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China to keep a watchful eye on Kazakhstan as political risk heightens

Expert comment

Written by Olena Borodyna, Ilayda Nijhar

Image credit:Shynar Jetpissova / World Bank Image license:CC BY-NC-ND 2.0

Central Asia, and the region’s largest country, Kazakhstan, is commercially and politically important to China and Russia. China is the country’s largest export partner, and as of 2020, mutual trade totalled USD 15.4 billion, contributing to almost 20% of Kazakhstan’s total trade turnover. It was also in the Kazakh capital Astana (now Nur-Sultan) in 2013, that Chinese President Xi Jinping launched the Belt and Road Initiative (BRI), sending a strong message that Kazakhstan plays a crucial role for China’s regional and broader geopolitical objectives. However, the recent civil unrest in Kazakhstan has been a wake-up call to Beijing that despite complex commercial ties and strong political elite ‘alignment’, Chinese investments are not immune to political risks.

Civil unrest in Kazakhstan

In early January 2022, Kazakhstan saw the worst civil unrest since it first gained independence 30 years ago. Rising fuel prices prompted an initial outbreak of protests in Zhanozen, leading to nationwide demonstrations which escalated to public demands for improved socio-economic conditions and reform of the political system. The protests took on several layers, from anti-government protests to calls to reclaim control from the Kazakh ruling elite led by First President Nursultan Nazarbayev and his close associates. Analysis suggests that 162 people own 55% of Kazakhstan’s wealth, with many connected to Nazarbayev by blood or business dealings.

Throughout the upheaval, there was much speculation over the roles that China and Russia might play to protect their interests in Kazakhstan. Despite the heightened political risk and perhaps safe in the knowledge that in this case Russia could be relied upon to provide military assistance, Beijing stuck to its long-standing policy of non-interference in internal affairs of foreign states, declaring the crisis as an ‘internal affairs’ matter for the government.

President Kassym-Jomart Tokayev and the Kazakh government successfully restored order following a week of civil unrest. The government’s success in regaining control was in large part due to the unexpected decision to request support from the Collective Security Treaty Organisation (CSTO), a Russia-led security bloc. The CSTO provided support via peacekeepers from member states to establish order following days of continued violence. CSTO troops have already vacated Kazakhstan, a move which surprised many observers who had anticipated that the Russian contingent would remain stationed in Kazakhstan for an extended period.

China, Russia and the balance of power

For the time being, Chinese economic and political interests remain for the most part unscathed. While there was much speculation about what Russia’s intervention means for the balance of power between Russia and China, the reality is that Kazakhstan understands the importance of both neighbouring powers. It is likely that the Kazakh political elite will continue to balance both countries, acknowledging that it cannot afford to stop monetary inflow from China nor lose out on security protection from Russia.

Since the transition of power in 2019 from Nazarbayev to Tokayev, Chinese-Kazakh bilateral relations have continued to thrive. Tokayev, a fluent Mandarin speaker, enjoys close relations with Beijing building on his in-country experience where he served at the Soviet embassy in the late 1980s. He has also been a strong advocate to strengthen the ‘strategic partnership’ between both countries and has publicly stated his optimism over increasing bilateral trade. Nonetheless, concerns around Chinese economic influence and interests persist not only in Kazakhstan but across Central Asia. There have been protests in neighbouring Kyrgyzstan against increasing Chinese influence, although there have been no indications that the recent Kazakh protests had an anti-Chinese angle.

China’s shifting priorities and risks

From China’s perspective, over the short to medium term, we anticipate that the country’s economic and political interests will remain intact, and that Beijing will continue to view Russia as the main security guarantor in Kazakhstan. Kazakhstan will retain its strategic importance for China’s foreign and trade policy. Beijing holds specific economic interests in Kazakhstan, particularly in oil and gas projects as well as the mining sector. The country’s rich uranium deposits are one major area of interest to China now that the country recommitted to nuclear energy. Indeed, securing uranium supplies will be critical to building up China’s nuclear power capacity – adding up to 70 GW during the period of the 14th Five-Year Plan.

Opportunities also exist for Kazakhstan to attract Chinese investment beyond oil, gas and mining, and in new sectors such as renewable power production. In the following decades, China’s economic priorities in Kazakhstan and the wider Central Asia region may further shift as the country pursues its 2060 carbon-neutrality goal and aims to become less reliant on fossil fuel to power domestic growth, reshaping its geopolitical priorities and alliances.

However, in the long-term, China will need to navigate the new security-economic nexus created by the recent upheaval and the questions it raises about the long-term viability of ‘predictable elite’ governance models across many countries in the region. The prospect of more ‘colour revolutions’ that destabilise the investment and security environment mean that in countries like Kazakhstan, China may have had a wake-up call about the limits of relying on political elites to secure its investments.

While there is an informal understanding between Russia and China over realms of influence in Kazakhstan, we anticipate China’s struggle to exert soft power influence over the Kazakh political elite will intensify, a sphere where Russia undoubtedly enjoys advantages given its Soviet legacy, but one that China cannot afford to ignore.