The talks between Nursultan Nazarbayev and Chinese leader Hu Jintao and the joint statement of cooperation strategy for the twenty-first century showed all signs of a model partnership between Kazakhstan and China. Hu Jintao and Nazarbayev signed 10 agreements relating to scientific and cultural ties, transport communications, bilateral trade, energy resources, border control and customs regulations, trans-border rivers and labor migration. Before leaving Beijing, Nursultan Nazarbayev announced in a visibly optimistic mood to the press that China and Kazakhstan finally eliminated all their border problems and laid a solid foundation for mutual trust and friendship. He stressed that the most important outcome of his talks with Hu Jintao was the conclusion of an agreement on joint monitoring of the environmental situation in the Irtysh River basin. Referring to earlier debated Chinese plans to divert the river water for agricultural use threatening to cause water shortage in the downstream areas of South Kazakhstan, Nazarbayev said Hu Jintao promised to refrain from any steps “that would damage Kazakhstan’s economy”.

At the same time, he said “it would be wrong to conclude that Kazakh-Chinese relations are developing exceptionally in the positive direction. We have some issues on which solution must be reached today. We must come to a compromise.” Among other problems which were listed as hampering bilateral economic activity by Nazarbayev is the imbalanced trade with China. The Kazakh President also added that “lately numerous critical publications appeared in the [Kazakh] press relating to “disproportions’ in the Chinese participation in developing oil and gas resources of Kazakhstan”. He clearly alluded to illegal Chinese workforce smuggled into Kazakhstan by Chinese oil and gas companies operating in the Aqtobe region of West Kazakhstan. In his words, the satisfactory solution for Kazakhstan would be to reduce the number of Chinese workers hired by Chinese-owned companies by 70 percent, and to replace them by local workers.

Broadly speaking, economic and demographic apprehensions expressed by Nursultan Nazarbayev in vague terms in Beijing are nothing more than a reflection of public anxiety in Kazakhstan repeatedly voiced since the establishment of diplomatic relations with China fifteen years ago. However, it was the first time the Kazakh leader publicly aired the popular feeling of anxiety over the future of bilateral relations on an official visit to China. Last November, Kazakhstani political scientists gathered in Almaty to discuss the threat of Chinese economic and demographic expansion. The debate came in the wake of the agreement concluded by Canada’s Nation’s Energy Company and the Chinese CITIC Investment Fund on the sale of the assets of the Chinese-owned Karazhambasmunay oilfield in Kazakhstan. The deal generated a wave of protests in the Kazakh parliament. But the director of the Risk Assessment Group research center, Dosym Satpayev, believes the real cause for the Kazakh government’s constantly losing economic battle with China is rooted in endemic corruption in corridors of power. The analyst argued that some corruption-prone influential members of government have already formed pro-Chinese forces to lobby for Chinese companies and make the government conclude agreements with the Chinese to the detriment of Kazakhstan’s economy. The economist Oraz Zhandosov proposes a new scheme according to which Kazakhstan should own 50 percent of the assets in the oil and gas sector leaving the remaining half of the assets to be divided among foreign companies. Economic analysts point out that Kazakhstan is increasingly assuming the role of a cheap raw material supplier for China and a dumping place for low-priced Chinese goods, while Kazakhstan’s textile industry has already lost the competition to the eastern neighbor in the domestic market.

Despite the growing resentment over Chinese expansion, Kazakhstan recognizes the vital importance of economic, political and military partnership with Beijing. As of December 1, 1,8 million tons of Kazakh oil was reported to have been pumped to China through the Atasu-Alashankou oil pipeline put into operation on December 15, 2005. By 2010, oil deliveries to China are expected to increase up to 20 million tons annually. Kazakhstan is considering the construction of the second phase of an oil pipeline to China, linking the Kumkol oil fields with Atasu, as well as a gas pipeline to the Xinjiang Autonomous Republic. Other projects include the railway link from Kazakhstan to China through the Khorgos border trade zone, in addition to the existing railway route between Chinese Alashankou and Druzhba on Kazakh territory. The trade volume by the end of 2006 reached $8 billion.

Nursultan Nazarbayev made a conclusive gesture of support for Chinese territorial integrity, paying visit to Hong Kong and Macau and reaffirming Kazakhstan’s adherence to the one-China principle on the Taiwan issue. Kazakhstan’s unequivocal stance on Taiwan was duly appreciated by Chinese propaganda. But with a booming economy in Muslim-populated unruly Xinjiang, Kazakhstan is likely to face more than one political dilemma in the future.