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CHINA'S «ONE BELT - ONE ROAD» INITIATIVE
Zh. Bagitzhanova, G. Jumadilova, A. Chaukerova L.N. Gumilyov Eurasian National University
[email protected], [email protected], [email protected]
The article is devoted to the role and influence of China's "One Belt - One Road" initiative in contemporary international relations. The author describes the priority areas of China's interests in Kazakhstan.
Keywords: China, Kazakhstan, «One belt - One road» initiative, New Silk Road, «The economic belt on the Silk Road», infrastructure, trade, Central Asia.
In the 15th century, European empires discovered new sea routes and developed modern vessels and this fact led to the extinction of the network that once connected all of Eurasia. Unexpectedly, in 2013 in Astana President Xi Jinping announced the creation of the "One Belt - One Road" initiative. China's "One Belt - One Road" initiative is an economic integration project that will help Kazakhstan to use both advantageous geographical location and geopolitical benefits.The network that connects Asia, Europe and Africa promises to integrate more than 3 billion people facilitating the exchange of goods and ideas. The countries of the Silk Road in modern conditions attract China with the possibility of highspeed transit shipments to Europe as one of the main solvent and capacious market in the Eurasian area for the sale of Chinese goods, as well as the availability of a variety of natural resources (oil, gas, metals, grain, etc.).
The infrastructure project is aimed to expand China's influence through its
neighbourhood using economic soft power, as well as to achieve the goals of its geopolitical agenda. [1]
According to the available sources, the new Chinese initiative may pursue three strategic objectives:
- expansion of international and regional trade;
- creation of international transport corridors from China to Europe and the Middle East through the territory of Kazakhstan and Central Asia;
- gradual increase of China's economic presence in Central Asia as a strategically important partner.
In order to achieve these goals, the key tasks for China are:
- development of trade and economic cooperation, removal of numerous barriers and restrictions in international and mutual trade, creation of a favourable climate for investment inflow;
- the construction of the Eurasian transcontinental network of railways and highways that allow the flexible use of various international transport corridors;
- comprehensive enhancement of China's trade, economic and logistic relations with countries along the Silk Road, primarily with the countries of Central Asia;
- a connection of all links of the Great Silk Road with the help of advanced transport-infrastructure and communication networks, as well as the development of the pipeline system;
- expansion of the export of Chinese goods, especially where China has excess production facilities, particularly in its western provinces (overproduction of steel, aluminium, photoelectric equipment, wind generators, etc.);
- a mutual settlement between the participants of the Silk Road through various currencies. The countries of Eurasia along the Silk Road can be conditionally grouped into five regions, for each of which China in its initiative defines a specific role. First of all, the Central Asian region, namely Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan and Turkmenistan, is designated as an outpost for expanding trade and economic ties with Europe, Russia, Turkey and Iran. Kazakhstan and Central Asia as a whole occupy an exceptionally important geostrategic position in Central Eurasia. These countries have treasures of precious metals, ore and metallurgical raw materials, energy resources. This region plays an important role for geopolitical and economic interests of the world's largest powers (Russia, China, the United States, the EU, etc.). [2]
Investments in infrastructure and subsequent benefits have become key growth drivers for both transcontinental trade and the economy of Kazakhstan.
In Kazakhstan, significant investments were made in strengthening its position as a transit corridor. Including more than $3.5 billion of investments in the "Khorgos - Eastern Gate", a dry port on the eastern border with China. COSCO Shipping, one of the world's largest suppliers of logistics services, and Lianyungang Port Holdings Group recently acquired shares in the project, thereby making it transnational, and giving the Kazakh side the opportunity to benefit from the vast experience of its partners.
Other significant investments include the Shalkar-Beineu railway, the Zhezkazgan-Saksaul railroad and the Kuryksky port. As a result, the increase in corridors and throughput will strengthen Kazakhstan's role as a transit region. According to Samruk-Kazyna, investments in infrastructure will contribute annually to the economic development of Kazakhstan at the level of 0.1% -0.2% over the next decade. [3]
Ajsia-EU-Asia transit container traffic via Kazakhstan^ 'ooo TEU
2012 2013 2014 2015 2016 2020
"Kazakhstan Temir Zholy" and its shareholder "Samruk-Kazyna" play a central role in the development of Kazakhstan as a transit point for the Silk Road.
The role of KTZ should be focused on improving the processes to create a reliable platform for a transit of goods through Kazakhstan and "Samruk-Kazyna" should support the long-term goal of developing a multimodal transport system that includes significant investments in the distribution of electricity and transport infrastructure, influence to reduce regulatory requirements in order to facilitate the bureaucratic processes necessary for transit traffic through Kazakhstan. [3]
■ ■ it* Open tracks * Transpareiil pricing • Simplified Tariff * Unified policy/regulation • Efficiency in traction use
^r A
up j Standardization siJ * Trtfrastructure (siynalling, safety) ■ Billing system * Customs declaration * Transport documents
▼ A
r V « * • Innovation A - Digital union within EAEU - Smart logistics • Easy to order services - Customer orientation
Instruments for the successful implementation [3]
Trade between the EU and China in terms of weight and cost increases annually. China's «One belt - One road» initiative will allow speed up delivery of better products, such
as electronics and premium food. Trains of ever-larger volumes will cross Eurasia, and an improved infrastructure will allow them to transport more containers. [6]
The central position of Kazakhstan will contribute to further strengthening its position as a transit hub. In particular, it is expected that by 2050 Indian freight traffic will increase almost sevenfold, expanding opportunities for Kazakhstan.
Kazakhstan is falling behind in key indicators that affect the economy, governance and successful implementation of the «One-Belt-One Way» Initiative
The creation of the Asian Bank for Infrastructure Investments and the Silk Road Fund is a strong aspect of the Chinese initiative, which is of great importance for strengthening multilateral cooperation in the countries of the Silk Road. This will ensure the financing of joint projects in the energy, transport, communications and other sectors of the economy. [3]
SWOT-analysis of the implementation of the Economic belt of the Silk Road in Kazakhstan
Strengths Weaknesses
Favorable geographical location of the country that allows the shortest routes through the continent. Developed transport and logistics infrastructure (the product of the USSR). The consonance of the state program of Nurly Zhol and the New Silk Road. The stable socio-political situation within the country and on its borders. Growth of production and employment of the population, due to the development of transport infrastructure. High transport security of transit cargo flows. Multimodal transport system, providing a wide range of choice of routes and means of delivery. 1. The lack of a unified Concept for the development of the transport and logistics system in Kazakhstan. 2. Low level and deterioration of the technical condition of the transport infrastructure. 3. The high cost of transit of goods. 4. Presence of transport and customs barriers. 5. Lack of qualified staff and weak use of IT technologies.
Opportunities Threats
1. Diversification of transport links to enter international markets. 2. Development of the transport, logistics and information and financial system to the level of the international hub. 3. Improvement of the investment climate and investment attractiveness of the Republic of Kazakhstan. 4. Profitable self-sustaining logistics with a high level of reinvestment in its own development. 1. Transport flows pass through the sovereign territory of States. 2. Possible natural hazards and man-made disasters. 3. Preservation of the raw orientation of the national economy. 4. Strengthening China's trade, economic and migration expansion to the Kazakhstan market.
5. Increase in commodity turnover.
6. Research of the needs of the world market, for the production of export-oriented products.
7. The need for the development of dry ports for container transportation along intracontinental routes.
5. Increasing competition for Kazakhstani enterprises.
6. Increase the load on the ecological state of the natural environment.
7. Strengthening of Chinese priorities in the country.
The project "Economic belt of the Silk Road" creates new opportunities for Kazakhstan's participation in the regional division of labour and cooperation, international business and investment, development of trade in goods and services, as well as creating new jobs and developing value chains.
The implementation of the project "Economic belt of the Silk Road" in the long term will improve the transport infrastructure, provide access to Kazakhstan's seaports of the countries participating in the Silk Road, accelerate the delivery of Kazakhstani goods to world markets, increase external and mutual trade, reduce costs for domestic exporters through the elimination of trade barriers and restrictions, attract new investments and joint projects.
At the same time, the formation of the economic belt of the Silk Road will be restrained due to the existing differences in the level of socio-economic development and living standards of the countries along the Silk Road, the inadequate development of the transport and logistics infrastructure in Central Asia, the poor level of freight forwarding services, use of the rolling stock of transport, the unwillingness of local businesses to compete internationally and enter foreign markets. One of the threats for Kazakhstan may be the raw-material orientation of the national economy since the investment projects of Chinese companies are primarily related to the extraction of oil and natural gas.
Other threats include China's expansion of trade, economy and migration to the Kazakhstan market, an increase in dumping by Chinese enterprises, a priority for Chinese workers in enterprises created by China in Kazakhstan, an increase in unemployment, a deteriorating trade balance, an increase in smuggling, and increased competition for Kazakhstan enterprises, environmental degradation, etc. The revitalized Great Silk Road on the basis of modern transport infrastructure and communications is able to provide a rapid promotion of goods, services, capital and labour between Europe and Asia, as well as between countries along the Silk Road.
China, as the world's largest financial centre, is able in the medium term to invest huge funds in the development of regional infrastructure, for what the creation of the Asian Bank for Infrastructure Investments and the Silk Road Fund was initiated. For Kazakhstan, as well as for other countries of Central Asia, it is important to participate in the implementation of the Chinese initiative "Economic belt of the Silk Road", effective use of new opportunities and advantages of regional cooperation, at the same time, minimizing risks and threats. It is important to ensure, within the framework of the Chinese concept of the revitalization of the Silk Road, the possibility of expanding trade, economic and investment cooperation between the states along the Silk Road, which are also participants in various regional integration associations (SCO, EEA, ECO, CAREC, etc.).
In conclusion, it should be noted that Kazakhstan was chosen for the purpose of promulgating the concept of the "Economic belt of the Silk Road". The leadership of China regards Kazakhstan as the main and prospective trade and economic partner in Central Asia. Moreover, Kazakhstan accounts for more than 70% of China's trade turnover with Central Asian countries.
Bibliography
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