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Analysis of China’s Economic Strategy and Foreign Policy in Kazakhstan Nur-Sultan, 2020 UDC BBK Team of authors: Fatima Zhakypova Timur Shaimergenov Dauren Oshakbaev Fatima Gerfanova Bolat Issayev Dmitry Kim Ivan Zuenko Iskander Akylbaev Rakhim Oshakbayev Analysis of China’s Economic Strategy and Foreign Policy in Kazakhstan: analytical research – Nur-Sultan, 2020. – 153 p. ISBN The TALAP Center for Applied Research together with the Konrad-Adenauer-Stiftung conducted a study on Kazakh-Chinese cooperation covering its past, present and future. The paper includes an analysis of the Belt and Road Initiative and reveals a set of factors that determine the role of Chinese investment in the development of the Kazakh economy. It furthermore provides an assessment of the impact of Chinese labor on the Kazakh labor market, and looks at trends in the development of China's “soft power” in Kazakhstan. Based on the results of a sociological survey, a China Perception Index was created to determine the assessment of China in Kazakhstan. This led to a set of recommendations for the development of Kazakh-Chinese interaction. This research is of interest to government agencies, entrepreneurs working or intending to work with Chinese partners, experts, students, and any members of the general public interested in learning more about cooperation between Kazakhstan and China. UDC BBK @ Konrad-Adenauer-Stiftung ISBN @ TALAP Contents Acronyms and Abbreviations ................................................................................................ 4 List of figures ........................................................................................................................... 5 List of tables ............................................................................................................................ 8 Summary .................................................................................................................................. 9 1. The Belt and Road Initiative: China’s global vision ........................................................ 10 1.1 The Belt and Road Initiative as a reflection of China’s vision of a new world order ....................... 10 1.2 The Belt and Road Initiative as a recent “paradigm of international relations”: what should Central Asia expect? .......................................................................................................... 20 1.3 Between the “Chinese model” and the “Chinese strategy”: Kazakhstan’s experience ................... 32 2. Cooperation or dependency: prospects and challenges of Kazakh-Chinese relations ................................................ 38 2.1 Analysis of fifty-six Chinese infrastructure projects: impact on Kazakh economy ................................................................................................................... 38 2.2 Investments or loans: the specifics of Chinese capital ....................................................................... 43 2.3 Cross-border trade assessment: the Khorgos case ............................................................................ 50 2.4 Expansion of the Chinese workforce: myth or reality? ....................................................................... 60 2.5 Digitalization of relations: introducing Chinese technology giants into the Kazakh market ....................................................... 65 3. “Panda” or “dragon”: difficulties in perception ............................................................. 71 3.1 Development trends of China's “soft power” in Kazakhstan: education, culture and mass media ...................................................................................................... 71 3.2 Results of the China Perceptions Index in Kazakhstan analysis ........................................................ 82 3.3 Xinjiang economic development: the environmental and social impact on Kazakhstan ....................................................................... 121 4. Ways of Chinese cooperation: advice ........................................................................... 126 4.1 Status quo: has Kazakhstan developed a current political strategy? ............................................. 126 4.2 “Keeping a balance of interests”: implementing EU and other extra-regional potential in cooperation with China .................................................................................................................... 139 5. Conclusion ....................................................................................................................... 148 3 Acronyms and Abbreviations BRI Belt and Road Initiative AIIB Asian Infrastructure Investment Bank AC Agroindustrial Complex ASEAN Association of South East Asian Nations «IAC» JC "Information and Analytical Center" Joint Stock Company of the Ministry of Education and Science of the Republic of Kazakhstan BRICS countries Political and economic union of the following five countries: Brazil, Russia, India, China, and South Africa NPC National People's Congress EU European Union GDP Gross Domestic Product HEI Higher Education Institution LRK Law of the Republic of Kazakhstan BRI Belt and Road Initiative SRC MF RK State Revenue Committee of the Ministry of Finance of the Republic of Kazakhstan CCP Chinese Communist Party PRC People's Republic of China SC МNE RK Statistics Committee of the Ministry of National Economy of the Republic of Kazakhstan MES RK Ministry of Education and Science of the Republic of Kazakhstan RLA Regulatory legal acts CSTO Collective Security Treaty Organization OBOR “One Belt and One Road" UN United Nations Organizations RK The Republic of Kazakhstan USA The United States of America XUAR Xinjiang Uygur Autonomous Region SCO Shanghai Cooperation Organization CCP CC Central Committee of Chinese Communist Party 4 List of figures Figure 1. Routes of the Belt and Road Initiative....................................................................................... 11 Figure 2. The share of Central Asian countries in China’s total exports, in % ...................................... 21 Figure 3. China’s share in the exports of the Central Asian countries, in % ......................................... 22 Figure 4. International Motor Traffic Corridor “Western Europe-Western China” .............................. 25 Figure 5. Dynamics of trade turnover of Uzbekistan and China (billion dollars) ................................. 27 Figure 6. Enterprises with Chinese participation by regions of the Republic of Kazakhstan as of May 1, 2020 .............................................................................................. 36 Figure 7. Distribution of projects by areas ............................................................................................... 39 Figure 8. Distribution of projects by economic sectors .......................................................................... 40 Figure 9. Dynamics of direct investments of the PRC allocated abroad in 2000-2018, mln. US dollars. ............................................................................................................................ 43 Figure 10. Ratio of foreign direct investment to the country’s GDP,%, 2000-2018 .............................. 44 Figure 11. Direct investments of the PRC received by recipient countries in 2018, bln. US dollars, % ...................................................................................................................... 46 Figure 12. Direct investments of the PRC accumulated by recipient countries by 2018, bln. US dollars % (according to the Ministry of Commerce of the PRC) ............................ 46 Figure 13. Total number of foreign workers by country in 2010-2017, people ................................... 60 Figure 14. Total number of foreign workers by region of the RK in 2010-2017, people ..................... 61 Figure 15. Total number of permits issued to foreign workers in 2010-2020, including Chinese citizen, people............................................................................................ 62 Figure 16. Share of permits issued to foreign workers - Chinese citizens in 2010-2020, % ............... 62 Figure 17. Permits to attract Chinese workers for the period 2010-2017 by region ........................... 63 Figure 18. Dynamics of imports of telephones and communication equipment to Kazakhstan (FEACN code 8517), mln. US dollars ................................................................. 67 Figure 19. Contingent of foreign students in the PRC (480,000), 2018 ................................................. 75 Figure 20. Dynamics of the number of Kazakhstani students in the PRC, thousand people ............. 76 Figure 21. Information about foreign students in the Republic of Kazakhstan for 2018, people ..... 76 Figure 22. Comparison of the interstate exchange of students of the RK-PRC ................................... 77 Figure 23. Number of articles with the “China” tag .................................................................................. 79 Figure 24. Topics of publications about the PRC in selected Kazakhstani media, number. ............... 80 Figure 25. Regional breakdown of respondents by RK, people ............................................................. 82 Figure 26. Comparison of respondents by region to the total number with the ratio of population of certain regions in relation to the total number of citizens of the Republic of Kazakhstan