Chinese investments power Kazakhstan's energy sector with over $25bn

Chinese investors have shown significant interest in Kazakhstan's power sector, with over $25bn invested in this sphere in the last 17 years.

As Ruslan Izimov, chief of the Centre for Chinese and Central Asian Studies ‘Sinopsis’ (Kazakhstan), explains, 

"China is one of the most significant partners of Kazakhstan in the power sector at this stage. This is not so much because China is the major investor in the petroleum and gas sector, but because Chinese transnational companies (TNCs) invest in various spheres of the power sector – petroleum, gas, coal, renewable sources."

China Global Investment Tracker reports that, China has invested a total of $36.7bn in Kazakhstan's economy during this period, with a significant portion, $25.2bn, going into the power sector.

As Abzal Narymbetov, a business analyst and member of the global non-profit professional society of petroleum evaluation engineers (SPEE) of Kazakhstan, points out, 

"USA (31%) and our national company ‘KazMunaiGaz’ (31%) have the biggest share in petroleum production in Kazakhstan, followed by the European countries with the combined share 17% in the third place, and China."

China's involvement in Kazakhstan's power sector extends beyond traditional fossil fuels. They have been actively participating in renewable energy projects, including wind and solar power initiatives.

As Zhakyp Hairushev, an honoured power engineer of Kazakhstan, notes, 

"China has its own political and economic strategy. Major contracts with American and European partners will expire in 2033-2041. China will probably wait and may pursue a different investment policy in Kazakhstan after 2030."

The investment dependence of Kazakhstan on China in the power sector is notable, reflecting the strategic importance of their collaboration. As Ruslan Izimov explains, "

The share of regional countries in the energy imports of China does not exceed 4%. Therefore, it is rather a strategic move for China to invest in the power sector of Central Asia in order to establish more effective overland transport corridors linking China and Europe."

In contrast to the petroleum sector, China does not exert significant influence in Kazakhstan's overall power sector. Chinese investments in this sector primarily focus on renewable energy. As Zhakyp Hairushev points out, 

"If we look at the structure of ownership of power sector assets involved both in production and transmission, we’ll see no Chinese businesses there. The situation is slightly different if we focus on renewable energy among power-producing organisations."

Kazakhstan serves as a crucial logistic partner for China, enabling the transfer of petroleum and gas from other countries through its territory.

This collaboration benefits Kazakhstan both as a logistics hub and through transit fees. As Abzal Narymbetov notes, 

"Now we do not fulfil our obligations regarding gas supplies to China because we simply do not have enough gas. Domestic gas consumption increases and little gas is left for export."

As China actively shapes its global role and alliances, countries like Kazakhstan play an essential role in a shifting geopolitical landscape. As Ruslan Izimov emphasizes, 

"We should remember that China today opposes the United States in the global arena. If Beijing tried to adapt to the existing world order in previous years, now it is quite obvious that China will create the alternative world order to the existing one. In fact, we are entering the bipolar world today, where the United States remain the hegemonic power, and China is a full-fledged ‘power centre. Such medium-sized and small countries as Kazakhstan and Central Asia republics are in-between these poles."

In this context, a balanced, multi-vector foreign policy that takes into account the interests of multiple stakeholders can be the most effective approach.

Kazakhstan's foreign economic policy aligns with this strategy, allowing the country to collaborate with a variety of economic partners while carefully managing its political relationships. This nuanced approach provides Kazakhstan with room for maneuverability in a changing world order.

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