Kazakhstan may become Chinese raw materials appendage: expert

Tengrinews has interviewed experts about benefits and downsides of trade expansion between Kazakhstan and China.

Focusing on the fact that Kazakhstan is mainly a producer of raw materials and China is the largest exporter of finished products in the world, the analysts listed several positive aspects of expansion of trade with China.

First of all, according to Victor Neustoyev, an analyst of Wild Bear Capital investment company, Kazakhstan's economic growth is staggering and any available means should be used to prop up the economy, which is exactly what the government is doing when it is increasing its trade turnover with China.

"First of all, we are talking about supplying raw materials (mainly oil, gas and metals) to China and importing consumer goods from China. I believe that at this stage Kazakhstan will benefit from increasing the shipments of raw materials to China. We first need to make sure that our economy is up and running, and only after that we can afford a luxury of engaging in measures to make it healthier. Population has already faced serious problems as a result of devaluation of the tenge (Kazakhstan's currency), so further contraction of the real GDP will hit the citizens even harder,” Naustoyev maintained.

Another expert, Senior Analyst of Alpari firm Anna Bodrova pointed at recent political events. She expects Western sanctions against Russia to negatively affect Kazakhstan that borders on Russia. “Losses from hostility of Western markets can be partly compensated but resorting to the Chinese market. China will not become a full replacement for the western customers, but it is still an option,” Bodrova said. She emphasized that China was able to generate a continuous demand, and it was definitely an upside of partnership with China.

Finam Management analyst Maxim Kliagin also believes in the positive nature of Kazakh-Chinese trade development. According to him, an increase in trade turnover will increase export revenues and contribute to the growth rate of Kazakhstan's economy. Besides, the increase in Chinese imports “will provide access to modern technologies and competencies and improve provision of the population with up-to-date consumer goods", he said.

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