CC BY
25
The Economic Aspects of Cross-border
COOPERATION IN THE GREAT ALTAI REGION
G. Jumadilova, A.Rustembek, Zh.Amzenova L.N. Gumilyov Eurasian National University jumadilova82@mail. ru
Abstract . The economic and transport aspects of transboundary cooperation of the Great Altai, the current condition and perspective spheres of the multilateral trade turnover are studied.
Key words: integration, export and import, cross-border trade, ecological production
The Great Altai is a cross-border zone of international cooperation and a unique format of cooperation within the framework of the International Coordination Council "Altai is our common home". This process is progressing thanks to the development of foreign economic relations of six regions of Altai (Eastern Kazakhstan, Altai Republic and Altai Region of the Russian Federation, Bayan-Olgii and Khovd regions of Mongolia). The foreign economic relations play an important role in the Altai region's economic structure. The Russian Federation, the People's Republic of China and Mongolia are our key partners in this process.
For the East Kazakhstan region, Russia, China and Mongolia are the most promising and fruitful in fact directions of foreign trade turnover and industrial relations. In order to intensify trade and economic relations, members of the ICC "Altai" are using the opportunity to further strengthen cooperation in the development of mining, transport and energy infrastructure, tourism development and environmental protection by using the Intergovernmental bilateral commission mechanism.
Since 2003, the trade turnover between Kazakhstan and Altai has increased 3 times and amounted to 571.9 million USD in 2012; Trade turnover with Xinjiang Uyghur Autonomous Region has increased 13 times and made up 199.4 million USD; Trade turnover with Mongolia's Bayan-Olgii and Khovd regions increased by 1.8 times and totaled 28.1 million USD according to the results in 2012 [1].
Figure 1. Trade turnover between East Kazakhstan region and Russia (In million USD)
Note: Designed by the author
The picture illustrates the trade turnover between East Kazakhstan region and the Russian Federation. The total turnover between East Kazakhstan region and Russia in February-January 2015 amounted to 15,076.9 million USD. Of these, 4,447.6 million USD made up export and imports totaled 10,529.3 million USD.
■ Trade turnover
■ Export
■ Import
The total trade turnover between East Kazakhstan Oblast and Russia in February-January 2016 amounted to 12,636 million USD. The export amounted to 3,059.2 million USD, import was equal to 9,129.8 million USD [1]. However, comparing the figures for February-January 2015 and the same period of 2016, the total trade turnover has dropped by 16.2%. The main reason for this was the imposed sanctions of Western states on the Russian Federation as a result, the import substitution program was implemented and the turnover of the commodity turnover declined. The export of goods from East Kazakhstan decreased by 22.9% and imports - by 13.3%. The Russian Federation is the main economic partner of the East Kazakhstan Oblast. Russia holds 20.4% of the total trade turnover of Kazakhstan.
For Kazakhstan, the People's Republic of China is a key and important trading partner. This concept can be said not only for the whole of China but also for Xinjiang autonomy. Table 7 is presented to prove this concept. Table 7 is presented to prove this concept.
Table 6. 20 major foreign economic partners of Xinjiang Region of China (in million USD) [2]
2012 2008
State Volume Place State Volume Place
Kazakhstan 11.167 1 Kazakhstan 9.071 1
Kirghizstan 4.039 2 Kirghizstan 7.973 2
Tajikistan 1.407 3 Tajikistan 1.254 3
USA 1.020 4 Russia 0.719 4
Uzbekistan 0.831 5 Azerbaijan 0.446 5
Russia 0.644 6 Uzbekistan 0.436 6
Malaysia 0.354 7 Pakistan 0.412 7
Mongolia 0.344 8 USA 0.224 8
According to this schedule, 20 main foreign trade partners of Xinjiang Autonomy of the People's Republic of China for 2004-2012 are illustrated. As we can see, in 2004, 2008 and 2012, Kazakhstan has been the main and key foreign trade partner of Xinjiang. As to 2004, total trade volume made up 5.636 million USD. In particular, the volume of trade with Kazakhstan amounted to 3.286 million USD, meaning that 58.3% of Xinjiang's total trading volume belongs to Kazakhstan. In 2008, the total trade volume of Xinjiang amounted to 22.217 million USD, including the volume of trade with Kazakhstan amounted to 9.071 million USD. Compared to 2004, the share of trade volume in 2008 was 40.8%, i.e. the share of Kazakhstan in the trading volume of Xinjiang dropped by 30.1%. While the total volume of goods increased by 3,286 million USD to 9,071 million USD, the total share dropped compared to 2004, which can be seen from the chart that Xinjiang autonomy strengthened the trade with Central Asian countries. In 2012, the total trade volume of Xinjiang amounted to 25.171 million USD. The share of Kazakhstan in this sum amounted to 11.167 million USD, or 44.3% of the total volume of Xinjiang sales. Compared to 2008, the total share of Kazakhstan increased by 3.8%. Now, comparing the volumes of commodities from 2004 to 2012, in 2004 the figure was 3.286 million USD, and in 2012 it was 11.167 million USD [3]. If we observe the dynamics of trade between Xinjiang and Kazakhstan, the trade volume in 8 years has grown to 7,881 million USD, or 70%. It is a sign that the trade relations between Xinjiang and Kazakhstan are strengthening and the crisis is slowing down.
6 000 000
5 000 000
4 000 000
3 000 000
2 000 000
1 000 000
0
2014
2015
2016
Figure 2. Export indicator of Mongolia (in thousand USD)
Note: Designed by the author
Figure 2 shows Mongolia's. export indicator between 2014-2016 years. In 2014, the total export volume was 5.774.330 thousand USD. 5.073.398 thousand USD of export belongs to China. It is equal to 87.8% of the total export. As we can see, the PRC is a key and strategic trading partner for Mongolia. In 2014, the volume of goods exported from Mongolia to Russia amounted to 61.607 thousand USD. It is equal to 1% of the export volume in 2014. The reason for such low index is the lack of a common economic zone and high customs duties under the EAEU. Kazakhstan exports to Mongolia in 2014 were 4.855 thousand USD [5]. It is equal to 0.08% of the total export. Such a low indicator is due to the absence of common border and lack of transport routes. Mongolia's exports to China, Russia and Kazakhstan are 89%, it means that China, Russia and Kazakhstan are the main trading partners for Mongolia. In 2015, the volume of exports amounted to 4.669.280 thousand USD. In comparison with 2014 the volume of exports has dropped by 20%. Export volume with China is 3.910.120 thousand USD, i.e. 83% [4]. It is decreased by 4.8% in comparison with 2014. Its main reason was the escalation of the second wave of the 2008 crisis. In 2015, Russia exported goods to Mongolia 76.871 thousand USD in the export volume of Mongolia. It was 1.6% of total exports. In comparison with the same period of 2014 the volume of exports increased by 0.6%. In 2015, exports between Kazakhstan and Mongolia amounted to 2.064 thousand USD, in comparison with 2014 it was decreased double times and amounted to 0.04%. The export volume of Mongolia in 2016 has increased by 6% compared to the previous year and amounted to 4.917.331 thousand USD. In 2016, exports to China amounted to 3.091.834 thousand USD. It comprised 79% of the total export volume. It was decreased by 4% compared to 2015. The reason was that Mongolia has strengthened its trade relations with EU countries. In 2016, the trade turnover between Mongolia and Russia amounted to 55.790 thousand USD and 1.1% of total exports. It is 0.5% lower than in 2015. In 2016, Kazakhstan exported 709 thousand USD, which was 0.01% of the total volume [6]. This indicator was very low, as it is mentioned above, its main reason was the absence of a common frontier zone. If we look at the dynamics of goods exported from Mongolia within three years, we can see a decline in commodity flows. Indicators have been dropping by an average of 0.5% each year, which was a trend due to the global crisis.
6 000 000 5 000 000 4 000 000 3 000 000 2 000 000 1 000 000 0
Export in general
China
Russia
Kazakhstan
2014
2015
2016
Figure 3. Import indices of Mongolia (in thousand USD)
Note: Designed by the author
Figure 3 shows Mongolia's import indicator for 2014-2016. In 2014, the total imports amounted to 5.236.667 thousand USD. Goods imported from China amounted to 1.767.915 thousand USD, i.e. 34% of total imports. As compared to the export figure, the share of the Russian Federation was equal to that of China and was equal to 30% of total imports, i.e. 1.549.318 thousand USD. The import indicator was much higher than the export with Kazakhstan. In 2014, it accounted for 0.5% of total imports. China, Russia and Kazakhstan account for 64% of imports in 2014. It's noteworthy that China and Russia import more than 50% of imports from Mongolia. In 2015, the total imports decreased by 27% and amounted to 3.797.519 thousand USD. There was imported goods from China to 1.389.940 thousand USD. It comprised 37% of total imports. Compared with
2014, the figure rose by 3%. And imports with Russia amounted to 1.020.986 thousand USD and amounted to 27%. Compared to the previous year, the figure dropped to only 3%. Compared with the previous year, goods imported from Kazakhstan in 2015 increased by 0.3% and reached 0.8% amounting to 29.223 thousand USD. In
2015, the share of the three countries in total imports was equal to 64%. In 2016, imports totaled 3.357.940 thousand USD. Imports declined by 12% in comparison with 2015. The import index with China was 1.060.919 thousand USD and was 31%. Compared to 2015, imports dropped by 6%.
The import index with Russia decreased by only 1% compared to the previous year and amounted to 27%, or 880.396 thousand USD. Goods imported from Kazakhstan amounted to 29.796 thousand USD, which was equal to 0.8% for the previous year. In 2016, Mongolia's imports from three countries accounted for 59%. This figure dropped by 5% compared to 2014 and 2015. In general, Mongolia's total imports kept declining from 2014 to 2016, with several factors [6]. The most important thing is that the Mongolian market is independent of foreign commodities and is an indicator of domestic production volumes.
Figure 4. Trade and economic relations between Altai and People's Republic of China (in thousand USD)
Note: Designed by the author
Figure 4 is given to describe commodity turnover between the countries in the Altai region. The picture shows trade turnover, exports and imports between Altai Republic of Russia and China between 2011 and 2016. In 2016, the trade turnover between Altai and China amounted to 135.462 thousand USD [7]. Looking at the figures in the graph, we can see the economic downturn in 2016. The main reason for this is the tendency that underwent the second wave of the 2008 crisis. But the commodity exported from the Altai region to China in 2016 is less than 696 thousand USD in 2014, i.e. only 2%. The main export and import indicators between Altai and China are shown in Figure 5.
The Xinjiang Uyghur Autonomy of China is the main regional partner for the Altai region. On February 25, 1999, the Agreement between the Government of the Russian Federation and the People's Government of Xinjiang Uygur Autonomous Region of China signed the Agreement on Trade, Economic, Scientific, Technological and Cultural Cooperation. Meetings at different levels are held between the two regions and Entrepreneurs from the Altai region have been taking part in the Urumqi Fair since 1998.
40 000 35 000 30 000 25 000 20 000 15 000 10 000 5 000 0
2011
2012
2013
2014
2015
Figure 6. Trade and economic relations between Altai and Mongolia
Note: Designed by the author
Figure 6 describes economic relations between Altai and Mongolia for 2011-2015. By the end of 2015, the trade turnover between the two countries amounted to 18.240 thousand USD. As you can see in the picture, the volume of exported goods from the Altai region is 98% higher than imports. There is also a tendency observed with the People's Republic of China. Moreover, within the framework of the EAEU the customs duty rate of the Russian Federation is 20%, i.e. the transportation of Mongolian goods to Russia is ineffective. As a result, commodity turnover and export after 2013 declined by 49% [7]. Figure 7 illustrates exports and imports products between Altai and Mongolia.
Figure 7. Indicators of exports and imports between Altai and Mongolia
Note: Designed by the author
The Delegation of the Altai region to Mongolia in Hovid region plays an important role. The main purpose of the Delegation is to strengthen and develop economic relations between Altai and Mongolia, to provide information exchange, develop cultural relations, strengthen cooperation in the field of education, sports and health, and establish relations with the western regions of Mongolia.
The ultimate goal of the integration processes in the Great Altai region is to create a macroeconomic zone covering the territories of six regions.
In this region, the process of cooperation began only in the early 2000s. Of course, during this time, there is no possibility to take full advantage of the benefits of integration. Nevertheless, today the results of the steps being taken by the bordering 6 states of the Great Altai region can be seen today.
Finally, let's take a look at the main issues of the integration processes in the Great Altay
region:
1. Economic and social development of the regions is low. In this case, the problem can be considered as stimulating factor.
2. The institutional part of the region has not developed yet. This is the main obstacle to the development of cooperation. But it takes a long time to solve this problem. And local authorities need to have certain competences.
3. Different approaches to the integration zones. For Xinjiang Uighur Autonomous Region, the Great Altai region is a trading and fair platform, while for Altai and Altai Republics it is considered as a political space. East Kazakhstan region pays a lot of attention to historical cooperation (Mongolia, Russia and Xingjian Kazakhs).
References
1. http://www.altairegion22.ru
2. Сичжоу чжи лу цзинцзи дай фачжань баогао. 2014- Бейжш: Чжунго цзинцзи чубаньшэ, 2014.
3. Xinjiang Statistical Yearbook 2016
4. China Statistical Yearbook 2016
5. http://www.khovd.gov.mn
6. http://www.bayan-olgii.gov.mn
7. http://www.altai-republic.ru
