Akorda’s Chinese failure

In its plans of recovering of economic growth and drastic modernisation of national economy, Akorda highly relies on China and its strategic initiative “One belt, one road”. This is why Kazakh officials are so active on the Chinese front; however there isn’t much use of it.

We remind that in Beijing in May of this year president of Kazakhstan Nazarbaev, proposed to the participants of International forum at the highest level to review five, in his opinion, most important issues of international development.

Among such issues, leader of the nation outlined:

  • Buildup of transit, including through bettering of service, easing the transfer of goods and eliminating of administrative barriers
  • Developing of agricultural cooperation with the goal of securing food security along the Silk Road route
  • A closer cooperation in the sphere of innovations and scientific-technical development
  • Rational management of resources of landlocked trans-border rivers
  • Mutual trust between participant countries of the project and their readiness to equal all-round cooperation.

Having once again supported the One belt, one road initiative once again, Kazakh president even announced that China has shown the world a new model of regional cooperation. The latter can be argued but the fact that China and its investments can be become the very driver that will be able to propel Kazakhstani economy into bright future is beyond doubt.

Let’s examine, announced by Nazarbaev, five important issues of international cooperation within the framework of Chinese initiative One belt, one road, which as we know, united two projects: Economic belt of the Silk road and Sea silk way of the XXI century.

The mutual trust between countries –participants of the project and their readiness to equal all-round cooperation, however, is an unfulfillable dream, especially in current conditions. The proof of that is the arrival of outside-the –system candidate Donald Trump as the US president, and Brexit of UK, which were the result of discontent of large masses of population of these countries with the worsening of their socio-economic standing.

Also, such discontent occurs everywhere, including Russia and Kazakhstan, and this means that without cooperation, especially equal one, there will be less mutual trust. All of the world states of the world, that earlier de-facto advanced and defended first of all their economic and political interests, will continue to do so, except more openly, cynically and fervently.

In that sense, China is not an exception. This is why in Russia, the view of prospects of closer economic cooperation with China and mass entering of Chinese investors into the country, with their investments and new tech. is much more pessimistic.

Kazakhstan, with it population, eight times less than that of Russia and 80 times that of China, can only hope for equal relations verbally. It can count on mutually-beneficial relations, but only on condition that Russia and China wont find common ground. Only in this case will republic be able to relatively freely maneuver between two neighboring countries and in the world. And even then, Akorda will have to wiggle around a lot within the country, since the attitude of Kazakhs to China is a cautious one.

Another proof that in international cooperation all states will first of all advance and defend their own interests is the problem of cross-border rivers. As we know all of Akorda’s efforts to change the situation on this issue have failed, since Chine is simply not able to make compromises. For China, development of border regions with Kazakhstan is a national priority, among other things, in order to weaken separatism and religious extremism in Xinjiang. What can Kazakhstan offer, so that Chinese powers agreed to lowering of water draught from, say Irtysh, especially if you consider the fact that effectiveness of water use in the republic is beyond any criticism?

The desire for close cooperation in the sphere of innovation and technological development, voiced by the president at the international forum in Beijing presupposes that there is scientific potential in Kazakhstan. But factually, there is none. And it won’t occur in the coming years or even decades. So the maximum what Kazakhstan can hope for is involving of separate Kazakh scientists in Chinese scientific research in certain fields and import of Chinese technology and equipment. But the former is closely related to investments into Kazakh economy. If there won’t be any or if they will be limited, it is not hard to tell that the result would be zero.

As for development of agricultural cooperation with the goal of securing of goods security along Silk road, that is actually a strategic possibility for Kazakhstan. But the problem is that Chinese domestic market is quite complicated, and it useless for the weak to try to break in on it.

Moreover, in order to breakthrough one needs to first make the production of Kazakh agricultural complex in general, competitive in all parameters – quality pricing and marketing. It is doubtful that China will agree to special preferences for Kazakh exporters; maximum what they can hope for is a some sort of lowering of customs and sanitary barriers, but this will only ease the access to the market and won’t make Chinese buy Kazakh goods.

Buildup of transit, including through bettering of service, easing of goods flow and eliminating of administrative barriers, is a subject, in which Kazakhstan has achieved certain level of success. But one needs to clearly understand that with all the advantages of turning the republic into a transit zone between China and Europe, influence of that factor will be limited economically. Yes, the profits from transit will increase a lot, but the increase in employment of population will be minimal, it will only increase by a few dozen thousand; however advancing economy through this, won’t be possible.

Thus, Chinese initiative One belt, one road really is a window of opportunity for Kazakhstan, its economy and producers. But whether the republic will be able to be in it, is a big question. Largely due to cautious attitude of Kazakhs towards that country, not to mention uncompetitive state of national producers, businesses, workforce, financial system and, let be honest, government mechanisms.

Add to this a clear lack of knowledge about China, its market, the Chinese, Chinese mentality and also simply knowledge about what can be sold there, at what price and on what conditions. And this deficit of knowledge, surely won’t be over in the foreseeable future.

Unfortunately, Akorda, is highly inert in this matter, likely thinking that Chinese exporters and investors are more interested in Kazakhstan, than other way around. Alas, that isn’t so. At the same time, Kazakh powers aren’t trying to solve the issue through their traditional administrative means, for example, by creating a science-research centers, working in the China-related field, or by creating government enterprises advancing Kazakh goods and service on Chinese markets. Logically, there should be several of such corporations, even a few dozen, since provincial markets in China, in their size largely exceed the entire Kazakh economy.

Thus, in conclusion of this article we will once again list main reasons, explaining passive behavior of Akorda in the Chinese field. First is the cautious attitude towards China from Russia, still Kazakhstan’s main ally; second is fear and distrust from the population. Next, third reason is inertness, standard fro Akorda, which is still primarily concerned with keeping domestic stability and still believes that investors will come to the country on their own terms, as soon as ratings will be higher. This reasons understandable, but cannot serve as a justification.


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