China’s Kazakh Concerns

Posted: March 6, 2022 in Straits Times
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More very late posting, this time from January for the Straits Times looking at how China was impacted by events in Kazakhstan at the turn of the year. Seems a world away from what we are facing now, though there is clearly a link that runs through Moscow.

China’s Kazakh Concerns

China is going to find that Kazakhstan is not the secure and predictable neighbour that it was, says the writer. PHOTO: REUTERS

When Chinese President Xi Jinping first announced his Belt and Road Initiative (BRI) vision in 2013, he started it with a speech in Astana, as the capital of Kazakhstan was then called.

In an expansive speech, Mr Xi articulated the importance of Kazakhstan within his broader vision of Chinese policy across the Eurasian landmass.

The Kazakh government appreciated the speech and the wider concept, so much so that a year later then President Nursultan Nazarbayev articulated his own national economic strategy called Nurly Zhol (bright path), which built on the Chinese ideas and projects. 

China and Kazakhstan would grow and prosper together. The Kazakhs benefited from Chinese trade and investment while Beijing appreciated having a stable “soft authoritarian” success story on its border. This intertwining highlights the importance of Kazakhstan to China, and explains the consequent horror with which Beijing watched the chaotic way in which the country welcomed in the new year. 

Chinese strategists were not alone in being shocked at the chaotic scenes that have played out over the past couple of weeks. Central Asia watchers both within the region and beyond were equally surprised by the turn of events, which began as demonstrations against a fuel price hike and escalated into violent clashes with hundreds reported dead and injured.

STABILITY AND PROSPERITY

Most used to see Kazakhstan as the most stable and prosperous country in what is still described as the post-Soviet belt that surrounds Russia. The government was an almost perfect articulation of the concept of “soft authoritarianism”, in which a strong authority dominated the country but left a certain space for political discourse, non-governmental organisations (NGOs) and a free (but controlled) media. 

The main reason it was able to do this was the massive wealth accumulated by the government, thanks to its large mineral and hydrocarbon reserves. 

These were exploited by numerous foreign companies, including Western ones.  Chinese firms have long looked at Kazakhstan as an important opportunity. Soon after the country’s independence from the Soviet Union, the China National Petroleum Corporation (CNPC) stepped in to exploit oil fields in Atyrau on the shores of the Caspian Sea.  In order to get the oil back to China, it built China’s first direct oil pipeline which stretched from Atyrau back to China covering more than 2,300km of the empty Central Asian steppe. This was only the first of numerous hydrocarbon projects. 

And it was not only a story of oil and gas. Mining company Kazakhmys, which dominates Kazakhstan’s rich copper reserves, received loans of around US$4.2 billion (S$5.7 billion) from the China Development Bank. The company would regularly take some parts of its loan facilities in yuan, something the Chinese bank appreciated as it helped with its wider strategy of trying to get the Chinese currency in wider global circulation, as well as ensuring that Chinese firms were used as contractors. 

Kazakhstan is one of the world’s largest producers of uranium, and in November last year started a joint venture with Chinese firms to produce nuclear fuel – a key part of China’s national energy strategy to reduce their carbon footprint. Kazakhstan is also a major target for Chinese agribusiness eager to take advantage of the vast underpopulated territory. 

According to Kazakh Invest data, there are some 20 million hectares of arable land (roughly the size of the United Kingdom) and another 180 million ha of meadows and pastures. This is very attractive to a country like China, with its booming population of middle class consumers looking for bountiful cheaper food options. 

Shortly before the Covid-19 outbreak, Kazakhstan opened a new market in Wuhan, where its products were sold. This became an early victim of the pandemic.  Kazakhstan was also a crucial first way station in the BRI. As mentioned, this was the country where Mr Xi first articulated his vision, even though elements of his ambitious trans-continental network were in existence long before the concept was announced. 

Kazakhstan had long sought to develop its rail and road links to China, eager to access its markets.  In the early 1990s, then President Nazarbayev had encouraged opening up his markets and rail routes to China, keenly sending his representatives to a Eurasian rail connectivity conference hosted in Beijing by then Premier Li Peng in 1996. 

For China, the Kazakh connection was useful more as a path on the way to more prosperous and populated markets in Russia and Europe. Either way, the two countries saw mutual advantage, with the Kazakhs getting infrastructure and transit fees, while China had a smooth path across the Eurasian heartland. 

Yet all this was thrown into question these past couple of weeks. The unexpected chaos in Kazakhstan caused concern among investors around the world. 

Western consultancies with large offices in big cities Nur-Sultan (Astana’s current name) and Almaty (the biggest city in the country) suddenly lost communications with them during the Internet outages amid the protests. Chinese firms were slightly more insulated from these disruptions, as most of their in-country staff were based at remote locations near oil fields or mining concessions.

PASSIVE BUT POINTED RESPONSE

While the riots look to have been put down, questions remain over stability in Kazakhstan and how China will manage this relationship going forward. At the moment, the response has been fairly passive, though pointed.  In a message to Kazakhstan’s President Kassym-Jomart Tokayev in the wake of the violence, Mr Xi talked about “colour revolutions”, highlighting the degree to which China was concerned about the instability in the country. 

This was an allusion to Western interference, referring back to the series of government overthrows seen in the former Soviet space in 2004, when Ukraine underwent a so-called “Orange Revolution”, Georgia a “Rose Revolution” and Kyrgyzstan a “Tulip Revolution”. For the Russians and the Chinese, these uprisings were widely seen as being linked to American-sponsored NGOs. 

For Beijing, the “colour revolutions” as well as the “Arab Spring” are like deadly viruses – something to be kept out lest the “bug” of public uprising catches on in China too. 

Yet, notwithstanding these concerns, China has done little in trying to help stabilise the situation. Instead, it has sat back and applauded as the Kazakhs called on Russia to step in and help bring stability under the Collective Security Treaty Organisation (CSTO), a Moscow-led alliance of six former Soviet states. 

Chinese Foreign Minister Wang Yi did offer “law enforcement and security cooperation” to help the country oppose interference by “external forces” – a narrative which echoed the explanations offered by the Kazakh government for the unrest. But these are likely just words. There is little to suggest the Kazakhs would take the Chinese up on the offer. 

This is in part because it is not clear what China would really be able to contribute that would be needed by the Kazakhs. There are also sensitivities at a public level about the relationship with Beijing. China has always struggled with an underlying sense of Sinophobia in the country. 

Earlier attempts by Chinese agribusiness to rent land in Kazakhstan had led to protests against the government for selling the people’s national patrimony to foreigners. Back in 2010, protests and violence erupted in Zhanaozen over a dispute between workers and a local CNPC affiliate, leading to at least 14 deaths. There have also been repeated lower-level clashes in the country between Chinese workers and locals. 

More recently, Covid-19 has made things even more awkward. While the Kazakhs have been keen to keep the borders and trading going, the Chinese have made entry to China very difficult. Although goods were coming out of China, they were not going back into the country. 

This had led to problems in Kazakhstan, in terms of sellers struggling not only to get their goods to China but also through it to other markets. Lianyungang, a city in Shandong, is heavily used by Kazakh sellers eager to gain access from their landlocked country to global markets. The Kazakh economy, already suffering from the effects of Covid-19, now found that the BRI, which was supposed to be about free-flowing connectivity, suddenly went only one way.

WORRIES AHEAD

All of this sets the context for how China is going to have to manage future relations with Kazakhstan. It is clearly happy that Russia had stepped in to help stabilise the situation, but the Kazakh government still has a lot of work to do in resolving bigger entrenched problems such as a glaring income divide, corruption and elite power contests. 

China is unfortunately a part contributor to these issues. Its investments have tended to engage with the elites, with locals feeling cut out. While Mr Tokayev will undoubtedly want to maintain the strong economic relationship with China, it will now have an added layer of concern to it from the Chinese perspective, and he will have to juggle his desire to keep Beijing happy while finding himself needing to answer to his local population in a more timely manner than before. All of which is likely to mean China is going to find that Kazakhstan is not the entirely secure and predictable neighbour that it was. 

The bigger problem for China is that if this is the case in Kazakhstan – the starting point of the Belt and Road chosen in large part for its stability – where else might their current assumptions be wrong

Raffaello Pantucci is a senior fellow at the S. Rajaratnam School of International Studies (RSIS), Nanyang Technological University, and the author of the forthcoming Sinostan: China’s Inadvertent Empire (Oxford University Press, April 2022).

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