China Investments in Kazakhstan
Kazakhstan’s President Nursultan Nazarbayev is on a state visit to China hoping to shore up Astana’s tight-knit relations with a key strategic partner and drum up investment for his country’s ailing economy.
With China fighting its own battles, however, it may fall short of the largesse that is being expected.
As Nazarbayev made clear during a Sino-Kazakhstani business forum on September 1, Astana is eager for Beijing to broaden its investment portfolio — hitherto concentrated in Kazakhstan’s energy sector — and start pouring cash into the industrialization projects on which the government is pinning its hopes for recovery.
“I believe this visit is a turning point in Sino-Kazakhstani ties, ” Nazarbayev said inremarks quoted by his office. “For over 20 years we have been actively cooperating with China, predominantly in the energy and natural resources sectors. In the new stage, we are starting to step up cooperation in the manufacturing sectors of the economy, including engineering and the processing of resources.”
Kazakhstan, whose economy is flailing under the pressure of falling oil prices and a regional downturn emanating out of sanctions-hit Russia, hopes Chinese cash can drive forward its anti-crisis strategy, the Nurly Zhol industrialization and infrastructure program.
Drumming up investment has become an even greater priority following Kazakhstan’s devaluation of its currency last month, when the central bank abandoned its policy of propping it up to allow it to float freely. The tenge has since lost some 27 percent of its value.
China has been a major investor in its neighbor’s economy, but Astana would be unwise to expect too much of Beijing. China’s pockets are not as deep as they once were: its economy is slowing, with shares tumbling on the stock market and the authorities forced to devalue the yuan twice last month.
China has invested heavily in Kazakhstan’s energy sector and accounts for around one-quarter of the country’s oil output, but its confidence is looking shaky of late. Last month, a Sino-Kazakhstani drilling company announced a raft of layoffs that drove home the impact of the crisis on joint cooperation in a sector crucial to both countries.
