THE SPECIFICS OF MODERN TRADE RELATIONS BETWEEN KAZAKHSTAN AND CHINA: EXPERT ASSESSMENTS

04.02.2019

Author: Marat Shibutov

In the post-Soviet intellectual tradition, geopolitics usually exists in the form of various colorful models that allow us to understand the current political situation in the world. They are, of course, popular and attractive to the average listener, but the trouble is that they are made up of non-professionals.

“Geopolitics” still stands for “political geography”, and this is not a propaganda tool, but a science, and it is based on the results of the same military geography and economic geography. You can’t base your analysis only on media content that is heavily implicated in conspiracy theory — you need to look at the realities. Moreover, these realities change over time, and moreover, they need to be constantly rechecked.

Let’s take a simple example — the relations between Kazakhstan and China. According to the traditional model, the situation is as follows:

Kazakhstan is a country rich in natural resources that China needs;
China buys these resources, and in return sells various goods, mainly consumer goods, but partly also equipment;

The trade balance is in favor of Kazakhstan, because China needs a lot of raw materials;
China will buy raw materials constantly and in large volumes, as its economy requires it.

In principle, in one form or another, these theses have been present for many years in the analysis of Kazakh-Chinese relations, that is, everything fits into the model of “a raw country — an industrial country”.

But is it so? Especially at the present time? Maybe some time ago I would have said myself that yes — it is so. But now I think that we need to check the numbers. We take data on exports from Kazakhstan to China and compare both Kazakh and Chinese data.

The maximum difference between the data of the customs authorities is $ 1.8 billion in absolute terms and about 50%. But in recent years, the difference is 10%, which is quite consistent with the difference in methodologies. So we can assume that the export data for recent years roughly coincide.

However, it should be noted that the constant growth of Kazakhstan’s exports to China ended in 2011, then remained stable for a couple of years, but then began to decline. Most likely, this trend stopped in 2018, but in any case, exports to China are far from peak values. And the matter, apparently, is no longer in prices, but in the fall in prices and volumes, which is much worse.

Now about the import. Here are the main problems. The difference between the Kazakh and Chinese data is very significant — the Chinese figures are 2-2. 5 times more than the Kazakh ones.

At the same time, an interesting phenomenon is visible — in 2011, mass arrests of a group of smugglers were made in Khorgos, which became the largest case of smuggling in Kazakhstan for all time. And then there is a drop in the difference between Chinese and Kazakh import data in 2011-2013. That is, tough repressive measures have had an effect of $ 1-2 billion annually. Then, however, the situation worsened again, but nevertheless the effectiveness of anti-corruption measures is visible.

And, finally, we turn to the trade balance for goods between Kazakhstan and China. According to Kazakh data, Kazakhstan has had a positive balance in trade with China for all 17 years, although it has been declining in recent years. It reached its maximum value in 2011.

According to Chinese data, 8 out of 17 years were with a positive balance for Kazakhstan, and 9 with a negative one. At the same time, in 2017, the negative balance reached a maximum of minus 5.2 billion dollars, which indicates a large imbalance.

In general, if you look at the chart, you can see that since 2014, according to Chinese data, Kazakhstan’s trade balance has been steadily negative. You can joke that this is the result of the” Belt and Road Initiative”, but in fact it is the result of the growth of smuggling.

As a result, according to the author, it follows from the above data that a new model of relations between Kazakhstan and China is currently being observed. This, according to the expert, is manifested in the following aspects. The author, in particular, expresses the opinion that Kazakhstan is reducing exports to China, which means, in his opinion, the importance of the PRC as a sales market is falling.

In his opinion, Kazakhstan is important for China only with the supply of uranium. At the same time, imports from China continue to grow, as well as the negative trade balance for the Republic of Kazakhstan. From an exporter of raw materials to the Chinese market, Kazakhstan has turned into a preferential buyer of Chinese goods that are used for its own consumption and possible subsequent resale.

In fact, due to the criminalization of commodity flows, the economic relations between Kazakhstan and China have changed. However, according to the expert, this has not yet been realized by both sides. Thus, it seems that it is necessary to constantly monitor the relations of countries, because their roles and the type of interaction can change quite quickly for one reason or another. In the future, unpleasant surprises may appear when there is a discrepancy between what is in the statistics and what is available in reality.

Published by the Center for the Study of China with the author’s permission.
Source: https://regnum.ru

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