Guest post: can China help Kazakhstan to diversify? – by Usen Suleimen and Xiaojiang Yu (Financial Times/Beyond -BRICS – September 9, 2013)

Dr Usen Suleimen is ambassador at large, Ministry of Foreign Affairs, Kazakhstan. Dr Xiaojiang Yu is associate professor in the department of geography at the Hong Kong Baptist University.

The visit of Xi Jinping, China’s president, to Kazakhstan last weekend and the signing of $30bn of new agreements is another symbol of the growing closeness between two of the world’s largest countries. It is a relationship built on mutual challenges, geographic proximity and energy, as China increasingly looks to central Asia to power its growing economy.

But these links have also raised alarm bells in the west. Kazakhstan and Turkmenistan, the region’s main producers of oil and gas, have been warned against letting China dominate their economies. China has found itself accused of a modern colonialism as part of a new ‘Great Game’ and of plundering the natural resources of poorer, weaker countries.

From Kazakhstan’s perspective, such fears are badly misplaced. Our two countries have had warm relations for more than 20 years, fostered by close links at senior government level. We cooperate on a range of foreign policy issues, including through the Shanghai Co-operation Organization and the Conference on Interaction and Confidence-Building Measures in Asia.

Economic ties have been driven by China’s need for energy and its willingness and ability to invest. China’s own oil fields can only meet half its needs, a figure expected to fall to 20 per cent by 2030.

China’s energy security concerns, however, rest as much on the location of supplies as on its need for imports. The country still depends on the politically volatile Middle East for nearly half its oil imports. The vast majority arrive by sea through the Straits of Malacca, which makes them susceptible to disruption.

This is why the opportunity to import energy overland from central Asia has proved so appealing. Kazakhstan and Turkmenistan can produce far more oil and gas than they need, with production set to soar. The giant Kashagan field in the Caspian Sea, in which it was announced last weekend that China was taking a stake, could catapult Kazakhstan into the top five global oil exporters.

China has already invested significantly in building pipelines and in buying stakes from existing and new oil or gas fields. Oil first flowed along the Atasu-Alashankou pipeline to China in 2006. As the pipeline is extended, the annual capacity of oil export has been increased from 10m to 50m tonnes. China now takes 22 per cent of Kazakhstan’s oil exports.

Later this year, a new 3,000 km gas pipeline from Kazakhstan to Khorgas in Xinjiang will come on stream to supply China with, at first, natural gas from Turkmenistan and Uzbekistan. More links are planned so that central Asia can play an increasing role in closing China’s energy gap.

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