By TBY | Kazakhstan | Jun 12, 2018
What appeared first as a symbolic gesture from Chinese President Xi Jinping, One Belt One Road’s (OBOR) official launch in Astana has since materialized into groundbreaking infrastructure investments. Specifically, in […]
What appeared first as a symbolic gesture from Chinese President Xi Jinping, One Belt One Road’s (OBOR) official launch in Astana has since materialized into groundbreaking infrastructure investments. Specifically, in the three years since the launch, Kazakhstan has attracted over USD50 billion worth of contracts from Beijing, aimed directly at the transportation and logistics sectors.
Most notably, this includes the SEZ Khorgos, the biggest dry port in the world. In May 2017, the Kazakhstani government made official the 49% stake sale of Khorgos to two Chinese companies, paving the way for development of a 600-ha, USD250-million, state-of-the-art logistics terminal.
Commenting on the early successes of the terminal, the COO of SEZ Khorgos, Hicham Belmaachi, told TBY: “A crucial landmark with the Silk Road is that the number of container trains passing from China to Kazakhstan has increased by 46% in the first eight months of 2017. Khorgos itself has increased by 119%. The growth of the market is a result of the fact that there is a need to use this new mode of transportation and a growing number of logistics operators believe in this route.”
In autumn 2013, President Xi chose Kazakhstan’s capital Astana to spectacularly announce the launch of the biggest infrastructure initiative the world has ever seen. A vast network of road, rail, and sea routes with China at its core, it stretches to Germany in the west and Singapore in the southeast. It is a project that will revolutionize global logistics like no other, cutting average time and cost of freight by approximately 40%.
Unsurprisingly, one of the countries expecting to witness the biggest direct impact from OBOR is indeed Kazakhstan. The ninth-biggest country in the world, bordering China’s western region, it is the first and largest stop on the projected Silk Road Economic Belt, extending thereafter through Uzbekistan, Turkmenistan, Iran, and Turkey, before making its way into Central Europe.
Upon entering into Kazakhstan, Europe-bound freights will likely take one of two routes. The first, via road, will stretch 2,787km on its way to Russia and the Baltic states. Its initial leg, connecting Khorgos to the country’s commercial capital, Almaty, was launched in September 2013 and cost USD1.3 billion, part-financed by the World Bank and the government of Kazakhstan.
The second involves widespread modernization of the country’s railway, specifically from Khorgos to the western port city of Aktau, in which Kazakhstan Temir Zholy (KTZ), the national railway company, will invest USD2.7 billion to upgrade its fleet and repair 730km of railroads.
Upon reaching Aktau, operators will have the option to ship directly across the Caspian Sea to Azerbaijan, or utilize the newly constructed Kuryk port—funded partly by Chinese capital—which aims to begin with cargo shipments to Azerbaijan, Russia, and Iran in 2018.
Yet, Chinese investments in Kazakhstan, and indeed across the OBOR, are by no means limited to logistics. In fact, Beijing is implementing a wider industrialization strategy in all the major hubs along the New Silk Road. In Khorgos, for instance, China’s Jiangsu province has agreed to invest more than USD600 million over five years to build industrial zones on both sides of the border, with the aim of developing a new city for 200,000 residents to cater to Khorgos’ rapid rise.
Also in progress are investments focused mainly around oil and gas, as well as agriculture.
Clearly, such commitments from Beijing would not have been possible without synergy in strategic objectives from their Kazakh counterparts. Kazakhstan’s President Nazarbayev wasted no time to launch Nurly Zhol in 2014, a USD9-billion domestic economic stimulus plan to modernize and construct railways, roads, ports, IT infrastructure, and education across the country. Improving the investment climate shortly followed in the shape of a new PPP law.
Consequently, the World Bank named Kazakhstan one of the 20 most attractive countries for global investors. China, for one, has taken note.