International integration

What is China’s Belt and Road Initiative? And how is it related to Kazakhstan?

The “One Belt-One Road” Initiative, also known as the “Belt and Road” Initiative (BRI), is a project which was first announced in September 2013 by President Xi Jinping during his visit to Kazakhstan’s capital, Astana. Ambitious in every sense of the word, the project envisions China’s implementation of large-scale infrastructure projects on at least three continents, costing a total amount of more than 900 billion dollars. In this regard, it is quite natural for the BRI to find itself in the spotlight of almost all Eurasian countries, including Kazakhstan. Kazakhstan, in turn, is geographically critical to the BRI’s success, due to the key land routes connecting China with the rest of Eurasia all passing through its territory. The Information Agency provides insight into this project and tells how it is related to Kazakhstan.
Astana city08 February , 11:51

What do “belt” and “road” mean?

The BRI has been called a Chinese Marshall Plan, a state-backed campaign for global dominance, a stimulus package for a slowing economy, and a massive marketing campaign for something that was already happening – Chinese investment around the world.

Over the six years since President Xi Jinping announced his grand plan to connect Asia, Africa and Europe, the initiative has morphed into a broad catchphrase to describe almost all aspects of Chinese engagement abroad.

From south-east Asia to Eastern Europe and Africa, Belt and Road includes 71 countries that account for half the world’s population and a quarter of global GDP.

The BRI, or yi dai yi lu, has been bifurcated into two parts:

- the “belt” refers to the “Silk Road Economic Belt” which is land based. It will connect China with Central Asia, Eastern and Western Europe;
- the “road” refers to the “21st Century Maritime Silk Road” which is sea based. It will connect China to South-East Asia, Africa and Central Asia.

Jointly, they’re meant to be a revival of the ancient Silk Road trading routes.

Six economic corridors and one maritime road have been proposed under the BRI:

1. New Eurasian Land Bridge (Western China to Western Russia);

2. China – Mongolia – Russia Corridor (North China to Eastern Russia via Mongolia);

3. China – Central Asia – West Asia Corridor (Western China to Turkey via Central and West Asia);

4. China – Indochina Peninsula Corridor (Southern China to Singapore via Indo-China);

5. China – Pakistan Corridor (South Western China to and through Pakistan);

6. Bangladesh – China – India – Myanmar Corridor (Southern China to India via Bangladesh and Myanmar);

7. Maritime Silk Road connecting Coastal China to the Mediterranean via Singapore-Malaysia, the Indian Ocean, the Arabian Sea and the Strait of Hormuz.



Kazakhstan’s projects within BRI framework

Kazakhstan is the most attractive Central Asian state to invest in, along with Azerbaijan and Uzbekistan. Landlocked Kazakhstan is the biggest of the Central Asian countries by land mass and possesses abundant oil and natural gas reserves. Its location makes it an attractive trade and logistics hub between China, Europe and South Asia. The Chinese quickly realized these strengths, and as such it comes as no surprise that President Xi Jinping decided to unveil the BRI in Kazakhstan. After all, the country serves as a critical component of the BRI land bridge through Eurasia.

From a total of more than 10,000 kilometers, 3,000 kilometers run through the territory of Kazakhstan.

The main land corridor of the BRI will cross Kazakhstan, significantly reducing the time and cost of transportation, compared to the traditional maritime routes or other land corridors.

Among the big projects are the construction of the modern dry port Khorgos on the border with China and modernization and expansion of the Aktau port on the Caspian Sea.  

Plans to utilize Kazakhstan’s location as a hub for improved connectivity actually precede the BRI by more than three years. In 2010, China and Kazakhstan agreed to upgrade their common border area at Khorgos. From the Kazakh side this involved developing the Khorgos dry port through improved access to railway transport and construction of commercial centers. Simultaneously, China ratified a new special economic zone in Yili, on the other side of the border in northwestern Xinjiang. Infrastructure to facilitate container transportation, smooth clearing of goods at the border, and procedures for tourists were all put in place in the zone.

The outcomes of past efforts are visible today under the BRI framework. Once seen as one of the most remote places on earth, the Khorgos dry port is now poised to rival Germany’s inland port in Duisburg by becoming the biggest dry port in the world and handling up to 30 million tons of rail freight per year in the long run. One major advantage that Eurasian rail freight has in the “BRI era” is that it is increasingly cost efficient, because it is cheaper than air and faster than sea freight. A train from Yiwu in China’s East into Europe through Khorgos only takes 15 days, in contrast to about 35 days by sea. As rail costs continue to fall, Khorgos is premising its hopes on capturing market share from sea routes which still dominate Eurasian trade.

The changes happening in Khorgos and surrounding area can make us think of the region as the new “Wild East”. The vast number of railways, pipelines and highways that are being built attest to that. The size of Khorgos’ ambitions are epitomized by the construction of a new town, Nurkent (Almaty region), designed to accommodate the expected increase in local population. Nurkent will offer free housing, educational facilities and recreational activities to over 100,000 residents that are expected to work in industries related to the dry port.

Developments in Khorgos show that Kazakhstan is seeking to position itself to benefit from growing Eurasian connectivity and aims to reshuffle global transport routes. However, the real question is whether or not Central Asian countries such as Kazakhstan are also able to reshape their domestic industries according to the needs of the BRI such that they can derive maximum benefits for the local population. Here the outlook is mixed.

Kazakhstan stands out as the unique BRI partner as it, in 2015, aligned its national development strategy with that of China in order to boost Kazakh trade, industrial capacity, energy and technology. This involved Kazakhstan tying its flagship “Nurly Zhol” economic plan to the BRI. The “Nurly Zhol” program foresees 40 billion dollars in spending until 2020 on projects related to logistics, infrastructure, public services and SMEs. China and Kazakhstan have also signed over 50 deals – amounting to 26 billion dollars - within three years of the introduction of the BRI.

Large upfront investments into Kazakhstan are important to fuel its growth outlook, however it is crucial that the country is also able to diversify its economy in order to become less dependent on natural resources. National, inclusive and widespread economic development premised on the rise of Eurasian connectivity and the BRI is not a given; Kazakhstan simultaneously needs to build up its manufacturing and technological capacities and create new opportunities for its emerging service sector.

The BRI can provide opportunities in this regard. For example, the “Digital Kazakhstan 2020” program specifically outlines the creation of the “Digital Silk Road” that focuses on the development of digital infrastructure in the Central Asian state. In practice, this means that Chinese telecommunication companies will contribute to the development of smart cities and smart infrastructure in Kazakhstan. Additionally, the increase in Chinese capital flowing through the region is expected to foster urbanization by bringing more migrant labor and tourism to smaller towns in the country.

Kazakhstan needs to ensure that it becomes more than just a transit point on a BRI map and therefore is also aiming to become a Central Asia finance hub. A newly-created, the Astana International Financial Center aims to become the go-to platform between London, Shanghai and Dubai.

Analyzing Kazakhstan’s involvement with the Belt and Road shows that it is taking a big bet on successful BRI integration and becoming the primary connectivity hub in Central Asia. To do this successfully, it will not only need to ensure a smooth political transition at home, but it also needs to balance its plans against geopolitical ambitions emanating from abroad. More importantly, it needs to become more than just a transit point for BRI trade and take the opportunity to develop its own economy in the areas of infrastructure, technology and finance. If the country manages to achieve these objectives, while simultaneously balancing its relationship with China, it has the potential to become one of the largest success stories of BRI engagement in the region.

Saltanat Sarina