As the Russia-Ukraine conflict enters its third year, Kazakh President Kassym-Jomart Tokayev has delivered an exciting message to the world:
Bilateral trade between China and Kazakhstan has increased by a staggering 100-fold over the past 30 years.
According to President Tokayev, the bilateral trade volume between China and Kazakhstan reached a record high of $41 billion in 2023. Behind this figure is the full flowering of cooperation between the two countries in energy, infrastructure, agriculture and other fields. China has become Kazakhstan's largest trading partner and the fourth largest source of foreign direct investment, with about $2 billion in direct investment in Kazakhstan in 2023, a year-on-year increase of 16.4%. What is more noteworthy is that China's cumulative investment in Kazakhstan's economy has exceeded 25 billion US dollars, which fully reflects China's long-term confidence and support for Kazakhstan's economic development.
Geopolitical and economic complementarity provides a natural advantage for cooperation between the two countries. As the world's largest landlocked country, Kazakhstan has abundant energy and mineral resources, while China, as the world's second largest economy and manufacturing power, has a huge demand for energy and raw materials. This complementarity provides a broad space for economic and trade cooperation between the two countries.
The in-depth implementation of the Belt and Road Initiative has injected new impetus into China-Kazakhstan cooperation. Since China put forward this initiative to Kazakhstan, the two countries have achieved remarkable results in infrastructure connectivity, production capacity cooperation, and financial cooperation. For example, the establishment of the China-Kazakhstan Khorgos International Border Cooperation Center has greatly promoted cross-border trade and personnel exchanges between the two countries.
Energy cooperation has become the backbone of China-Kazakhstan economic and trade relations. The completion and operation of the China-Central Asia natural gas pipeline has made Kazakhstan one of China's important energy suppliers. At the same time, Chinese enterprises are actively participating in the development of oil and gas resources in Kazakhstan, which further deepens the cooperation between the two countries in the field of energy.
After the outbreak of the Russian-Ukrainian war, it has brought a lot of economic pressure to Kazakhstan. As a country with close ties to Russia, Kazakhstan has to face the knock-on effects of Western sanctions against Russia. In this situation, Kazakhstan urgently needs to find a new economic partner, and China happens to be the best choice.
The people of Kazakhstan are calling for an end to the war in Ukraine
Let's take a look at a set of data: In 2022, the year of the outbreak of the Russian-Ukrainian war, the trade volume between China and Kazakhstan reached 31.4 billion US dollars, a year-on-year increase of 23.6%. In 2023, this number has soared to $41 billion, a record high. This rapid growth is largely due to Kazakhstan's urgent need to diversify its economic risks and reduce its dependence on Russia.
Specifically, the impact of the Russia-Ukraine war on the growth of Sino-Kazakh trade is mainly reflected in the following aspects: Western sanctions on Russian energy have forced China to find new energy supply channels. As a major oil country, Kazakhstan has naturally become an important choice for China. In 2022, China's crude oil imports from Kazakhstan reached 19.9 million tons, a year-on-year increase of 7.5%. In the first 11 months of 2023, this figure grew further to 20.3 million tonnes. The volume of oil transported by the China-Kazakhstan oil pipeline is also rising, and it is expected to reach 20 million tons in 2023.
The Russia-Ukraine war has blocked traditional Russian transport routes, making the China-Europe freight train passing through Kazakhstan even more important. In 2022, the number of China-Europe freight trains passing through Kazakhstan will reach 5,435, a year-on-year increase of 23%. In the first three quarters of 2023, this number has reached 4,932 columns, a year-on-year increase of 22%. This not only brings considerable transit fee income to Kazakhstan, but also promotes the economic development of cities along the route. Due to the restrictions on Russian grain exports, China began to import more agricultural products such as wheat and soybeans from Kazakhstan. In 2022, Kazakhstan's agricultural exports to China reached $765 million, a year-on-year increase of 34%. In the first half of 2023, this trend continued, with agricultural exports increasing by 25% year-on-year.
Kazakhstan is building a multi-purpose terminal in Kurek on the Caspian Sea in hopes of increasing its grain export capacity to destinations such as China
In the face of an uncertain international environment, China has stepped up its investment in Kazakhstan. In 2022, China's direct investment in Kazakhstan reached US$1.65 billion, a year-on-year increase of 12.5%. In 2023, this figure further grows to about $2 billion, an increase of 16.4%. It is worth mentioning that these investments are no longer limited to the traditional energy sector, but are gradually expanding to manufacturing, agriculture, new energy and other fields. For example, the Atyrau petrochemical complex project is being built with the participation of Chinese companies, with a total investment of 6.86 billion US dollars, which is expected to create more than 6,000 jobs in Kazakhstan. In order to avoid the risks that may be brought about by US dollar settlement, China and Kazakhstan are increasingly using local currencies for settlement. In 2022, the proportion of local currency settlement between the two countries will reach 25%, and it will further increase to 30% in the first three quarters of 2023. This not only reduces transaction costs, but also reduces exchange rate risk.
The pandemic and war have boosted the development of the digital economy. In 2022, the number of platform users of a well-known Chinese e-commerce company in Kazakhstan increased by 50%. In 2023, China Mobile signed a cooperation agreement with Kazakhstan Telecom Company on the construction of 5G networks, which will provide strong support for Kazakhstan's digital transformation.
We should also note that the rapid growth of trade between China and Kazakhstan is not without challenges. Some people in Kazakhstan are concerned that over-reliance on China could affect the country's economic security.
In fact, it is the norm for Kazakhstan to rely heavily on foreign countries at the economic level, such as Mexico and other Central American countries, which are heavily dependent on the United States economically, but no one in Mexico or the United States has pointed out these problems.
To borrow the official phrase, China-Kazakhstan cooperation is based on mutual respect, mutual benefit and win-win results, and is not aimed at any third party. At the same time, Kazakhstan is also actively pursuing a diversified diplomatic strategy, deepening cooperation with China, and trying to balance relations with Russia, the European Union, the United States and other major countries.