Decade of China’s Belt and Road Initiative: Kazakhstan’s role
This year, the Belt and Road Initiative (BRI), a massive infrastructure development project, marks a decade since its launch. Kazakhstan, the country where the initiative was announced, plays a pivotal role in this endeavor. More about Kazakhstan’s role in BRI, what opportunities and challenges BRI entails and what stands ahead is in the latest article of Kazinform.
What is BRI?
The BRI is a massive infrastructure and economic development project initiated by the Chinese government in 2013. It was announced by Chinese President Xi Jinping during his visit to Kazakhstan in September 2013.
“Building high-quality, sustainable, risk-resistant, reasonably priced, and inclusive infrastructure will help countries to fully utilize their resource endowments,” said Xi Jinping back then.
BRI aims to enhance regional connectivity and promote economic cooperation across Asia, Europe, Africa, and beyond. The initiative is comprised of two main components: the Silk Road Economic Belt, which focuses on overland connectivity, and the 21st Century Maritime Silk Road, which focuses on maritime routes.
The objective of the Silk Road Economic Belt is to enhance China's land-based transportation connections to Europe and Asia through six major corridors within the BRI. These corridors include the New Eurasian Land Bridge Corridor, the China – Central Asia – West Asia Corridor, the China – Mongolia – Russia Corridor, the China – Pakistan Economic Corridor, the China –Myanmar – Bangladesh – India Corridor and the China – Indochina Peninsula Corridor.
The Maritime Silk Road aims to construct new ports or enhance existing ones along the sea routes connecting China's coastline. These sea routes consist of two main pathways: one that passes through the South China Sea, crosses the Malacca Strait, and extends to the Indian Ocean, ultimately reaching Europe and another that traverses the South China Sea and extends further into the South Pacific.
BRI in numbers
As of the end of June 2023, China has inked more than 200 documents on jointly building the BRI with 152 countries and 32 international organizations.
According to different estimates, China invested up to $1 trillion in this initiative and signed more than 3,000 cooperation projects.
“In 10 years of the existence of the BRI, global connectivity has been strengthened and infrastructure projects have spread throughout the world. Secondly, a solid foundation was created for intensifying trade, economic and cultural-humanitarian ties in the Eurasian space. All this contributes to solving common problems,” said Vladimir Norov, the former minister of foreign affairs of Uzbekistan and a former secretary-general of the Shanghai Cooperation Organization.
China’s Ministry of Commerce indicates China's trade in goods with Belt and Road countries grew from $1.04 trillion in 2013 to $2.07 trillion in 2022, with an average annual growth rate of 8 percent.
The 2019 study published by the World Bank noted that if implemented fully, the program has the potential to elevate 32 million individuals from moderate poverty, defined as those with a daily income of less than $3.2. It may also contribute to a maximum increase of 6.2 percent in global trade, with BRI participating economies experiencing an even more significant boost of up to 9.7 percent.
Global income could see a rise of as much as 2.9 percent, while low-income corridor economies may witness an increase in foreign direct investment of up to 7.6 percent.
Yet, while these figures may look substantial, for some nations, the expenses associated with BRI-related infrastructure could surpass the potential benefits.
Kazakhstan’s crucial role
Kazakhstan, the world's largest landlocked country, occupies a crucial position in the BRI. Its geographical location connects China to Europe through the Eurasian landmass, making it a vital transit corridor.
President Kassym-Jomart Tokayev has repeatedly emphasized Kazakhstan’s commitment to BRI, including his latest remarks at the Xi’an summit with Central Asian and Chinese counterparts in May.
Kazakhstan’s involvement in BRI directly aligns with its strategic goal of enhancing transport and logistics potential. The nation, which invested in this sector nearly $35 billion in the past five years, seeks to bring the share of the sector to 9 percent of GDP from the current 6.2 percent.
“As China’s closest neighbor and reliable partner, we will continue to actively participate in the joint construction of the Belt and Road. An important step in this direction will be the early opening of the third railway crossing on the Kazakh-Chinese border. One of the key sections of the China – Central Asia – Europe route is the Trans-Caspian International Transport Route. At the current stage, this artery has acquired strategic importance. We intend to systematically increase its capacity by introducing digital solutions and modernizing infrastructure,” he said back then.
Kazakhstan was the first country to confirm its participation in the groundbreaking project, said Aidar Amrebayev, director of the Center for Applied Political Science and International Studies.
He noted that Kazakhstan’s active participation in the project stems from a longstanding strategic partnership marked by the highest level of cooperation.
“A decade ago, Kazakhstan made history by becoming the first country to confirm its participation in this extensive collaborative initiative right here at Nazarbayev University. This stands as proof of the mutual understanding and compromises that our countries have achieved. In all our undertakings, our decisions are rooted in political trust, and that trust is clearly evident in this context," said the expert.
A strategic and enduring partnership
In 2022, Kazakhstan and China celebrated 30 years since the establishment of diplomatic ties. According to the Bureau of National Statistics, in 2022, the volume of bilateral trade amounted to $24.1 billion, of which exports of Kazakhstan reached $13.1 billion dollars, and imports - $11 billion.
Between January and July 2023, the volume of bilateral trade amounted to $16.3 billion, including Kazakhstan’s exports – $7.6 billion and imports – $8.6 billion.
As of 2022, China’s foreign direct investment in Kazakhstan hit $1.4 billion, while gross investments made up $23 billion.
Amrebayev highlighted that industrial collaboration plays a crucial role in the Kazakh-Chinese partnership, serving as a driving force within the BRI. China and Kazakhstan have jointly identified an extensive list of 52 projects with a combined value exceeding $21.2 billion. He said half of these projects are either completed or currently in progress.
“I've personally visited some of these locations, such as the Shymkent oil refinery reconstruction and the establishment of the new CaspiBitum enterprise in Aktau, which is Kazakhstan's sole oil refinery dedicated to producing air-blown road bitumen," Amrebayev stated.
Experts say Kazakhstan benefits a lot from the involvement in BRI. “This is not surprising,” said the World Bank in its 2020 case study.
“As a large land locked country, its integration with the world is highly dependent on the quality of cross-border transport and that depends as much on its own transport network as it does on those of its neighbors. For more than a decade, Kazakhstan has invested substantially to improve its own network, but due to more limited improvements in trade facilitation and limitations of resources in many neighboring countries, the gaps have been difficult to fill,” reads the report.
Connectivity is a central goal
Connectivity is a fundamental aspect of the broader objectives of the BRI, and the development of physical infrastructure, such as roads, railways, and ports, is part of this effort.
“In 2016, China officially launched the first freight train, China and Europe, heading to Poland. Since 2016 to 2022, freight trains from China to Europe grew from 1,700 to 16,000 a year, with an average growth rate of 55 percent. Annual value of freight cargo grew from $8 billion to $75 billion,” Norov explained.
Amrebayev also noted Kazakhstan’s pivotal role in the connectivity effort.
“It is clear that the Silk Road Economic Belt is intended to facilitate engagement between significant and self-sufficient markets, notably China and the European Union. We find ourselves at a pivotal point along this transportation route, with a commitment from our nation's leadership to transform into a prominent hub that links western and eastern regions, as well as northern and southern regions," Amrebayev said.
Impact on Central Asia
The BRI has funded numerous infrastructure projects, including the Khorgos Gateway, which has become a major dry port and transshipment point.
Vladimir Norov also emphasized the positive impact of Central Asian countries' involvement in the BRI.
The initiative also includes energy and resource projects, such as pipelines and power plants, that help ensure a stable and reliable supply of energy and raw materials to participating countries.
He highlighted the significance of a gas pipeline project that was inaugurated in 2009, stretching from Turkmenistan to China and passing through Uzbekistan and Kazakhstan, ultimately reaching Xinjiang.
The Central Asia-China Gas Pipeline consists of three segments that originate in Gedaim, situated on the border of Turkmenistan and Uzbekistan. These segments traverse central Uzbekistan and southern Kazakhstan before reaching their destination in Horgos, located in China's Xinjiang.
"Over the years, this pipeline has transported an impressive 423 billion cubic meters of gas to China, significantly improving the lives of more than 500 million people," he said.
In addition to the gas pipeline, several other vital infrastructure projects have been completed in Central Asia as part of the BRI. These include a 100-megawatt wind farm in Zhanatas, located in southern Kazakhstan, the Turgusun hydropower plant in eastern Kazakhstan, the China-Kyrgyzstan-Uzbekistan highway and the Vahdat-Yavan section of the Dushanbe-Kurgantube highway.
Norov also noted the construction of a heat power plant in Dushanbe, Tajikistan, has not only addressed energy shortages but also played a pivotal role in upgrading central heating systems in the capital.
In 2022, China's trade with the five Central Asian countries saw a notable surge, reaching a total of $70.2 billion. Kazakhstan played a significant role in this trade, accounting for a substantial 45% share.
Data provided by China's Ministry of Commerce indicates that by March, China's direct investments in the five Central Asian nations had exceeded $15 billion. Furthermore, the cumulative turnover generated from completed projects in the region had reached an impressive $63.9 billion.
Norov proposed that China and the European Union should work together by harmonizing the BRI with the EU's Global Gateway connectivity project.
"The merging of the Belt and Road Initiative and the European connectivity initiative would be advantageous for all nations, particularly the landlocked countries of Central Asia. Both the European and Chinese parties should play a role in turning Central Asia into a significant transportation route. This would be beneficial for all countries involved,” said Norov.
Challenges remain
One of the problems facing the BRI is the need to simplify customs procedures.
“The pandemic, as well as the rapid growth of trade and e-commerce, has revealed the need for major changes in the transport and logistics system of the Belt and Road. One of the problems is delays often caused by lengthy customs procedures, security checks, and the need to change trains in accordance with different standards. Automation of customs procedures using the IT projects of the digital Silk Road can significantly reduce the processing time for goods for European and Chinese customers,” said Norov.
Other experts also raise concerns about the debt burden incurred by participating nations. Investigations and reports have shed light on countries struggling to repay loans from Chinese lenders, leading to concerns about debt sustainability.
Some critics have also documented the environmental consequences of BRI projects, including deforestation, habitat destruction, and carbon emissions. These stories have highlighted the need for sustainable development in infrastructure projects.
At least 90 countries will participate in the third Belt and Road Forum for International Cooperation (BRF) in Beijing in October, which will focus on the achievements in 10 years of initiative, opportunities and challenges ahead.
