Historical Background

Relations between China and Kazakhstan can be traced back to the times of the ancient Silk Road, during the Han dynasty (206 BC–220 AD). At that time, the vast territory of today’s Xinjiang, Central Asia, and beyond were known in the territories controlled by the Han dynasty as ‘Western Regions’ (西域). In the late second century BC, Zhang Qian (who died in 114 BC) was the first Chinese official envoy to open trade routes with these regions and bring back knowledge about the area to emperor Han Wudi (156BC–87BC). Over two millennia later, Zhang’s pioneering role still resonates in China to such an extent that he was recalled in Xi Jinping’s inaugural speech announcing the Belt and Road Initiative (BRI) in Astana (now Nur-Sultan, the capital of Kazakhstan) in 2013. 

The ancient Silk Road was never static. Over the centuries until the decline of Silk Road trade by the mid-fifteenth century, some routes in Central Asia acquired importance, while others died out along with the cities and trading stations on their courses. A part of the Silk Road passed through the territory of the modern Zhetysu and South Kazakhstan regions, which were inhabited by nomadic tribes. After the fragmentation of the Golden Horde in 1428, the White Horde (a proto-Kazakh state) was first divided, and then formed the Kazakh Khanate by the end of the century. With the growth of territories, long-lasting conflict with neighbouring Dzungars and Oirats, and the slow disintegration of the Kazakh Khanate in the eighteenth century, Kazakhstan first became part of the Russian empire and then of the Soviet Union. 

Looking back at the Soviet era, two incidents that occurred on the border between Kazakhstan and the People’s Republic of China (PRC) assume high historical significance. In the spring of 1962, at the beginning of the Sino–Soviet split, 60,000 Kazakhs, Uyghurs, and Soviet citizens left northern Xinjiang and illegally crossed the border into Kazakhstan at Bakhtu to flee the consequences of China’s Great Leap Forward. The so-called Yita Incident (伊塔事件) was also encouraged by promises made by Soviet leaders of better job opportunities and life conditions. The second incident took place in 1969, at the peak of the Sino–Soviet border conflicts, when Soviet and Chinese military forces clashed near Lake Zhalanashkol. In Chinese sources, it is known as the Tielieketi military incident (铁列克提事件), named after the river flowing into the Lake Zhalanashkol. Soviet sources report that two Soviet and 19 Chinese men were killed on that occasion.

After declaring independence from the Soviet Union in December 1991, Kazakhstan established diplomatic relations with the PRC in January 1992. The long-standing border dispute with China was resolved with the signing of the China–Kazakhstan border treaty in April 1994. Two years later, in 1996, the Shanghai Five grouping (later renamed Shanghai Cooperation Organisation) was created to settle territorial issues and deepen military trust in the border regions of Kazakhstan, Kyrgyzstan, Russia, Tajikistan, and China.

In 1997, China’s increasing energy demands resulted in the China National Petroleum Corporation (CNPC) acquiring a 66.7% stake in Kazakhstan’s national oil and gas company AktobeMunaiGas and an agreement to construct an oil pipeline from western Kazakhstan to China’s Xinjiang autonomous region. In 1999, China and Kazakhstan issued a joint statement emphasising their wishes to strengthen bilateral relations and cooperation in the coming century. In 2002, both countries signed a treaty on China–Kazakhstan ‘good-neighbourly and friendly cooperation’. In 2005, the completion of the first section of the China–Kazakhstan oil pipeline and subsequent acquisition of the former Canadian–Kazakhstani joint venture PetroKazakhstan oil company by the CNPC coincided with the joint statement on the establishment of the strategic partnership between the two countries. Finally, in 2011 China and Kazakhstan announced the development of an ‘all-round comprehensive strategic partnership’, which was further upgraded to the ‘new stage of comprehensive strategic partnership’ in 2015.Marking the close relationship between Kazakhstan and China, the first President of Kazakhstan, Nursultan Nazarbayev, in office from April 1990 to March 2019, met with President Xi Jinping 19 times between 2013 and 2019, the period when their presidencies overlapped. On the occasion of his first official visit to China in September 2019, Nazarbayev’s successor, President Kassym-Jomart Tokayev, signed a bilateral agreement to develop a ‘permanent comprehensive strategic partnership’ (永久全面战略伙伴关系), securing a higher political recognition from the Chinese counterparts, but not yet at the level of a ‘strategic coordination/cooperation’ as in the Russian ‘comprehensive strategic partnership of coordination for a new era’ (新时代全面战略协作伙伴关系) or Pakistan’s ‘all-weather strategic cooperative partnership’ ( 全天候战略合作伙伴关系).

BRI Status

President Xi Jinping first proposed the creation of the Silk Road Economic Belt (SREB) during his visit to Nazarbayev University in Astana (now Nur-Sultan), Kazakhstan, in September 2013. In his speech, he stressed that both China and Central Asia ‘are at a crucial stage of development with unprecedented opportunities and challenges’ and proposed the ‘five connections’ (五通) along the SREB, that is policy communication, road connectivity, trade, monetary circulation, and understanding between the people. The ‘five connections’ were later outlined in the BRI roadmap Vision and Actions on Jointly Building Silk Road Economic Belt and 21st-Century Maritime Silk Road published in 2015.

In December 2014, the Ministry of Economic Affairs of Kazakhstan and China’s National Development and Reform Commission signed a cooperation document to jointly build the SREB. In May 2015, a joint statement was issued by China and Russia on cooperation in linking the construction of the Silk Road Economic Belt and the Eurasian Economic Union (EAEU), to which Kazakhstan has belonged since its official launch in 2015. 

The announcement of the BRI coincided with Kazakhstan’s own infrastructure programme ‘Nurly Zhol’ or ‘Bright Path’, which was officially launched in November 2014 and was initially supposed to last five years. In August 2016, the cooperation plan for the conjugation of the Nurly Zhol and the SREB between the governments of Kazakhstan and China was signed. In the same year, Kazakhstan joined the Asian Infrastructure Investment Bank with a paid-in capital of 729.3 million USD and 0.8406% of total votes.An official Memorandum of Understanding (MoU) between the Kazakh and Chinese governments on the implementation of the cooperation plan for the connectivity of the Nurly Zhol new economic policy and the construction of the Silk Road Economic Belt was finally signed in 2019 during President Tokayev’s visit to China.

Current Economic Relations

Trade: In 2019, China was Kazakhstan’s second largest trading partner—after Italy in exports and Russia in imports. The trade turnover between China and Kazakhstan amounted to 14.36 billion USD, with 7.82 billion USD of exports to China and 6.54 billion USD of imports. In comparison to 2018, the trade turnover increased by 22.8%. Kazakhstan mainly exports commodities (oil and gas, uranium, metals, agricultural and chemical products) to China and imports industrial goods (consumer goods, machinery and equipment). This trade structure leaves plenty of room for improvement—namely, a need to increase the added value of products exported in order to diversify Kazakhstan’s economy. Additionally, a single customs space within the EAEU could explain the increase in trade volume between the countries since 2015, as Chinese cargo enters Kazakhstan before going to the rest of the EAEU. It also makes it difficult to estimate the actual trade volume, especially since the Chinese and Kazakh data often do not match. The discrepancy in customs data is also driven by corruption and the existence of a whole shadow economy. Since taxes and customs revenues are the main sources for the state budget (47% in 2020), the government of Kazakhstan is actively fighting illegal cross-border trade. According to President Tokayev, in 2020 there were about 50,000 cases of inaccurate goods declarations on the border with China, resulting in a discrepancy of more than 5 billion USD with China’s mirror statistics. Digitalisation at the Chinese–Kazakhstani borders is helping to combat the shadow economy. With the creation of the Electronic Declaration Center in 2020, the discrepancy in customs statistics with China reduced from 60% in 2017 to 45% in 2020.

Investment: According to the National Bank of Kazakhstan, China has been the fourth largest investor in the Kazakh economy (after the Netherlands, United States, and Switzerland) in recent years. The biggest gross inflow of Chinese investment came in 2012 and 2013, before the announcement of the BRI. The fall of oil prices and the Crimean crisis of 2014 brought down the Russian ruble as well as the Kazakh tenge, and as a result, Chinese investment in Kazakhstan slowed down. The total amount of investment from China in the period from 2005 to 2019 was 36.2 billion USD, or about 5.2% of the total investment for the whole period. Most of these investments were directed into joint ventures in the sectors of oil and gas, mining and processing industries, and logistics and infrastructure.

Additionally, the Astana International Exchange (AIX), a part of the Astana International Financial Center (AIFC) established in 2017, was created to develop public equity and debt capital markets in Central Asia. Its AIX Belt and Road Market Segment is devoted to the provision of capital market solutions for the BRI projects with the RMB being the most important trading currency. The Shanghai Stock Exchange and the Silk Road Fund are among the shareholders of the AIX. The AIFC has signed memoranda with the China Securities Regulatory Commission and the China Banking and Insurance Regulatory Commission in 2018, and established strategic partnerships with the Shanghai Stock Exchange, Silk Road Fund, China Development Bank, China Construction Bank, China CITIC Bank, and CITIC Securities. According to the AIFC Governor Kairat Kelimbetov, the BRI opened new prospects for financial cooperation between Kazakhstan and China.

Aid and loans: Since 2015, Kazakhstan has been classified by the World Bank as an upper-middle-income country, so it does not receive ‘aid’ in the narrow sense of the word and has even been a contributor in the OECD’s Development Assistance Committee (DAC) since 2013. However, Kazakhstan is actively attracting development finance from multilateral development banks, the United Kingdom, and China. For example, the construction of Nur-Sultan’s light rail transit is financed with a loan from China Development Bank. The project has now been halted after a corruption scandal.

According to the statistics provided by the National Bank of Kazakhstan, Kazakhstan’s external debt to China as of 1 October 2020 accounts for 6.4% of its total external debt (including intercompany lending). Outstanding loans to China are significant only in two sectors—banking (1.2 billion USD) and government-guaranteed debt (1.3 billion USD). Most of Kazakhstan’s debt to China is in USD, and loans issued in Chinese yuan account for about 390 million USD or 0.2% of the total external debt. 

Key Controversies in Bilateral Relations

Transboundary rivers: China and Kazakhstan share a 1782.75-kilometre-long border and 23 transboundary rivers. Two of them, Ili and Irtysh, are the largest and most contested ones in terms of water management and use. Both rivers originate in Xinjiang and are heavily used for the development of western China (in agriculture, oil extraction, and hydropower). As a result, it is anticipated that Kazakhstan may face a water deficit in its eastern regions, the concentration of harmful substances in the rivers may increase, and the natural ecological balance in the Zaisan and Balkhash lakes, where these rivers flow, might be disrupted. Negotiations on transboundary water management between Kazakhstan and China have been going on since 1999. Today, the main problem is the lack of an agreement on water distribution for transboundary rivers, although negotiations started in 2015. According to the Kazakhstani Minister of Ecology, Geology, and Natural Resources, China typically does not negotiate water allocation with its neighbouring countries and Kazakhstan is the first and only country with whom the Chinese authorities are currently engaging in this sense.

Negative perception of China: Popular perception of China in Kazakhstan is largely negative due to a variety of factors, including historical memories of the Sino–Soviet split or even earlier nomadic confrontations with the Chinese empire, more recent resource nationalism, fear of a Chinese take over of the country, lack of transparency in high-level dealings with China, or simple xenophobia. In the spring of 2016, protests broke out in several cities in Kazakhstan—with different accounts pointing to the number of participants ranging from a few hundred to a few thousand—against proposed amendments to the Land Law, which was entering into force in July that year. The changes would have enabled foreigners to rent Kazakhstani agricultural land for up to 25 years (instead of 10 years as stipulated before). The protestors feared that the Chinese investors would lease and eventually take over the land. In 2019, on the eve of President Tokayev’s first official visit to China, the Kazakhstani people protested the ‘relocation’ of 55 Chinese plants in sectors such as oil and gas, ore mining and processing, machine manufacturing, energy, and food production over concerns about pollution and rising debt, as well as China’s treatment of Muslim Uyghurs and Kazakhs in Xinjiang. The idea of building these factories was first announced in 2014 under the framework of linking the Nurly Zhol to the BRI. Chinese actors were to invest about 27.6 billion USD in industrial facilities, mostly in fossil fuels and extractive industries. However, the Kazakhstani government’s lack of transparency and clear communication of the project list contributed to rumors and disinformation about the relocation of the ‘old Chinese factories’ being spread over social media in 2019, giving rise to the protests.

Xinjiang: The anti-Chinese sentiment in Kazakhstan is being further exacerbated by the detention of Muslims in Xinjiang. An estimated 1.5 million Kazakhs live in China. Since the Kazakhstani government announced its repatriation programme in 1997 to attract ethnic Kazakhs (‘oralman’) from the other countries, including China, many Kazakhs moved from Xinjiang to Kazakhstan, leaving families divided across the two countries. For this reason, the population of Kazakhstan follows China’s domestic matters very closely. 

The Kazakhstani government has to find a balance between maintaining its strategic relations with China on the one hand, and responding to its population’s worries about the fate of their relatives and fellow Kazakhs in Xinjiang on the other. In recent years, two prominent cases related to a Xinjiang whistleblower, Sayragul Sauytbay, and a human rights activist, Serikzhan Bilash, attracted extensive coverage from local and international media. Sayragul Sauytbay, an ethnic Kazakh from Xinjiang and a former member of the Chinese Communist Party, was sent to work at a political reeducation camp and later escaped, crossing the border illegally in April 2018 to join her family that had moved to Kazakhstan two years before. She was charged for using the forged documents to cross the border and was at risk of being deported back to China. After her high-profile court trial in Kazakhstan in July 2018, Sayutbay was released on a suspended sentence. After she was refused an asylum in Kazakhstan, in June 2019 she fled to Sweden, where she was granted political asylum.

Serikzhan Bilash, an ethnic Kazakh from Xinjiang, moved to Kazakhstan in 2000 and received citizenship in 2011. In 2017, Bilash founded the Atajurt Eriktileri (Volunteers of the Fatherland), a nongovernmental organisation (NGO) that assisted the relatives of ethnic Kazakhs, Kyrgyz, and Uyghurs detained in Xinjiang, published testimonies, and worked with international media and human rights groups. In March 2019, the Kazakhstani authorities detained him for inciting inter-ethnic hatred. Bilash first pleaded not guilty, but later signed a plea agreement for ‘his family and his children’. The court sentenced him to a fine and banned him from engaging in social activities. Up to that point, Bilash had repeatedly tried to register Atajurt with the authorities, but the Kazakhstani Justice Ministry refused to grant registration. In September 2019, after Bilash stepped down as NGO leader, the Justice Ministry approved all the necessary documents but the registered organisation was now headed by a man who was more agreeable with the official Kazakhstani line towards China. In 2020, two more criminal cases were initiated against Bilash. Due to mounting pressure, in September 2020, Serikhan Bilash had to leave Kazakhstan with his family first for Turkey and then the United States.

Key Sources

Websites:

• Caspiana platform at Harvard University
• Caspian Policy Center website
• Central Asian Bureau for Analytical Reporting
• Eurasianet
• Forbes Kazakhstan
• Informburo (online news portal in Russian)
• Kursiv (business news portal)
• Ratel.kz (independent online portal in Russian)
• The Astana Times
• The Bulletin (news from Central Asia & the South Caucasus) 
• The Oxus Society for Central Asian Affairs 

Books, Scholarly Articles, and Reports:

• Baldakova, Oyuna. 2019. ‘Protests Along the BRI: China’s Prestige Project Meets Growing Resistance.’ MERICS website, 10 December. Link. 
• Bitabarova, Assel G. 2018. ‘Unpacking Sino-Central Asian Engagement Along the New Silk Road: A Case Study of Kazakhstan.’ Journal of Contemporary East Asia Studies 7, no. 2: 149–73. 
• Central Asia Data-Gathering and Analysis Team Research Project. 2019. ‘BRI in Central Asia Data Review Series 20–27.’ OSCE Academy in Bishkek website. Link.
• Kassenova, Nargis. 2020. ‘Kazakhstan’s Adaptation to the Belt and Road Initiative: Tracing Changes in Domestic Governance.’ In The Belt and Road Initiative and Global Governance, edited by Maria Adele Carrai, Jean-Christophe Defraigne, and Jan Wouters. Cheltenham, UK: Edward Elgar Publishing, 182–203.
• Kembayev, Zhenis. 2020. ‘Development of China–Kazakhstan Cooperation.’ Problems of Post-Communism 67, no. 3: 204–16.
• Kenderdine, Tristan. 2018. ‘Kazakh Land, China Capital: Exporting China’s Project System to External Geographies.’ Central Asian Affairs 5, no. 4: 313–41.
• Konrad Adenauer Stiftung & Talap Center for Applied Research. 2020. Analysis of China’s Economic Strategy and Foreign Policy in Kazakhstan. Link.
• Mauk, Ben. 2021. ‘Inside Xinjiang’s Prison State.’ Pulitzer Center website, 26 February. Link.
• Pieper, Moritz. 2020. ‘The Linchpin of Eurasia: Kazakhstan and the Eurasian Economic Union Between Russia’s Defensive Regionalism and China’s New Silk Roads.’ International Politics, 2020. Link. 
• Xiaocuo, Yi. 2019. ‘A Road to Forgetting: Friendship and Memory in China’s Belt and Road Initiative.’ Made in China Journal 4, no. 1: 114–17. Link. 

Cover Photo: Kazakhstan, by Ewan McIntosh (CC).