In the loving arms of dragon

Dosim Satpaev

Let’s speak without using the diplomatic language! We should admit honestly that China is not only the strategic partner for Kazakhstan but also the source of certain alerts, first of all in the energy field and within the bounds of Shanghai organization of cooperation. However, we are just extra source of raw materials for the Celestial Empire itself. Therefore, let’s concentrate on the assets and the growing economic, military-political contacts of two countries: from the viewpoint of our country’s national interests.

War for some, Motherland for others!
Most of the experts of world class consider that economic stagnation, the ghost of which is wandering around Europe, would probably lead to the replacement of the leading country of international economy. Particularly, George Soros states that the status of USA as economic superpower is not ensured any more: the going financial crisis has weakened its ability to compete with other growing economies such as China and India. Moreover, he considers that the current crisis on the world market is not only crash but also the end of 60-year credit boom based on the dollar as world’s reserve currency.
More and more the West falls under the influence of new economies of Asia, Middle East and Russia. Indeed, the rise of volatility of world market has led to the fact that on the one hand the investors of these regions have begun to increase their presence in many spheres of economy of the most Western countries including USA. On the other hand, the maintenance of high rates of economic growth of the same India or China performs the function of cushioning spring for the whole world market. As Yegor Gaiday thinks, in the near future China will move to the mode of convertibility of its currency-it would make Yuan the world’s third reserve currency. Russia has also got good chances, which has long been listed in the perspective group of economic leaders within the bounds of BRIC (Brazil, Russia, India and China). All these things are the evidence of the fact that the permanent replacement of hegemons is happening in our eyes. At that, the two of claimants are the geographically closest neighbours of Kazakhstan!
How not to find yourself between the Russian “hammer” and the Chinese “anvil” under such conditions?
At that, it is more or less evident that namely China has got more benefits from the new processes in the world globalization and it is obvious that it would leave Russia behind in the competition for becoming economic center of planet. Certainly, it would happen if China manages to settle its internal problems. It is predominantly extensive development of manufacture at its highest cost, the low qualification of the most of workers, accordingly, the low quality of production. It is less efficiency of State companies which cover unemployment. It is the more deepening division of the country into backward agricultural and booming industrial regions and the social stratification as well. China more and more resembles the “steam boiler” which may explode one day.
All these facts make us be more careful in weighing the real dangers and advantages from the cooperation with China. Namely because of this fact, the active economic and military-political contacts of Kazakhstan and China has got considerable importance from the viewpoint of national interests of our republic. That’s why, the visit of Kazakhstan’s Prime Minister Karim Masimov to China, which took place at the beginning of April, arouses great interest.

From the diplomatic poetry to the energy prose
Let’s begin from the energy field, the major natural advantage for Kazakhstan. Already now the Chinese companies control the minefields Kenkiyak and Zhanazhol, oil company “PetroKazakhstan” and oil-mining company СNPС-Aktobemunaigaz; they hold 100% of shares in this company, which develops the minefield Northern Buzachi. The dependence of Kazakhstan on Chinese companies will increase by 2010-15 years if they manage to take control over the large minefields on the Caspian shelf. Most probably, with this aim China takes part in the construction of oil-pipeline Kenkiyak-Atasu-Alashankou so actively. The next project may become the construction of gas-pipeline again in the direction of China. It lowers the dependence of republic on the Russian company “Gasprom”, which controls all the transit routes of gas export from the countries of Central Asia, but gives a birth to the ghost of new monopoly. It is just enough to remember the historical event which took place on the 5th November of 2007 when “ExxonMobil” has let “PetroChina”, the largest Chinese company in the field according to the sizes of market capitalization, to take its place on the world oil market. 
According to expert judgments, the Chinese market has absorbed third of the increased world’s oil offer since 2005. In May of 2003, China started to form the strategic reserves of oil repeating the European and American strategy. According to the forecast the countries of OPEC will have provided 66% and the former USSR 20% of Chinese oil import by 2025. The demand of China for oil makes up 6.5 million barrels per day or the eight percent of world’s consumption. At that the share of raw materials in the import makes up more than 40%; as a result the country firmly occupies the second place according to this figure.  
However, our republic together with other countries of Central Asia shouldn’t rely on the fact that Chinese business will come to other non-raw-material sectors of the country, especially, to the sphere of high technology as well. We should be realistic and understand that China is interested in us first of all as new sources of raw material. It is so sad that we cannot be equal partners with China at the present moment. For the Celestial Empire, the countries of Central Asia are mostly the new sources of power resources which don’t fit the intention of Kazakhstan to tear itself away from the status of “appendage of raw materials”.
At that, the investment policy of China in Kazakhstan doesn’t differ from its investment policy in other countries and regions of the world, whether it is Africa, Latin America or Middle East. It is always based on the strict insistence of national, economic interests of China which should be taken as an example by our officials. According to energy conception of China, its officials intend to form energetically self-sufficient society. With this aim, in recent years, the Chinese show great interest in the participation of developing minerals on their own territory and alien territories as well. China wants to create energy cooperation with neighboring countries including Kazakhstan. By the way, the prime-Minister of China Wen Tzyabao has again emphasized the necessity of close cooperation with Kazakhstan for successful realization of joint oil-gas projects during his meeting with Karim Masimov.
Namely because of this fact, understanding the interest of China mainly just in power resources of the country, one of the tasks standing before Karim Masimov was the reorientation of Beijing to the direction of cooperation in the non-raw-material field. The result has become the signing of the Plan of measures for realization of the Cooperation Program in the non-raw-material sectors of economy.
However, what confuses us is that such attempts have already been made. It is enough to remember the official visit of Kazakhstan’s President to China on 19-23 December of 2006, when the decision about establishing Kazakhstani-Chinese fund for financing the projects in Kazakhstan and China with the participation of Kazakhstani Sustainable Development Fund “Kazyna” and The State Development Bank of China was taken. In the first stage, it seemed that Kazakhstan and China have agreed about the mechanism of joint financing the large infrastructural and investment projects. At that time, it was said that the total volume of potential investments could reach 5bn $. It was also said that Fund “Kazyna” together with Chinese companies would make up the range of projects in such fields as metallurgy, telecommunication and informational technology. With this intention, “Kazyna” planned to open its offices in Beijing, Hong Kong and Urumqi. However, during the visit of Karim Masimov to China nothing was said about the existence of such offices. Moreover, Prime-Minister of Kazakhstan has again emphasized that the structure of Kazakshtani export to China keeps pronounced direction of raw-material direction.
We can just imagine what expects Kazakhstan in case of its entrance into WTO. In this case, the final transformation of the country into the product market for Chinese import in return of raw materials is fully realistic.

How to make Kazakhstani lemonade from Chinese lemon?
Naturally, there appears such question as what advantages Kazakhstan can get from the neighborhood with the future world’s economic center? The given question is important from the viewpoint of security of our economic interests and ensuring at least some competitiveness. First of all, we should consider the spheres where we cannot compete with China. In the first place, we are talking about the serial, mass production of any kind of products. Our advantage must be the unique offer of goods. The establishment of science intensive production with higher export potential, the manufacturing of the products of oil and gas refinement, the export hard wheat of high-quality, the usage of transit potential, the uranium reprocessing , the development of hard-to-copy “wise technology” can be related to the list of such offer. We should use the Chinese only as consumers of our production or as contractors in the production of components. Besides the purchase of industrial assets in China has also got strategic importance, which Kazakhstani business tries to do in other countries.
Now the major task of Kazakhstan is to take more pluses than minuses from the neighborhood with China. As it is said it should “Make lemonade from lemon”. More or less it depends on the precisely developed strategy of cooperation with China in the short-term, medium-term and long-term perspective subject to all possible problems and benefits. One of the examples can be the transport initiative of China for providing the transport exit to Iran and Europe, which is beneficial for Kazakhstan as well. Particularly, the plan of construction of transkazakhstani railway route from the bordering station Dostlyk to Turkmenistan and then further through Iran and Turkey to Europe is considered. China together with Kazakhstan, Kyrgyzstan and Tajikistan has launched 87 haul routes in all including 43 passenger and 44 cargo routes. China also joins the railway project “Kars-Tbilisi-Baku”. After the opening, the transport route would turn into the modern Silk Road and it would be possible to head for Shanghai or Hong Kong directly through Kazakhstan from Kars.
In its turn, the activity of Chinese business is possible not only in the energy sphere of republic or in the field of delivery of consumer goods. We should pay attention to the statement of Beijing about the necessity of support for entering the national capital into foreign markets and realization of transnational economic activities. By the way, the wish of Kazakhstan to enter the list of 50 competitive countries and become the member of WTO expands automatically the chances of transnational companies to conduct a business in the country. It concerns the Chinese TNC as well. The transnational companies of China occupy the half of places in the world’s rating of 100 largest transnational companies of the developing countries, which has been published in “The report about world’s investments of 2006”. In its turn, the number of companies with the participation of Chinese capital beyond the borders of China makes up over 10 thousand. According to the data of Ministry, 54.7% of Chinese capital investments have been spent for full obtainment of companies with 100% of participation in the capital. And almost 90% from the total volume of investments has been invested in more perspective fields-telecommunications, automobile industry and the development of natural resources including in Kazakhstan as well.
Here we can note about the bank structures of China as well, which are ready to come to the financial market of Kazakhstan already as potential purchasers of Kazakhstani banks. Taking into account that this process has already begun in our republic, the given perspective is absolutely possible. Therefore, we should be ready that the activity of Chinese financial structures in Kazakhstan may provoke the serious change in the balance of forces in banking system of the country. At that the Chinese investment expansion in Kazakhstan will possibly take place in the agricultural field as well. Especially, the investments would be made in the field of wheat production, the demand for which will grow year by year in China since according to the forecast; by 2030 China would need 650 million tons of food supply in order to feed 1.6 billion people yearly. In general, judging the volume of investments and activity namely Kazakhstan is the regional priority for China in economic sphere. It can be supposed that the increase of economic influence of Chinese companies in Kazakhstan may lead to the appearance of prochinese lobby from the number of political and business elite.
Per se, we are talking about greater increase of economic activity of China in the different regions of the world including the Central Asia, where this process has already begun. The Shanghai organization of cooperation remains as the only possibility of participation on equal terms in the regional geopolitics for China. Here the China has the chance to attract the countries of the region by means of economic programs. That’s why, the activity of China in lobbying the ideas about increasing the economic constituent within the bounds of SOC is so flaring.

The Chinese stake on the “two-wheel” SOC
SOC has got the potential because of the fact that it is the only regional organization, which China may use as an instrument of influence on the countries of Central Asia. It would be more possible with the strengthening of the Chinese factor in the region, which already takes place.
At the same time, there is misunderstanding of that role, which SOC should play in the near future. For China it is the establishment of new united economic environment that is in the opinion of Chinese side, SOC must have two wheels: “security” and “economic cooperation”. Others see SOC as the favorable chance for the countries of Central Asia to become the linking point between the West and the East. The third side considers SOC as the child of artificial impregnation and artificial feeding, the appearance of which was the forced necessity. And the fourth side in the first place the countries of CA themselves consider SOC as the new provider of security, which together with CSTO and NATO is ready to participate in the tender for doing the anti-terror services.
And here China has got what Russia doesn’t have, namely the possibility of attracting the countries of the region through economic programs. The speech is not about establishment of some analogue of EuroAsian Economic Community or the Organization of regional initiative. Most probably, it means more intensive investment activity of the Celestial Empire in Central Asia. However the mechanism of joining the gigantic Chinese economic potential with different economic systems of Central-Asian States, which fear to be absorbed in the course of Chinese trading expansion, isn’t still clear.

The strategic line of Chinese administration to form the society which is made up of the people with average welfare in the country is called the “syaokan” policy. This term has been brought to the political speech by Dan Syaopin in his times.  Evidently, that under such culture of making reforms –the growth of the life level of average Chinese is connected only with the maintenance of high rates of the country’s economic development by any means. In the first place, it should be done by means of utilitarian usage of newer and newer resources including the raw materials as well. As it was noted by Hu Tzintau himself, China would have to pay off with resources and ecology for the growth of its economy. And in such draft, unfortunately, Central Asia would be given the role of appendage of raw materials, which fully satisfies Beijing. The line of easily seen problems stands behind all these things and first of all they are in the field of ecology for Kazakhstan.

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