The Kazak government plans to spend $58 billion in investment in infrastructure by 2020, half of which will likely go to the country’s railroads in the hopes of increasing transportation and involvement in China-Europe cargo shipments to boost GDP. Kazakhstan is located between China and Russia, bordering Chinese regions expecting growth in manufacturing. By uniting Kazakhstan’s transport assets, the country hopes to increase efficiency to attract shipment to Europe of goods manufactured in China through Kazakhstan. In addition Khazak railroad monopoly, Temir Zholy manages a special economic zone, called Khorgos, on the Chinese border (benefits of which we have discussed in class).
Xinjiang borders Kazakhstan, and expects $104 billion of investment from the Chinese government and manufacturers including Toshiba, Acer Computer International Inc., Suzuki Motor Corp., Ford, and Hewlett-Packard Co. The government is also encouraging production by companies like Apple and Dell.
This example of neighboring countries like Kazakhastan trying to catch the benefit of China’s economic growth is an interesting perspective on China’s success. The Kazakh railway monopoly boasts increasing shipments from China to Europe by 62 percent.
Kazakhstan’s geographic position, north of the volatile middle east could prove very valuable from a transit perspective. If it can remain stable and a safe place to do business, overland trade will probably tend in that direction. More overland trade to the west should help China’s efforts to develop its more rugged inland / western areas. Kazakhstan’s marketing efforts to western businesses are quite aggressive and frequently found in the Economist and other publications. I wonder if Kazak growth will benefit China more, or vice versa?
It is good to see a push for infrastructure from Kazakhstan. Many of the Eastern European countries can suffer from weaker infrastructure systems left behind from Soviet rule. The investment by Kazakhstan should stimulate growth, it will be good for the country to participate in the China-Europe cargo trade.