Kazakhstan, China To Cooperate In "New Silk Road" Global Trade Expansion

On Thursday, Kazakhstan’s President Nursultan Nazarbayev met with his Chinese counterpart Xi Jinping, while Jinping was in Astana to attend the annual Heads of State Council summit of the Shanghai Cooperation Organization (SCO), held from June 8-9. 

“Our trusting relations influence the whole spectrum of interaction between our governments. State-to-state relations between Kazakhstan and China can be fully described as standard,” Nazarbayev said. “China had become a principal economic partner [of Kazakhstan] in terms of foreign direct investment, allocated loans and a number of joint ventures,” he added. “We have no open issues; any problems that arise are resolved.”

The SCO was founded by China, Russia and the five Central Asian Republics in Shanghai in 2001. Just this week it welcomed India and Pakistan into its fold, the first expansion of the bloc since its founding. Iran is expected to gain membership sometime in the near future.

While the organization was born out of regional and border security concerns, it has evolved over the years to address shared economic, trade and energy demands.

The now-eight-member bloc considers safeguarding regional security against terrorism, separatism, and extremism, along with promoting regional development, its core values, dubbing them the “Shanghai Spirit” – something China and Kazakhstan have strived to uphold bilaterally as they expanded economic, security and trade ties over the last two decades.

In the early 2000s, China directed its military assistance to Kazakhstan towards cooperation against separatism and religious extremism. Following the September 11, 2001 attacks against the United States, senior figures from the Chinese and Kazakhstani governments teamed up, pledging unity in the area of counterterrorism. Later, in 2015, China donated communications equipment and other technologies to Kazakhstan’s military.

China also agreed under the auspices of the SCO to coordinate Special Forces training with Kazakhstan, and increase its military’s combat preparedness in urban environments, mountain conditions and at sea. The two are party to the SCO’s annual Peace Mission anti-terrorist exercises, the most recent being held in Kyrgyzstan in 2016.

“A vivid example of harmonious work is our [Kazakhstan-China] cooperation in the SCO,” Nazarbayev said after his meeting with Jinping on Thursday.

China has increased its economic presence in Kazakhstan, the largest economy in Central Asia and the third largest in the Caspian region following Russia and Iran, with a gross domestic product (GDP) of over $128 billion in 2016.

The growth of the Chinese economy has increased its demand for energy resources, consequently making Kazakhstan an attractive market, as it holds 30 billion barrels of oil in proven reserves, the twelfth largest globally, and over 2.4 trillion cubic meters of natural gas. As Kazakhstan’s largest customer, China consumes 15 percent of its exports, including oil and oil-based products, coal, and gas.

Kazakhstan stands to gain from Jinping’s revival of the Silk Road, in a project known as “One Belt, One Road,” or OBOR. The transportation megaproject will connect Asia to Europe and Africa via a series of shipping lands and land routes, some of which cross the Kazakh steppes.

On Thursday, an agreement was inked linking OBOR with the Kazakhstani infrastructure development initiative Nurly Zhol, meaning “lighted path,” which connects Kazakhstan’s remote regions to intercontinental trade and transportation routes.

“I would separately like to notice your idea of ​​the Great Silk Road ‘One Belt, One Road’, which you first voiced in Kazakhstan,” Nazarbayev said addressing Jinping.  “We signed a joint agreement on linking this initiative with ‘Nurly Zhol’ Program. Kazakhstan paved the railway from the borders of China to the Caspian Sea and connected Khorgos with Almaty,” said Nazarbayev while noting the work is not yet complete.

This year’s SCO summit was held alongside the opening of Expo 2017, an international exposition that runs from June 10 – September 10 and is focused on energy. China is a participant in the exposition, with a program titled “Future Energy, the Green Silk Road."

China received the rotating SCO chairmanship from Kazakhstan at this week’s summit and will host the next meeting of the heads of the SCO member states in the summer of 2018.