China allocated US$500 million each to Astana, Bishkek, Tashkent and Dushanbe for the implementation of socially significant projects.
It is this financial tool that is the main policy of China’s influence on the countries of the region. In addition to debts that are hedged against national economies, the China Development Bank is required to invest part of its overseas client’s income from the export of raw materials in deposits on its accounts. If the borrower cannot fulfil its obligations, the Chinese side blocks the debtor’s assets without going to court. If we look at the statistics, the total debt of Central Asian countries already looks impressive. Thus, Tajikistan’s debts to Chinese banks amount to more than 35% of GDP, Kyrgyzstan’s to about 22%, and Uzbekistan’s to about 20%.
Turkmenistan, where all information is classified, and Kazakhstan, whose share of China’s foreign debt is about 10%, have thus far remained above this debt problem.
China and Kazakhstan
However, Astana is now among China’s largest borrowers, and in recent years it has been moving into economic dependence on China, an issue recognised by Kazakh President Kasym-Jomart Tokayev. According to him, Kazakhstan must co-operate with China, is dependent on the Chinese market, with its agricultural production is geared towards the Chinese market. This understandable, China has 18% of the world’s total population but only 5% of the worlds arable land. However, this doesn’t necessarily mean that feeding China and being dependent upon that income is always politically astute.
In terms of the statistical data, it turns out that China’s economic expansion in Kazakhstan is well underway. Over the past two decades, the two countries’ trade turnover has grown almost 70-fold. The 2022 trade volume between Kazakhstan and China increased by more than 20% to US$13.6 billion, accounting for 20.2% of Kazakhstan’s total trade turnover. This surpassing Russia with 18.9% and a US$12.7 billion trade volume. From January to May 2023, Astana and Beijing have already traded US$10.7 billion, an increase over 2022’s same period of US$8.8 billion. Analysis shows that China has overtaken Russia’s lead in trade with Kazakhstan due to growing exports, including various equipment, clothing, auto parts and other products.
In addition, China plans to create 56 modern industrial enterprises worth US$24.5 billion in Kazakhstan. More than 700 joint ventures are already operating in Kazakhstan, including in strategic projects. These include the Shymkent oil refinery, the Zhanatas wind farm, the Atyrau petrochemical complex for polypropylene, the Turgusun hydroelectric power plant, among others. In fact, the Chinese side has managed to achieve its participation strategic industries traditionally controlled only by the state, which has many analysts concerned.
Another problematic signal for Kazakhstan is the trade imbalance. Today Astana exports mainly mineral products, metals and chemical products to China. In turn, the PRC supplies machinery, equipment, metal, ceramic and glass products, consumer goods, and so on. In other words, by buying resources from Kazakhstan, China creates products from them and sells them back, which creates problems for local producers and is one of the obstacles to the development of local production, including high-tech production, where China’s presence is also noticeable through equipment or project financing.
It should be noted that both countries attach great importance to the export of Kazakh agricultural products to China. The signing of 18 bilateral protocols between the governments was initiated, as a result of which about 600 Kazakh enterprises were authorised to supply the Chinese market. Astana stressed that such cooperation is aimed at opening in Kazakhstan high-tech industries, developing its industrial potential, modernising infrastructure, stimulating the non-resource sector of the economy, as well as creating more than 25,000 new jobs.
However, all this currently remains largely on paper. For example, back in 2016, China and Kazakhstan agreed to implement more than 50 joint projects, but only a few of them have been actioned to date. Moreover, Kazakhstani workers are generally suspicious of Chinese employers, which has lead, on occasion to strikes.
Despite all this, cooperation between Kazakhstan and China in the agricultural sector continues to develop and is explained by the authorities of the two countries with the best intentions. In March this year, Astana offered Beijing a wide range of industrial and agricultural goods worth over US$1 billion. Kazakh enterprises are officially ready to supply China with chilled meat products, fish products, poultry, pork, eggs, horse meat, and so on. In May, during the state visit of the President of Kazakhstan to China, agreements were reached on joint construction of a copper smelting plant in the country, co-operation in natural gas supplies, as well as on expanding the list of exported agricultural products to China. Kazakhstan has since received protocols for exporting 23 types of crop and livestock products, while negotiations are already underway for 11 of these.
Last month (August 2023), Kazakhstan’s Ministry of Agriculture and four Chinese associations agreed on comprehensive co-operation in the agro-industrial complex, for which they will create a permanent joint body. Beijing is expected to support Astana in providing comprehensive smart agriculture solutions and promote the use of smart technologies adapted to Kazakhstani conditions, including modern, encompassing agricultural machinery, pesticides, fertilisers, seeds, and water-saving systems.
Currently, the Ministry of Agriculture of Kazakhstan has 6 investment projects worth US$225 million. Simply put, China will put Kazakhstan’s agriculture in direct dependence not only on its market, but also on technologies, without which this sphere will not be able to develop normally. Despite the January to June 2023 trade turnover of agricultural products between the two countries increasing by 73% compared to the same period last year, totalling US$578.5 million, many analysts see a serious danger to the independence of Kazakhstan’s agro-industrial complex, which like many other areas of the local economy, is gradually falling into dependence on China.
It is safe to say that Beijing continues its systematic work on the economic conquest of Central Asia. Kyrgyzstan, Uzbekistan and Tajikistan have already become dependent on China, and now, apparently, it is Kazakhstan’s turn. Does Astana realise this? Apparently, yes. However, it is currently unclear whether they are ready to resist Chinese expansion or surrender to it. The second option will undoubtedly cause secondary damage to Kazakh-Russian relations, which is hardly in the interests of Kazakhstan either. The country needs food for thought as well as food exports to China.
Source: Asiais
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