The Belt and Road Initiative, undoubtedly, carries with it a promise of unprecedented breakthrough. There are indeed important expectations vested in this endeavor. And in particular, that is the case for Kazakhstan and its Central Asian neighbors.
China is the only major world power that not only holds the key which could help Central Asia’s landlocked developing countries, including Kazakhstan, facing geographic handicaps and remoteness from the major corridors of international commerce, to escape their isolation by much more actively integrating themselves into the global economy in a beneficial manner, but also sees benefits in using such a tool. No other powerful state is interested in having such an option as much as China. As a result, Kazakhstan is now in transition from being a remote, hinterland country beyond the reach of many nations from different parts of the world towards being a state playing a major role in oil transit between Russia and China through Atasu – Alashankou pipeline and in transit trade between Europe and Asia through the Eurasian railroad network.
Zonakz.net, in an article by Kemar MASHANLO published with reference to KazTAG and entitled «Чжан Сяо: Санкции США против Китая не повлияют на наше сотрудничество с Казахстаном» – «Zhang Xiao: US sanctions against China will not affect our cooperation with Kazakhstan», said: «Kazakh-Chinese economic cooperation has recently been developing at fast pace. The experts have confirmed an unprecedented economic effect stemming from the integration of China’s Belt and Road Initiative and Kazakhstan’s Bright Path (Nurly Zhol) Program. The constantly changing geopolitical environment has been impacting the dynamics of interaction between the two neighboring countries.
At our request, Mr. ZHANG XIAO, Ambassador Extraordinary and Plenipotentiary of the People’s Republic of China to Kazakhstan, has kindly agreed to express his views on those matters.
Kemar Mashanlo: Mr. Ambassador, what would you pay special attention to when evaluating the results of the past five years of cooperation between Kazakhstan and China in the framework of the Belt and Way Initiative?
Mr. Zhang Xiao: I regard the progressive implementation of the planned program, aimed at ensuring the industrial development of Kazakhstan and including 55 large-scale projects worth $27 billion, as a matter of extremely great importance. Of this total, nine projects were completed last year alone, eight more are expected to be completed this year. Based on this, I think it is quite possible for the above-mentioned program’s projects to be fully implemented over the coming four to five years. That feels pretty real to me.
The transit component is another key factor for successful development of the Kazakh economy. Already now the transit of goods has generated profits of $2–3 billion a year for the country, as a significant part of the overland international trade routes between Europe and China passes through Kazakhstan. As we know, the Sino-Kazakhstan International Logistics Base in the port of Lianyungang gave your republic access to the sea, which made it possible for it to significantly increase exports abroad, in particular, to the countries of Southeast Asia.
Kemar Mashanlo: The topic of Kazakh-Chinese cooperation has been touched upon during conversations with citizens of two countries, and in such cases, one often hears complaints about difficulties in obtaining entry visas. How is this issue handled?
Mr. Zhang Xiao: Kazakh-Chinese relations are progressing quite well, yet they have a very large untapped potential. This includes the visa-related issue.
After being appointed as ambassador to Kazakhstan, I took increasing interest in your country’s business climate, and I was surprised to hear my compatriots, intending to visit it, emotionally saying that among the countries of the world, Kazakhstan is that one for which it is most difficult to obtain visas.
Arriving at the place of fulfillment of the diplomatic mission in Nur-Sultan, I faced with appeals from Kazakhstanis, local residents, – appeals containing similarly emotional complaints. Only this time, it was about the difficulties of obtaining a Chinese visa. The long lines to the consular service window testified to this.
After getting to look into this situation, I realized that it was a really difficult problem, which had been discussed many times by the two parties. But the years go by, and the question remains the same.
It must be admitted that the solution to the problem has practically stalled. And the lack of the necessary conditions for reciprocal visits, to each other’s countries, does not contribute to spiritual rapprochement, establishing trust, raising awareness of neighboring countries with the purpose of, inter alia, mutually beneficial cooperation.
I think that until the problem of entry visas is resolved in the course of our bilateral negotiations, we will not be able to boast of entering a stage of high-quality development in our bilateral relationship.
Kemar Mashanlo: Nowadays the implementation of many large-scale projects in Kazakhstan is closely related to the economy of China. Could the US attempts to counter the Belt and Way Initiative lead to negative consequences for the cooperation of the two countries?
Mr. Zhang Xiao: I am sure that the US sanctions pressure on the People’s Republic of China won’t be able to slow down our interaction with Kazakhstan. It has of course to be understood that the use of discriminatory measures and protectionism can cause temporary difficulties for the national economy of our country. But today in China, we have already created a margin of safety, enabling our economy to withstand them without serious consequences. Fifteen years earlier, the growth of the Chinese economy was completely – by 70-75% – dependent on exports. Now the situation has changed. Last year, 76% of the country’s annual economic growth was due to domestic demand. The share of export earnings amounted to about 17%.
According to our economists’ estimates, a trade war with the United States could cause approximately 1% slowdown in our economic growth. That is, if China’s GDP growth is projected at 6-6.5% for 2019, then, allowing for the expected damage from the sanctions, it actually could be at 5-5.5%. That suggests there is no question of it having a critical impact on the country’s economy, and there’s no way for joint investment projects with our partners, including Kazakhstan, to be affected by the trade war with the United States.
Kemar Mashanlo: The Kazakhstani users of Huawei products were concerned to hear an announcement from the Google about partial suspension of cooperation with this Chinese company. Would you like to make a comment on the situation?
Mr. Zhang Xiao: I can do no better than echo the statement made by representatives of Huawei, who asked the broad masses of consumers of their products, including in particular, smartphones and tablets, not to worry about the use of electronic devices, explaining that such a situation was foreseen in advance.
I would add that, 15 years ago, Chinese manufacturers of smartphones began, according to «Plan B», secretly working to develop their own microchips as a standby to be used in case Huawei could not buy analogous chips in the US one day.
They are already being used in high-end Chinese smartphones. As for the Android system, Huawei got a backup plan there as well, according to which its own operating system has been developed.
As for the hype around Huawei created by the West, I believe that it forms part of the trade war launched by the United States against the People’s Republic of China. These actions exactly reflect the position of Washington, which seriously fears the competition from China – the world’s second largest economy – which is quite well positioned to soon catch up with the USA and overtake them. Therefore, America is endeavoring to reduce the influence of China on the world market.
But Trump (Donald, President of the United States – KazTAG) must realize that if trade tariffs on goods from the People’s Republic of China are raised, there will be no trade with China anymore. This means that the United States will lose the largest market in the world and will also suffer losses. It seems to me that in Washington, they cannot realize the simple truth: whoever loses the market will lose the future.
Kemar Mashanlo: How do you feel about the forecasts of some experts who believe that in the course of the trade war, Beijing can reduce its imports from the US, and Kazakh exporters of, say, agricultural products could take advantage of the opportunities this development would present?
Mr. Zhang Xiao: I believe that Kazakhstan is able to fulfill its export potential, irrespective of the effect of US-China trade dynamics.
Contributing factors are: excellent geopolitical location of the two countries, common borders, and convenient infrastructure. All these things favor the development of trade, including, inter alia, the export of Kazakh agricultural products to China.
I must note that at present, work in this regard is being carried out quickly and efficiently. Just in the last five months, 20 types of agricultural products from Kazakhstan have got access to the food market of China. They include not only soybeans, but also such categories of food as wheat, flour, vegetable oil, honey, beef, horse meat and others.
In general, I would like to note that in our country, Kazakhstani agricultural products are considered as being ecologically clean. Therefore, they are in high demand and have very good prospects for large-scale entry into the Chinese market.
Kemar Mashanlo: Thanks for the interview!»
The Kazakh-Chinese political and economic relations, starting almost from scratch in early 1990s, have made significant progress in their development over the years since our nation gained state independence. In December 1992, an economic and trade agreement was signed between the governments of the Republic of Kazakhstan (RK) and the People’s Republic of China (PRC). Since the mid-1990s, a steady growth of trade began to be noticed between two countries. In the year 2000, Kazakhstan–Chinese commodity trade turnover amounted to over $1.2 billion.
Our republic thus became an important trading partner of China, taking second place among CIS countries after Russia. In 2017, the commodity turnover between Kazakhstan and China increased by 37.4% and reached $18 billion. It›s an impressive progress, isn’t it?! Accordingly, the geopolitical environment in which Kazakhstan is located has dramatically changed.
At the end of 1991 and the beginning of 1992, when the Soviet Union finally disintegrated, and former Soviet Union Republics achieved independence, Russia was undoubtedly the largest economic power in the whole area immediately surrounding Kazakhstan. In 1990 (the last full year of the Union), its gross domestic product (GDP) had been about $570 billion, which represented a per capita income of $3,780. But since then, the situation has radically changed.
The Central Asian republics in general and Kazakhstan in particular faced major challenges in the early years of independence. Their economies were trapped in a «cycle of de-development». Real gross domestic product (GDP) fell by one half or more in Tajikistan, Kyrgyzstan and Kazakhstan between 1990 (the last full year of the Union) and 1994. By the end of the decade, a period of high oil prices set in, and Kazakhstan began to see accelerated economic progress. Meanwhile, China’s economy has been continuing to witness tremendous growth. Its gross domestic product has surged from less than $150 billion in 1978 to $8570.35 billion in 2012 – and to $13407.40 billion in 2018. At the beginning of 2006, the Chinese national statistics, showing a national economic output of $2.26 trillion, sent China soaring past France, Britain and Italy to become the world’s fourth-largest economy. In the second quarter of 2010, China passed Japan to become the world’s second-largest economy behind the United States.
It is important to us that China›s rapid economic development and increasing influence gain within the system of regional and international relations are accompanied with an equally impressive intensification of the ties of this state with Kazakhstan.