Kazakhstan’s leverage and economic diversification amid Chinese connectivity dreams

Abstract

Since its independence, Kazakhstan has adopted a multi-vectorism approach to balance between various great powers, especially between Russia and China. Despite extensive theorisation of such foreign policy, scholarly research has rarely investigated the topic beyond diplomatic power dynamics. Based on a systematic search of China’s joint projects in Kazakhstan in the past 30 years, this paper illuminates several unexpected developmental intricacies based on Kazakhstan’s multi-vectorism, its geo-strategic location, the availability of oil-driven sovereign wealth funds, and the public pressure for more responsible industrial policies: (1) China’s ambition to connect to the West has unintentionally amplified Kazakhstan’s multi-vector bargaining power; (2) Kazakhstan’s industrial policies, supported by various financial tools backed by its oil-driven sovereign wealth funds, are integral to its multi-sector economic development and diversification of exports to include more high-value intermediate and consumer goods; and (3) shown via a case study on Kazakhstan’s agricultural development, initial state-level negotiation and sub-national implementation, coupled with a mix of Sinophobic and Sinophilic sentiments, have led to a nuanced path of economic diversification. Given the authoritarian legacy in both China and Kazakhstan, empirical research to compare industry-specific development variations would be enlightening for developing economies to design optimal paths to leverage China’s rising dream and capital.