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Kazakhstan: Between CES and China

Kazakhstan: Between CES and China

Three former Soviet republics – Kazakhstan, Russia and Belarus – enter the second decade of the 21st century in new conditions: in the conditions of the integration union being formed on the basis of mutually beneficial economic partnership. At that time when the Customs Union was formed, almost the whole world economy was in a state of financial crisis. This was also was one of the main reasons for activization of integration processes between our countries.

The Republic of Kazakhstan succeeded to go through the hard years of the crisis with least losses. According to the 2011 results, a 7.5 % growth of GDP has been fixed in the country, the value of GDP per capita has reached $11.3 thousand, the aggregate volume of attracted foreign investments has exceeded $160 billion, while annual inflation has come to 7.4 %.

An important role in maintaining such weighty economic indices has been provided by the country’s oil and gas sector. In recent estimates, the Kazakhstan’s oil and gas reserves have reached over 5.3 billion tons and 3.3 trillion cubic meters accordingly. For the years of independence, the oil production in the country has grown by 4 times and gas – by 5 times. By 2020, it is expected the increase in the annual oil production up to 130 million tons and gas – up to 90 billion cubic meters.

For monetization of produced resources, for many years already Kazakhstan is developing its export routes of hydrocarbons based on a multivector policy. At present, there are 3 basic directions of oil export – Russian, Transcaspian and Chinese – at which it is planned their further expansion to satisfy the growing demand for export capacities.

As for natural gas, in addition to the main transportation routes built in Soviet times – the gas pipelines Central Asia-Center and Bukhara-Ural – the transit gas pipeline Turkmenistan-Uzbekistan-Kazakhstan-China has been already built and now is being operated. It is also expected to join to this gas pipeline the internal main gas pipeline Beineu-Bozoi-Shymkent, being currently under construction. It is planned to deliver gas from Western Kazakhstan to the republic’s southern regions via this pipeline and then further for export to China.

Due to the republic’s rich reserves, investment openness and attractiveness, tens of billions of US dollars have been attracted from different countries to the oil and gas industry. With the aim of considerable growth of direct foreign investments into the country’s economy, the Kazakhstan’s government has worked out and approved the national plan for attraction of investments, development of free economic zones and stimulation of the country’s export for 2010-2014.

This plan assumes the work in four main directions:

1. to improve activity of the so-called "front-office" – state bodies with which foreign investors meet first of all;
2. 2) to build a systematic work with foreign investors by attracting all state bodies at all levels;
3. to introduce target indicators under direct foreign investments and the export of processed products for foreign institutions of the RK and local executive bodies;
4. to improve legislation.

In the structure of investments, of special significance are the investments from China. Development of economic cooperation with China is one of the priorities of Kazakhstan’s foreign policy. It should be stressed that the post-Soviet history of the Kazakh-Chinese relationships began in 1991 when an agreement on economic cooperation was signed between the government of Kazakhstan and the managing bodies of the Xinjang-Uigur Autonomous Region.

Today, active cooperation between the two countries is based on over 50 intergovernmental agreements and over 40 agreements between various ministries and institutions of both countries. However, a long-term stable development of strategic partnership between Kazakhstan and China is provided by several basic documents. They are:

1. Joint declaration on establishment and development of strategic partnership (of July 4, 2005);
2. Agreement of good neighborly relations, friendship and cooperation (of December 23, 2002);
3. Agreement on the formation of the Committee on Cooperation (of July 2, 2004);
4. Strategy of Cooperation in the 21^st century(of December 20, 2006);and
5. Concept for development of economic cooperation (of December 20, 2006).

At present, the relations between the two countries show an upward tendency. In 2011, the turnover of goods between Kazakhstan and China has reached $21.3 billion, which is by 51 % more than the year before. However, the structure of bilaterial trade speaks about availability of a considerable potential for further growth: the basic export positions of Kazakhstan to China are oil and other mineral resources, while the import positions – finished goods, machines and equipment.