i) Historical development
The People's Republic of China and Kazakhstan formed diplomatic relations on January 3, 1992. The two nations signed their first boundary agreement in April 1994, a supplementary agreement in September, 1997, and their second supplementary boundary agreement in July 1998 to mark their 1,700 kilometers (1,100 mi) shared border. In 1993, the President of Kazakhstan Nursulta Nazarbayev made an official visit to Beijing at the invitation of the then-Chinese President Jiang Zemin. Since then, the leaders of China and Kazakhstan have frequently exchanged high-level official visits. In 1996, both nations became co-founders of the Shanghai Cooperation Organization.
Aimed at bolstering regional partnership on regional security, economic development and fighting terrorism and drug trafficking amongst Central Asian nations, Kazakhstan and China become co-founders of the Shanghai Cooperation Organization (SCO).In ...view middle of the document...
ii) Potentials for Cooperation
China and Kazakhstan have promoted a rapid expansion of commerce and partnership over economic development, especially in harnessing Kazakhstan's oil, natural gas, minerals and other major energy resources. Owing to rapidly expanding domestic energy needs, China has sought to obtain a leading role in cultivating and developing energy industries in Kazakhstan. Along with operating four smaller oil fields, the China National Petroleum Corporation in 2005 bought Petrokazakhstan, that was the former Soviet Union's largest independent oil company, for USD 4.18 billion and spent another USD 700 million on a pipeline that will take the oil to the Chinese border. Petrokazakhstan was the largest foreign purchase ever by a Chinese company. In 2009 China lent $10 billion to Kazakhstan and gained a stake in KMG.
China’s CNPC has aggressively expanded its presence in Kazakhstan over the recent years. It owns 67% of integrated oil company PetroKazakhstan, 86% of producer AkhtobeMunaiGaz, 50% of another big producer MangustaiMunaiGaz (MMG), and a 50% direct share in three oil fields.
CNPC’s extensive presence in Kazakhstan has been built up through a complex series of transactions that have resulted in the company controlling around 20% of the country’s oil production. Uniquely among foreign companies in Kazakhstan, its operations are mostly integrated, with an upstream, midstream and downstream presence. Its involvement in regional pipeline projects and the proximity of its core region of Xinjiang in China will ensure that Kazakhstan remains a vital part of CNPC’s operations.
CNPC is likely to continue growing its Kazakh operations both organically and through acquisitions as and when suitable targets become available. As well as increasing oil output, CNPC’s main production to its main markets in China.
iii) Possible conflicts
There are tax and regulation changes in Kazakhstan. This may restrict the investment level of China. The differences in political state of the two countries also cause worries. China has been claiming its territory at the border at East Kazakhstan.
But still, many things remain unknown as the leader of both countries didn’t say a word on those differences.