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Chinese president stresses friendship with Kazakhstan, pledges major economic investments

09 september 2013, 11:09
1

Chinese President Xi Jinping courted Kazakhstan like a suitor bearing flowers and chocolates this weekend with a foreign-policy speech on China’s relations with Central Asia and a commitment to one of the largest investments ever in Kazakhstan’s oil and gas industry.

In the speech at Nazarbayev University he also proposed creating a new economic-prosperity belt along the ancient Silk Road stretching from Europe to China.

And he cheered the faculty and students who turned out early Saturday for his speech by announcing scholarships for 30,000 Central Asian students to study in China, a plan to train 10,000 Central Asian teachers in his country and a pledge to bring 200 Nazarbayev University instructors and students to an educational summer camp in China next year.

“I hope Nazarbayev University students take advantage” of these programs, Xi said.

You can see  Xi’s entire speech in English here:

 

The key pillars of the oil and gas investment that Kazakhstan and China announced over the weekend were:

 

-- A Chinese commitment to spend $5 billion to obtain an 8.3 percent share of the giant Kashagan oil project in the Caspian Sea, which is nearing commercial production.

-- A pledge to invest $3 billion in the second phase of Kashagan’s development. That’s great news to the Kazakh government because the project has been way over budget due to some of the world’s most challenging drilling conditions.

-- And a promise to spend an unspecified amount to help Kazakhstan build its fourth oil refinery. Refineries are very expensive propositions, so the Chinese investment would be in the billions.

Kazakhstan has three refineries – in Pavlodar in the north, Shymkent in the south and Atryau in the west. Each is undergoing billion-dollar renovations, but a new refinery will be needed to meet an increase in domestic demand by 2025, government leaders have said. And it would have the added benefit of helping Kazakhstan ramp up petroleum exports.

The oil and gas investments that China agreed to were among 22 commercial deals worth $30 billion that Kazakhstan and China signed during Xi’s visit, President Nursultan Nazarbayev announced.

The president was on the podium with Xi at Nazarbayev University, along with university President Shigeo Katsu and new Education Minister Aslan Sarinzhipov, who led the team that founded Nazarbayev University four years ago.

The 22 commercial deals will help make a reality a Xi-Nazarbayev agreement in March to increase China-Kazakhstan trade from $26 billion a year to $40 billion.

China is Kazakhstan’s largest trading partner, surpassing Russia several years ago. And Kazakhstan is China’s second-largest trading partner in the former Soviet Union, behind only Russia.

The thrust of Xi’s foreign-policy speech was that China will be a friendly and supportive neighbor to Kazakhstan and the rest of Central Asia, and that it had no hostile intentions against countries in the region nor designs on their territory.

Since Kazakhstan became independent in 1991, many Kazakhs have worried that their neighbor of 1.3 billion people would come up with a pretext to seize part of their land. The world’s ninth-largest country has large swaths of wide-open space and only 17 million people.

Xi sought to allay those fears by noting that relations between China and Kazakhstan have been friendly since Kazakhstan’s independence and will continue to be. As proof he pointed to the two countries settling a decades-long dispute over their 1,600-kilometer-long border in the 1990s that had spawned military clashes during Soviet times.

Xi’s visit to Kazakhstan is part of a Chinese initiative this month to reach out to all of Central Asia, Chinese diplomats and journalists have noted.

Xi visited Turkmenistan on September 4 and was headed for Uzbekistan and Kyrgyzstan after his three-day Kazakhstan visit.

He arrived in Astana late Friday with Nazarbayev after attending the Group of 20 nations’ summit in St. Petersburg. Nazarbayev was at the summit because Russia, this year’s summit president, had designated Kazakhstan an observer nation at the event.

Xi offered several touching “people stories” in his speech at Nazarbayev University to illustrate what he described as the longtime affinity between Chinese and Kazakhs.

The backdrop for one story was the fact that China was in the midst of a civil war between the Nationalists and Communists when World War II started in the late 1930s.

When the composer Xian Xhinghai tried to return to his country after a visit to Moscow in 1940, an anti-Communist Chinese warlord blocked his way, and Xian ended up in Almaty, exhausted and penniless.

There the famed Kazakh composer Bakhytzhan Baikadamov took him in. Xian stayed in the city until the war was over,composing some of his best-known works, including patriotic songs for the Soviet war effort.

In 1998, China’s then-president, Jiang Zemin, joined President Nazarbayev in dedicating a plaque to Xian on a street in Almaty named in Xian’s honor.

One of Xi’s other “people stories” struck a chord with the Nazarbayev University crowd because it involved a Kazakh student. Xi said Ruslan, who has been studying at a Chinese university, has made donation after donation of his rare RH-negative blood to save lives in China.

When Chinese friends asked why he was so diligent about it, he replied that he simply felt it was his duty to help others.

Xi, who recalled wistfully how much he’d enjoyed his university days, used the story about Ruslan to note that the Nazarbayev University students would be among the young Kazakhs helping to strengthen Chinese-Kazakh relations in years to come.

Xi’s proposal for a new Silk Road economic belt was intriguing, though short on detail. That was understandable for a speech that covered a lot of foreign-policy, economic and educational ground, however.

He said creation of the economic belt could start with development of scattered areas – and those clusters could be linked over time.

It wasn’t clear whether he was suggesting further development of existing cities along the Silk Road or whether new economic centers should be built from scratch.

He said five steps needed to be taken to make the economic belt a reality:

 -- China, Central Asia and other countries interested in becoming part of the economic belt should agree on policies to guide the development effort.

 

Chinese President Xi Jinping (L) speaks with his Kazakh counterpart Nursultan Nazarbayev (R) after being awarded an honorary Doctorate from the Nazarbayev University in Astana. ©AFP

Chinese President Xi Jinping speaks with his Kazakh counterpart Nursultan Nazarbayev after being awarded an honorary Doctorate from Nazarbayev University in Astana. ©AFP

 

-- The partner countries should improve road connections within their territories and with their neighbors. Kazakhstan has worked for several years to build or refurbish the largest section of the Western Europe to Western China corridor. The project will be completed in 2015, President Nazarbayev has said.

The ultimate goal of a Silk Road highway-improvement effort would be a modern road connecting the Pacific Ocean and the Baltic Sea, Xi said.

-- The partner countries should reduce trade barriers to a minimum, including customs-clearing between borders, which these days can take hours.

Xi noted that the Silk Road corridor, with 3 billion people, has the potential to become the biggest trading zone in the world. But the potential won’t be realized without steps to improve trade flows, including reducing red tape, he suggested.

-- The partner countries should take steps to broaden the number of currencies used to settle trades.

For decades the U.S. dollar has been the currency used to settle the majority of trades. That causes problems when the dollar fluctuates, with some trading countries becoming losers and some winners on transactions.

Xi’s proposal to have more trades settled in local currencies had to have pleased President Nazarbayev. He’s maintained for years that baskets of different currencies should be used to settle trades as a way of reducing the dollar’s often-negative influence on transactions.

-- The partner countries should take steps to increase understanding with each other as an underpinning of regional development.

Xi invoked Kazakhstan’s beloved poet Abai Kunanbaev in making the point that the world is one.

He noted that Abai wrote:

“The world is an ocean, time is a flowing wind, early waves are elder brothers, late waves are younger brothers. Generations change, but the calm remains undisturbed.”

 

Author:
Hal Foster

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