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China’s DongFeng Auto Company Plans To Launch Plant In Kazakhstan

By Azamat Batyrov July 23, 2018

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Workers assemble Honda Civic cars at Dongfeng Honda Automobile assembly plant in Wuhan in China's Hubei province. / Don McCurren / Associated Press

Kazakhstan is stepping up economic cooperation with China through a $3 billion deal with the state-owned Dongfeng Motor Corporation, considered one of China’s biggest automobile manufacturers.

As one China’s ‘big three’ automobile makers, Dongfeng is planning to construct factories in the North Kazakhstan region in 2019, where heavy duty cars, municipal equipment and eventually small aircraft will be produced, according to Yerzhan Artykbekov, a representative from the North Kazakhstan’s Transport and Logistics Complex.

The complex will be built in Petropavlovsk, located 40 km south of Kazakhstan’s border with Russia, and occupy roughly 165 hectares. Automobile production is not expected until six years later.

“Why Petropavlovsk? Because earlier it was an engineering city and the machine-building center,” Artykbekov said Monday following a meeting with a Chinese delegation from Hubei Province, according to Kazakhstan’s newspaper Time.

“One of the goals is to develop the machine-building potential of the city, especially since it is bordering Russia, has access to the Trans-Siberian Railway, and the potential of Russian metallurgical plants should also be used here. It is necessary to reduce the cost of products, and this is only possible with the production of spare parts and components directly on site,” Artykbekov said.

Specialists from the two countries will jointly train staff that will work at the complex, which will take place in Kazakhstan and in China. Employees will be housed in a ‘micro district’ within the complex.

Kazakhstani officials say that the project is aimed at increasing exports.

“Sales markets are likely to be the countries of Central Asia, Asia and Eastern Europe,” Artykbekov said.

Within the first stage, Dongfeng Motor Corporation is planning to invest $500 million venture, while the total amount of investments is expected to reach $3 billion.

Companies from China have been showing an active interest in various sectors of Kazakhstan's economy for several years.

In early 2016 the number of Chinese companies in Kazakhstan totaled 668, which was 35 percent more than in 2013. As of today, Beijing’s investments in Kazakhstan involve more than 2,700 different enterprises, ranging from oil and natural gas sectors to logistics, machinery and agribusiness.

China is a shareholder in Kazakhstan’s oil giant PetroKazakhstan Inc., AktobeMunaiGas, KarazhanbasMunaiGas, and the Kazakhstani-Chinese uranium mine known as “Irkol,” amongst others. In addition, the two neighboring countries jointly operate the Khorgos international center located on the Kazakhstani-Chinese border.

In 2017, China National Vehicle Import and Export Company signed an agreement to purchase a 51 percent stake in Kazakhstan’s AllurGroup. According to the deal, the Chinese company is expected to supply Kazakhstan with the car kit sets and provides Kazakhstan with the right to manufacture and export JAC branded cars.

China’s direct investments in Kazakhstan over the past 12 years amounted to around $14 billion, making it one of the Kazakhstan’s top five largest investors, according to a report issued by the website 365info.kz in May. At the same time, trade between the two neighboring countries was worth roughly $10.5 billion in 2017, with Kazakhstani exports worth $5.8 billion and imports $4.7 billion, according to Kazakhstan’s Statistics Committee. Trade between Kazakhstan and China increased by 25 percent last year compared to 2016 figures.