Kazakhstan pushes for US deals — helped by China’s investments

Kazakhstan pushes for US deals — helped by China's investments

China’s “Belt and Street” investments in Kazakhstan are paying off, permitting the Central Asian nation to advertise itself as a lovely marketplace for the U.S. and different world buyers.

Throughout a Jan. 16 go to to the White Home, Kazakh President Nursultan Nazarbayev declared a “new period of relations” between the 2 nations. That afternoon, U.S. firms signed 20 business contracts with Kazakhstan price $7.5 billion at a enterprise roundtable.

One in all three areas of collaboration named in a joint press assertion is agriculture, the place Kazakhstan’s commerce with China is rising. Produce grown within the central Asian nation travels into China by railroads and inland “ports” constructed as a part of the huge regional improvement program Beijing launched 5 years in the past.

Map of the “New Silk Street” for a railway connecting Europe to China by Central Asia

Supply: Kazakh embassy within the U.S.

“The Kazakhs have been extra profitable opening up the agriculture market in China to Kazakhstan for wheat, greens and beef than others have been,” mentioned David Merkel, a nonresident senior fellow on the Atlantic Council, a U.S.-based suppose tank. He’s additionally on the board of trustees of Nazarbayev College in Astana, Kazakhstan.

“Now due to the infrastructure constructed out due to the [Belt and Road Initiative], they’ve the market to be checked out extra favorably for investments,” Merkel mentioned.

The Kazakhs, he added, are utilizing their success in accessing the Chinese language market as “leverage to say to U.S. buyers, ‘Put money into Kazakhstan, not only for the Kazakh market but in addition the Chinese language market and what’s past China.'”

As a part of the Belt and Street Initiative, China has developed inland ports in cities reminiscent of Xi’an which can be linked by railroad to comparable hubs in Kazakhstan and stretch all the best way to Europe. The transit strains additionally unfold east. Early final 12 months, Kazakhstan despatched its first cargo of wheat to Vietnam by China, helped by railroads connecting Central Asia to a port on the jap coast of China.

Chinese language companies have already tapped into the commerce alternatives the Belt and Street railways have opened up. China has invested greater than $14 billion in Kazakhstan during the last decade, in response to knowledge cited by the Kazakh authorities.

In 2017, trains operating from Xi’an to Central Asia carried 170,000 tons of products price 1.three billion yuan ($210 million), in response to Jie Gai, undertaking supervisor in advertising for Xi’an Worldwide Inland Port Multimodal Transportation. About 75 % of these items went to Kazakhstan, Gai mentioned.

In roughly the primary three weeks of 2018, he mentioned, six trains have left Xi’an for Central Asia carrying 11 tons of products price 2.73 million yuan.

In the meantime, Xi’an Aiju Grain and Oil Trade Group has opened an oil manufacturing unit in Kazakhstan, mentioned Liu Dongming, the corporate’s vp and deputy celebration secretary. The corporate additionally works with farms within the nation that Aiju both owns or invests in.

“This 12 months, we’ll broaden in Kazakhstan,” he informed CNBC.

His firm has clearly benefited from a July 11 settlement with the Kazakh authorities for grain and oilseeds commerce. By rising produce in Kazakhstan, processing them in China, and sending them again to the Central Asian nation on the market, Liu has mentioned the corporate cuts prices by about 20 %. Thus far this 12 months, Liu mentioned, Aiju has imported 60 % extra oilseeds and wheat from Kazakhstan.

Total, Kazakhstan exported 150,300 metric tons of oilseeds to China within the advertising 12 months ended July 2017, in response to a report compiled for CNBC by the U.S. Division of Agriculture’s International Agricultural Service, citing business sources.

Just a few U.S. firms have been long-time buyers in Kazakhstan, and no less than one just lately introduced a brand new deal.

Common Electrical subsidiary GE Transportation has labored within the nation for the reason that 1990s and introduced on Jan. 17 it signed two contracts with Kazakhstan’s state-run railroad Kazakhstan Temir Zholy, or KTZ. The offers are price greater than $900 million, in response to a launch, and embody the supply of 300 “shunter” locomotives and an 18-year service settlement for 175 “passenger Evolution Sequence” locomotives.

“Our new agreements with KTZ replicate our ongoing dedication to accomplice with Kazakhstan to construct a world-class rail business that serves the area and past,” Rafael Santana, CEO of GE Transportation mentioned in a press release.

The announcement got here as a part of the U.S.-Kazakhstan agreements introduced throughout the assembly of the 2 nations’ presidents. Particulars concerning some reported “contracts on collaboration in agriculture sector” weren’t instantly accessible. The U.S. Chamber of Commerce referred CNBC to the Kazakh embassy, which didn’t reply to requests for remark.

The U.S. does not have regular commerce relations with Kazakhstan, and issues about upholding contracts and human rights points within the nation nonetheless exist. U.S. firms may want to contemplate China’s rising involvement in Kazakhstan’s improvement.

“It is an space that’s actually on the coronary heart of Belt and Street and China’s overland aspirations, that are big,” mentioned Jonathan Hillman, a fellow on the Heart for Strategic and Worldwide Research, a U.S.-based suppose tank.

However, he mentioned, participation in this system does not equal purely supporting China’s objectives.

“Regardless that Belt and Street has alternative for landlocked nations that they won’t have in any other case, they’re nonetheless interested by balancing reasonably than aligning themselves,” Hillman mentioned.

For Kazakhstan, flanked by China on one aspect and Russia on the opposite, the U.S. affords a possible counterweight.