A Thorny Road To Sino-kazakh Partnership

Chinese Foreign Minister Li Chaosin made his first official visit to Kazakhstan in April 2003. The success of his meetings with Kazakh officials prompted Kazakh Foreign Minister Kasymzhomart Tokayev to emphatically state that his views were identical to those of his Chinese counterpart and that no impediments stood in the way of further cooperation between the two countries. [1] The same sort of unbinding diplomatic language was used during Kazakh President Nursultan Nazarbayev’s visit to Beijing in May of this year. Received with open arms by his Chinese hosts, Nazarbayev concluded his talks by signing an agreement on the construction of a 988 kilometer long oil pipeline, meant to connect Kazakhstan’s Atasu railway station with China’s Alashankou border crossing. According to officials from the Kazakh oil company Kazmunaygaz and the Chinese National Petroleum Company (CNPC), construction costs will be equally shared by both sides.

The first phase in an ambitious $1 billion project initiated by Kazmunaygaz and the CNPC, the pipeline is expected to be completed in late 2005 and require a $688 investment. The pipeline will allow oil-rich Kazakhstan to pump 20 million tons of oil to China. Construction of a gas pipeline from Kazakhstan to China’s rapidly developing western parts is also under consideration, opening new investment possibilities for Kazakhstan.

Unlike western companies, clamorously competing over the huge resources of the Caspian, China did not seem to display much interest in the West Kazakhstan oil rush until the late 1990s. In 1997, CNPC acquired a 60.3% stake in state-run Aktobemunaygaz oil company for $320 million, taking up liabilities to pay off $71 million in debts. CNPC also promised to invest $4 billion within 20 years to develop Kazakhstan’s Kenkiak and Zhanazhol oil fields and to build a pipeline from West Kazakhstan to Xinjian Uigur Autonomous region. [2] The arrangement suited land-locked Kazakhstan, which was looking to lessen its dependence on war-troubled Russia for shipment of its oil.

But the Chinese company was in no hurry to build the pipeline. Worse than that, its activities began to run counter to interests of the Kazakh government. In 2000, CNPC management laid off 1,774 local Kazakhs to bring down the production cost. Meanwhile, investment was far below the targeted level, slowing oil production and put the social infrastructure development program of the Aktobe region (where CNPC was located) at risk. A long chain of unfavorable comments in the press and public protests followed, as the local Aktobe government criticized the CNCP. Press reports said company managers were forcing Chinese ethics and mentality on Kazakh workers, making them sing the Chinese national anthem and gradually limiting the use of the Kazakh language in workplaces.

At a meeting with the CNPC management in March 2000, Kazakh Prime Minister Kasymzhomart Tokayev warned that “the government closely watches how far foreign companies abide by laws of Kazakhstan and Chinese companies are no exception in this sense.” Tokayev also said that disrespect for Kazakh laws might cast a shadow on Sino-Kazakh relations. [3] To settle the conflict, CNPC promised to reinstate some of the sacked workers and allocate $1 million as a financial aid to boost the rural economy of the underdeveloped Aktobe region. But at the same time, CNPC Deputy General Director Yao Wen complained to reporters that the foreign ministry of Kazakhstan had not allowed 20 oil specialists from China.

The employment of a Chinese workforce remains a thorny issue with the Kazakh government in dealing with CNPC. Under the pressure from Astana, CNPC had to cut the number of the Chinese personnel by 40% this year, and send them back to China. The Kazakh government has urged the company to train local workers for high-qualified jobs to replace the foreigners. Though CNPC partly recognized that it failed to meet its obligations, it was nevertheless reluctant to yield to this demand. Instead, CNPC business executives invent various excuses to minimize the number of the hired local workforce, while some Kazakhs working in the company repeatedly complained in the press that they were being paid less than half of the salary paid to Chinese workers. Desperately in need for qualified oil specialists to reach its ambitious target of 150 million tons per year by 2015, the Kazakh government initially planned to use the CNPC to train Kazakh workers to replace Russians who have emigrated to Russia. Kazakhs feel the company fell short of these expectations.

However, in his talks with the Chinese leader Hu Jintao as well as at the Kazakh-Sino business Forum in Urumchi, Nazarbayev cited the CNPC as a good example of the expanding economic partnership between the two countries. And he hailed the efforts of Chinese companies to prospect and develop oil fields on the Caspian. [4] Statistical figures illustrate the positive signs of Kazakh-Sino bilateral economic relations. According to the Embassy of Kazakhstan in China, the trade volume between the neighbors reached $3.29 billion in 2003, an increased of 68.1% compared with 2002 figures. Economists predict that by 2010, the trade volume will rise to $5 billion. [5] Official figures say that roughly 40 Chinese companies and 70 joint venture enterprises are now operating in Kazakhstan. China and Kazakhstan have also discussed the construction of the narrow gauge railway to link Dostyk station on the Chinese border with Atasu.

Maulen Ashimbayev, the director of the Kazakh Institute for Strategic Studies, downplayed fears over Chinese economic and demographic threat to Kazakhstan, calling them exaggerated at a press conference after a meeting of Kazakh and Chinese political and economic experts. He affirmed his belief that the development of western China offers a rare opportunity for Kazakhstan to export its energy resources to its oil-hungry neighbor and create additional jobs. “You need alternative [oil transportation] routes, and we need alternative energy resources,” agreed the deputy director of the Shanghai Institute of International Studies, Wan Xiao Shu.

Such positive assessments of Sino-Kazakh economic connections and protestations of friendship on the official level are not, however, necessarily representative of feelings within the wider Kazakh population. Ethnic Russians, especially, are not enthusiastic about the growing volume of imported goods from China. Low-price Chinese footwear, clothing, prepared food, radio, TVs and other consumer products are pushing relatively superior-quality goods from Russia out of the market not only in heavily Russian-populated North Kazakhstan, but also in the marketplaces of any southern city. And although the Department of Sanitary and Epidemic Inspection recently warned that Chinese rice contained high levels of lead, Kazakhstan has no means by which to stop the flow of cheap imports from China. Paradoxically, 30 percent of rice from the Kyzylorda region of South Kazakhstan, which produces enough rice to feed the entire Kazakh population, is brought in from China. Last year, 60,000 tons of rice was smuggled into Kazakhstan, bypassing customs controls. [6]

These concerns do not seem to trouble the official Kazakh-Sino relation, however. During President Nazarbayev’s May visit to Beijing, the Chinese leadership pledged its support for Kazakhstan’s accession to World Trade Organization (WTO). A few years ago, Kazakh officials stressed that they would follow Russia and China’s examples in entering the WTO. Speaking at the “Asian Dialogue on Cooperation” conference in Jindao, Tokayev announced that Kazakhstan would join the WTO by mid-2006 or at the end of 2005. [7] However some analysts in Kazakhstan fear that WTO membership would leave Kazakh markets open to Chinese trade expansion, which has already assumed a threatening scale. Opponents of the WTO charge that Kazakhstan must first create reliable legal mechanisms to protect its domestic market from an uncontrolled flood of Chinese goods.

Apart from purely economic concerns, the political implications of close Sino-Kazakh relations should not to be overlooked. The persecution of ethnic Uigurs in Xinjiang Uigur Autonomous region by Chinese authorities increases tensions among Kazakhstan’s 1.4 million Uigurs. The Kazakh leadership has been wary of raising the issue of reprisals against Uigurs or the fate of Kazakh dissident writer Kazhigumar Shabdan imprisoned in China. Instead, Kazakh diplomats prefer to assure their Chinese partners that the Uigur “terrorists” of the East Turkistan Islamic Movement will never find shelter in Kazakhstan.

Despite some bumps in the road, Beijing, alarmed at American military presence in Central Asia, has continued down the path of closer relations with Kazakhstan. Capitalizing on anti-American sentiments and the inherent openness to communist ideology of the pro-presidential party, Otan, China has begun to develop a strong strategic relation with its western neighbor. Though it tones down anti-American rhetoric during talks with Kazakh officials – so as to avoid antagonizing Kazakhstan in the midst of its rapprochement with the United States – China has attempted to play Russia against America, stressing the former’s “leading geopolitical role” in Central Asia. Such efforts are doomed to failure, however, given Russian irritation over the Sino-Kazakh pipeline accord, which has forestalled the construction of a Siberia-China oil pipeline. But in the end, for all the atavistic communist mentality of the current regime, Kazakhstan looks to China for an economic partner rather than a political ally.

Notes:

1. Panorama, May 1, 2003

2. Delovaya nedelia, April 23, 2004

3. Panorama, March 24,2000

4. Express K, May 18

5. Delovaya nedelia, May 21, 2004

6. Khabar TV, June 26, 2004

7. Delovaya nedelia, June 24, 2004