China and Eurasia Forum Quarterly, Volume 7, No. 1 (2009) p. 47-59
© Central Asia-Caucasus Institute & Silk Road Studies Program
ISSN: 1653-4212

China-Central Asia Trade Relations:
Economic and Social Patterns
Sadykzhan Ibraimov*

ABSTRACT
The aim of this article is to study China’s economic presence in Central Asia and its main involvements in raw materials, transport routes, opening of markets and free economic zones, and small and medium-scale projects. It must be noted that over the years from 1992 to 2007, the highest trading volumes were between China and Kazakhstan, which represented from 80 to 86 percent of all Chinese-Central
Asian trade. This growing economic cooperation has a social impact on the development of a Central Asian business diaspora based in Xinjiang. China also demonstrates its capacity to use local corruption schemes and internal Central
Asian weaknesses in its own interests: From the earliest years of independence, smuggling with China, especially the export of metals and the import of consumer goods, has proved to be a very profitable venture for Central Asian high-level officials. Keywords • China-Central Asia Trade • Xinjiang • Business Diaspora • Shuttle
Trade • Corruption

Introduction
The main difficulty in the study of economic relationships between
China and Central Asia is the lack of reliable or complete information.
Many reasons can explain this fact. The Central Asian states, first of all, do not publish information on cross-country trade. On this issue they follow the Soviet tradition and prefer not to strengthen the role of China to a public opinion which could be adverse. The Chinese authorities, for their part, do not try to heavily advertise their activities in the region and are quite comfortable with a lack of transparency in economic relations.
The next reason results from the fact that nearly the entire trading system of China with the Central Asian republics is based on corruption and criminal schemes involving high ranking political and economic elites. Objective publicity on this issue could openly reveal the flaws in cross-trading mechanisms and paint a real picture of the existing political

*

Sadykzhan Ibraimov is an Independent Researcher based in Kazakhstan.

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order in Central Asia. This article is therefore built both on the information available to the public and on some confidential information.

Sino-Central Asian Trade Relations
One should first look at official figures on China’s economic presence in
Central Asia. From independence until 1998, trade turnover between
Central Asia and China was quite limited, around 350 to 700 million dollars each year. The volume started growing after the 1998 financial and economic crisis. During the period of 2000-2003, trade between China and
Central Asia more than tripled, increasing from 1 to 3.3 billion dollars.
From 2004 to 2007, this trend of trade growth became more sustainable: turnover increased by 3.7 times (270 percent), or from 4.3 to 16 billion dollars.1 Throughout the 1990s, China had a very modest position in the
Central Asian states’ foreign trade. However in the period 2000-2007, annual Sino-Central Asian trade turnover grew very rapidly, increasing on average more than 15 times compared with the 1990s. At the end of
2007, China’s share of Central Asian trade reached about 14 percent, while the region constituted 0.7 percent of China’s foreign trade. In 2007, trade between China and Kazakhstan amounted to 12,385 million dollars; breaking down to 1,608 million dollars between China and Uzbekistan,
984 million dollars between Kyrgyzstan and China; 684 million dollars between Tajikistan and China; and 377 million dollars between
Turkmenistan and China.2
Since the first years of independence, Central Asia has quickly turned into a raw materials base for China. The first phase consisted of the export of commodities: scrap metal, non-ferrous products containing rare metals, plastic waste, etc. Local businessmen quickly discovered how to work in the border regions, especially Xinjiang where mini mills and factories to process the incoming raw materials were built. After privatization virtually all major Central Asian factories and enterprises were subject to reconstitution through the bribery and subornation of local officials, and equipment and raw materials were exported to China.
Analysis of Sino-Central Asian trade therefore reflects the growth of
China as a supplier of finished products and of Central Asian countries role as suppliers of raw materials. At the end of 2007, the share of raw materials in Central Asian exports to China amounted to 91 percent; breaking down to energy at more than 68 percent, ferrous and nonferrous metals at about 6 percent, and raw textile materials at about 2 percent. At the end of 2007, the share of manufactured goods in China’s exports to
1

Vladimir Paramonov, Aleksei Strokov, Oleg Stolpovskii, Rossiia i Kitai v Tsentral’noi
Azii: politika, ekonomika, bezopasnost’ [Russia and China in Central Asia: Politics, Economy,
Security] (Bishkek, 2008), p. 155.
2
Ibid., p. 157.

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Central Asia amounted to 86 percent of all Chinese exports, with machinery and equipment at about 52 percent, food and consumer goods at more than 32 percent, and chemical products at about 2 percent.3
For a better understanding of the topic, one should review the main transport routes connecting Central Asian republics to China. The main flow of goods from China to Central Asia passes through Kazakhstan.
This is due to objective reasons such as convenient geographical conditions allowing transport and communication corridors to function year-round, and the development of a rail link between China and
Kazakhstan, connecting the latter with the other republics of Central
Asia and Russia. The second means of entrance of China into Central
Asia is through Kyrgyzstan. One route connects Kashgar with the northern part of Kyrgyzstan via Naryn, while another way links China, through Sary Tash, with the south of the country, then to the Fergana
Valley and Uzbekistan. The third entrance passes through the GornoBadakhshan region (GBAO) to central areas of Tajikistan and beyond.
However the road through GBAO is difficult to navigate due to its natural environment and is practically impassable during the winter. The rapid creation and development of specific Chinese firms focusing on consumer needs in Central Asia should also be analyzed because they have responded to market changes in the region. More internationalized markets selling Chinese goods and services appeared in the 1990s. In order to accelerate the development of trade, China intentionally arranges flights and routes for entrepreneurs and businessmen, for instance between Bishkek and Torugart, Osh and Irkeshtam, Urumqi and Khorgos, and Urumqi and Bakhty.
At present several major markets and free economic zones have opened especially for trade between China and Central Asia. One of the major markets is Dordoi, near Bishkek. Low taxes and customs duties in
Kyrgyzstan, and its location on the border with Kazakhstan have turned
Dordoi into a popular market not only in the Kyrgyz Republic, but also in neighboring Kazakhstan. Each day thousands of buyers of retail and wholesale goods from Kyrgyzstan, Kazakhstan, and the other Central
Asian republics come to Dordoi to purchase imported Chinese goods, often marked as “made in Poland” or “made in Turkey.” In the south of
Kyrgyzstan, not far from the Uzbek border, the Karasuu bazaar is the largest market in all Central Asia, exporting Chinese goods to
Uzbekistan, Tajikistan, and beyond. In Tajikistan several major Chinese and joint markets also operate, such as Amindzhan, Shahrahe Abreshim
(the Silk Road), Bunyad-Shengong, Mostafa Artush, and Shanghai. In
Kazakhstan, a network of wholesale markets supplies Chinese goods not

3

Ibid., p. 159.

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only to the Central Asian republics, but also to bordering regions of
Russia.
In the Chinese Chuguchak suburb, located a few kilometers from the
Kazakhstani customs post of Maikapchagay, and at the Khorgos post, free economic zones operate within the framework of a treaty signed by the foreign affairs ministries of Kazakhstan and China, effective since March
2006. According to the document residents of Kazakhstan can purchase goods from Chinese manufacturers on the territory of Chuguchak without visa but within one day. Permission for “free” transportation through the customs posts of the two countries is granted to goods weighing no more than 50 kilograms and worth no more than 1,000 U.S. dollars. Kazakhstani entrepreneurs are also allowed to carry goods for domestic trade in China. In the future the Kazakhstani authorities intend to build warehouses, hotels, and other related infrastructure near these free trade zones. They also plan to rebuild roads going from UstKamenogorsk, via Zaysan, to Maikapchagay, in order to ensure that inhabitants of the Altai region of the Russian Federation also use these trade corridors.
China has also proposed small-scale projects for the construction of mini mills and factories to replace old ones in Central Asia. For example, in the Osh region, two mini-factories for the production of bricks were built. Chinese-produced flour mills work in all the central and regional areas of Kyrgyzstan, Uzbekistan, and Kazakhstan. Such firms were opened with the help of migrants from China, who were supported through financial and technical assistance from the Chinese government.
These small businesses are meant to satisfy only domestic needs, and should in no case rise to the regional or international levels. Specialists in
China always keep an eye on them to ensure that this type of product is produced according to the needs of only the Central Asian market. At this point in Kazakhstan, Chinese trains are launched, with components and technical support to them being provided by the Chinese side.
The next phase is the construction of strategically important roads in
Central Asia. In Kyrgyzstan the Chinese took over the construction of the 400 km Irkeshtam-Osh road. China is in charge of 60 km of the already constructed Osh-Uzgen road and has also built more than 100 km of the Madaniyat-Shamaldysay-Tashkumyr-Razan road to the Krupsai hydroelectric station. At first construction firms hired local workers, but by August 2006, replaced them with Chinese migrants. The related
Chinese strategic objectives include the construction of large cementasbestos sheeting production at the Kyzylkiisk plant in order to compete with the already existing Kuvasai cement-asbestos sheeting plant in
Uzbekistan, which is located 40 kilometers from the border with
Kyrgyzstan.

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As for Tajikistan, China is its main investor in the domestic transport and communications industries. By investing funds and ensuring construction of power lines, providing roads and railway with equipment, and moving material and human resources, China pursues several important geopolitical and geo-economic objectives. If Tajikistan seeks to participate in the Karakorum highway, China intends to redirect the transportation and communication flows in a north-south direction through its territory. China’s presence at strategic Tajik sites will also allow Beijing to control the domestic transport and electricity infrastructures. China has additionally opened a new alternative land route to the Fergana Valley, Afghanistan, Iran, and South Asia. And finally China has given itself a rare opportunity to obtain minerals and metals extraction in the GBAO: fluorites in Agadzhan and Duncheldyk, tin and tungsten in Buguchi-Dzhilga, boron in Akarhar, monocytes (an alloys additives) in Baygumbez, and tantalum and niobium in Kuristik.
In addition China has reconstructed a part of the DushanbeKhodjent-Chanak highway connecting the center of the country with the north and allowing for year-round vehicular traffic. It built the Shar-Shar road tunnel, which facilitates and reduces significantly the time it takes to transport people and goods between the center, the Kuliab area, and the
GBAO. In 2004, China built a road through the Kulma pass at the
Sarykolsk ridge, connecting the territory of Xinjiang and GBAO. Since the summer of 2007, China started construction on roads from its border to Dushanbe, through the southern outskirts of GBAO and Khatlon region, and further from the capital to the Fergana Valley and the border with Uzbekistan. The Asian Development Bank has grant money to build the road from Dushanbe to Kyrgyzstan via Rasht and Dzhirgital.
The China Theban Electric Apparatus Stock (CTEAS) is also constructing high-voltage transmission lines from Tursunzade to
Khojent, and to Lolazor-Khatlon from Dangary to Kuliab. The construction of 500 kW power transmission lines is also in the works.
These north-south projects will be crucial in electricity distribution in the
Central Asian region, which will not only permit the connection of all regions in Tajikistan to a single power grid, but also the export of electricity to Kyrgyzstan and Afghanistan.
Thus China has turned Kyrgyzstan and Tajikistan into economically dependent areas, and bases to expand its capabilities in other states, such as Uzbekistan and Kazakhstan. China has moved closer to the region’s energetic centers—the Krupsai, Tashkumyr, Toktogul, Nurek, Rogun and
Sktudin hydro-power stations—as it intends to develop the water capabilities of Kyrgyzstan, Tajikistan, and Uzbekistan. In the next ten to fifteen years, China will be in great need of drinking water. Beijing is therefore interested in the water-energy potential of Central Asia and started implementing a program of development in the Fergana Valley in
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Kyzylkiisk, Osh, Jalalabat, Kochkorata, and Andijan. The Chinese authorities are indeed convinced that by mastering the Fergana Valley region and its hydropower, they will effectively influence the policy of the Central Asian states.

The China-Kazakhstan Trade Axis
China is today a major trading partner for Central Asian countries. Over the years from 1992 to 2007, the highest trading volumes were between
China and Kazakhstan, which represented from 80 to 86 percent of all
Chinese-Central Asian trade.4 China joined the four leaders in the list of economic partners of Kazakhstan several years ago and even started confidently replacing other players in this group, such as Russia. China’s share in the foreign trade of Kazakhstan from 1996 to 2004 almost doubled, from 4.8 to 8.3 percent, in terms of value. Kazakhstan is the second largest partner of China among CIS states (Russia is first), its portion being about 70 percent of the total trade of China and the five
Central Asian republics. Given the exponential growth of trade between the two countries, the existing plans to increase the turnover by 15 billion dollars, from the current amount of 13.9 billion dollars, by 2015 seem quite modest.5 The situation determines that the total foreign trade of
Kazakhstan is barely 70 billion dollars, and that Kazakhstan’s trade growth with China is one of the highest.
Since 2005, both sides have decided to pursue a bilateral strategic rapprochement. The legal framework of this process was included in the
Declaration on Strategic Partnership signed by the presidents of
Kazakhstan and China in July 2005. Since then, the process of convergence has been quite consistent, and the two states have taken important steps toward it. In the Joint Declaration signed at the end of the visit, the two countries expressed willingness for the “continuous deepening of bilateral relations and enhancing coordination and cooperation in solving international problems based on the principle of friendship from generation to generation, good-neighborliness, mutual trust, and close cooperation.”6 According to President Nursultan
Nazarbaev, the strengthening of relations with China is one of the main strategic priorities of Kazakhstan’s foreign policy.7 Hu Jintao, in turn,
4

Ibid., p. 159.
The amount of 13.9 billion dollars, representing the volume of Sino-Kazakhstan trade turnover in 2007, was mentioned by the Chinese side at a joint business forum carried out during the visit of Karim Masimov.
6
As President Nazarbaev stated in January 2008, during his visit to China.
7
“President Kazakhstana vstretilsia so spetsposlannikom glavy KNR” [The president of
Kazakhstan met with the special envoy of the head of the PRC], Kazakhstan segodnia,
January 8, 2008,
(September 12, 2008).
5

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confirms that China should pay special attention to the development of relations with Kazakhstan and considers the strengthening and deepening of the Sino-Kazakhstan strategic partnership as a priority in his foreign policy.8 All of this diplomatic rhetoric would not deserve so much attention if it was not supported by essential prerequisites, confirming that the turnaround in relations results not only from political will and geopolitical environment.
During a meeting with the Kazakhstani Prime Minister Karim
Masimov on April 11, 2008, Hu Jintao explained that “the potential for bilateral business cooperation is enormous, the parties should seize opportunities, based on sincerity and mutual profit to implement agreements.” The Kazakhstani Prime Minister responded that
Kazakhstan intends to strengthen bilateral cooperation with China in the investment, finance, energy, agriculture, and infrastructure construction sectors in order to facilitate the joint development of both countries’ economies. Kazakhstan is more subjected to and thus focused on specific economic problems. Nevertheless considering the interests of the parties,
Kazakhstan and China should be satisfied with the results of the visit.
It seems that Astana has no other choice than the PRC if one considers its geo-economic characteristics, the great potential of China’s economy, and the weaknesses of Kazakhstan’s other neighbors. Factors that have emerged in the course of bilateral relations also play a role, such as the successful cooperation of Kazakhstan and China in the infrastructure sector. In early 2006, an Atasu-Alashankou oil pipeline was launched, allowing for the annual transport of up to 20 million tons of oil from Kazakhstan’s Caspian coast to the western, and thus eastern, provinces of China. This Kazakhstani-Chinese project, despite its difficult history, has become the main success in the interaction between the two countries and could be the key to their large-scale energy cooperation. As Astana receives practical benefits from the pipelines, it is easier for Kazakhstan to decide on similar new projects, such as the implementation of the Sino-Central Asian gas pipeline.
Considering the transit potential of Kazakhstan and the new opportunities for Chinese trade with Europe, the transportation and communication projects are also important for the development of
Kazakhstani-Chinese cooperation. It is a well-known fact that one of the
Chinese railways’ weaknesses is their low participation in the transportation of foreign trade goods, a situation that could be changed through cooperation with Kazakhstan. Meanwhile the situation regarding railway service both in the Chinese and Kazakhstani territories is far from ideal, and much remains to be done in order to turn Kazakhstan
8

Hu Jintao’s Declaration during a meeting with the speaker of the Kazakh Parliament,
Kassym-Zhomart Tokayev, which took place in China on January 24, 2008.

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into a transcontinental bridge between Asia and Europe. To date the current railway line going through Dostyk-Alashankou primarily carries goods for Chinese trade with Central Asian states.9 Out of 101 existing cross-border passenger and cargo routes between Xinjiang and its eight neighboring countries, more than sixty connect it to Kazakhstan. In addition to the existing highways between China and Kazakhstan, four new direct road routes for freight transport have opened at the end of
2008: Urumqi-Khorgos-Karaganda, Urumqi-Maikapchagay-Karaganda,
Urumqi-Baketu-Karaganda and Urumqi-Dostyk/Alashankou-Karaganda.
Three direct passenger routes will also be open on the same lines, except that of Khorgos.
Kazakhstan and China also initiated a new form of trade cooperation by developing the unique Khorgos Sino-Kazakhstani international center for cross-border cooperation, viewed by both sides as the second largest project of their strategic cooperation, after the pipeline. Situated 670 kilometers from Urumqi and 378 kilometers from Almaty, Khorgos is the largest road checkpoint in this region and the Chinese checkpoint closest to the countries of Central Asia, West Asia, and Europe. Khorgos therefore has the opportunity to become the main gateway to western
China, with a current annual transit capacity of 3 million people and 2 million tons of cargo.
It is thus clear that China has achieved a significant advantage over any potential competitors and created an important infrastructure base, which in a few years will probably be more modern and more powerful than that of Kazakhstan and Russia. It seems that even the intensification of Kazakhstani foreign cooperation with Russia or the
West will no more change this trend of increased interaction and convergence with China, as it will always be one step ahead of other interested parties. Another advantage in Beijing’s favor is its ability to satisfy requests for the economic development of Kazakhstan. Focusing on the differentiation of its economy and the redirection of commodityoriented manufacturing, as well as the realization of innovation and industrial development programs, Astana has faced foreign investors’ reluctance to help its domestic manufacturing industry. In this regard
China has proved more flexible and far-sighted, a situation that is well received by Kazakhstani leaders as a means to promote long-term plans.

The Central Asian Economic Niche in Xinjiang
According to Chinese customs statistics, the volume of foreign trade between Xinjiang and Kazakhstan reached record levels in 2008. This is
9

Igor’ P. Azovskii, “Vneshnetorgovye perevozki zheleznykh dorog Kitaia: segodnia i zavtra” [Foreign Trade Railway Transit of China: Today and Tomorrow], (September 12, 2008).

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mainly due to the growth of the total external trade of the Xinjiang
Uygur Autonomous Region (SUAR), which in the first quarter of 2008, ranked first in the country.10 The Chinese authorities are now using their growing economic relations with Central Asia to develop Xinjiang, an underdeveloped region of the country. Beijing’s “open door policy” has contributed to the inflow not only of foreign capital, but also of human resources into the country. Comparing the costs of border crossing and living in China to the possible business income, many consider it cheaper to live in China and earn in Kazakhstan. In cities such as Beijing,
Guangzhou, Urumqi, and Yining, entire neighborhoods have appeared in which immigrants from Central Asia live. Such choice is motivated by geographical centers for the wholesale trade of Chinese products. Yet the favorite city is Urumqi, where many people can speak Russian or
Kazakh, making easier the lives of those who chose to stay in China.11
In Xinjiang and especially in Urumqi, many Central Asian nationals have found their social niche. Some of them are current or former
“shuttle traders” and have long experiences in such missions. Some of them open travel agencies to help the new generation of commercial tourism. Others called kubovshchiki deal with cargo transit. They control the price lists of Chinese consumer goods, have complete information on the tax and customs policies of Kazakhstan and China, closely monitor staff changes at customs, and handle the timely delivery of goods to
Kazakhstani businessmen traveling in Urumqi or other Chinese cities.
They thus work as unofficial regulators of cross-country trade and as key elements of the customs business and of corruption. Another area developed by Central Asians in China is the restaurant business, as
“Muslim food” is quite developed in all of China tanks to the Hui minority. In addition, some Central Asian citizens are engaged in the agriculture, mining, and processing industries, and try to take advantage of the “Far West” development of project opportunities.12 According to this program, foreign nationals are allowed to invest in any type of industry from water management to power engineering or the chemical and mining industries. Foreign investment companies are exempted from local income taxes for ten years. Those involved in agriculture and extractive industries, except in oil and gas, are exempt from taxes for five

10

The foreign trade turnover volume of Xinjiang has increased up to 90.4 percent during the first quarter 2008, in comparison with the corresponding period of the last year, having amounted to 3.45 billion dollars.
11
Sof’ia Ushurova, “Zhit’ po nebesami” [To live under the skies], (September 12, 2008).
12
“Xinjiang Strategy of Economic Development”, Investment Directory on Xinjiang, China
(Urumqi: Press-secretariat of the representation of People of Xinjiang, 2004), p. 191.

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years. They do not pay taxes on their real estate and transportation costs, including maritime transport, for the five first years of business.13

Corruption as the Reality of Sino-Central Asian Trade
However Chinese success in attracting investment from Central Asia is linked more with China’s understanding of the specifics of economic life in post-Soviet countries, and their use of local corruption schemes and internal weaknesses in its own interests. It should be noted that the
Chinese government provided various sized grants for Central Asia at low interest rates or even free of charge. Chinese grants were mainly used for the construction of mini-markets or roads connecting remote regions with central cities, thus contributing to the development of trade routes for Chinese goods. But the lion’s share of these grants went into the pockets of local officials.
Sometimes the legal decisions taken by the government left the door open to corruption. For instance the Kazakhstan Ministry of Transport and Communication issues each year an order to reduce the load on the axles of trucks by almost one quarter (3 to 4 tons). But no one would drive a half-loaded truck from abroad through the whole country, at a significant economic loss. Entrepreneurs are therefore forced to pay bribes to all those working in the customs posts in order to increase the load. Without preferential treatment one can also transport across the border only 10 tons of goods; any entrepreneur carrying more must register them under an assumed name. Otherwise the goods will automatically be considered smuggled. In order to avoid this situation, entrepreneurs are ready to bribe the custom officers. While the goods travel over the country toward the destination, each traffic police patrol car will determine the existence of accompanying documents, permits, certificates, and correspondence of the load to type and weight. After checking and often receiving “fees,” the patrol transmits information about the truck to the next post, so entrepreneurs must pay bribes all along the road. Kazakhstan regulations and laws are justified to protect the interests of the country, although they in fact adversely affect the rights of private firms. These laws apparently make Kazakhstani citizens become bribers and beneficiaries. Therefore it is impossible to work legally, as the whole system is corrupted.
The first option for Chinese or Kazakhstani businessmen going to
Kazakhstan is to declare less than what they have and let Kazakhstani customs officers take the “fee.” The second one is to register products under another category, requiring a minimal fee, and to pay customs so that the trucks’ contents are not checked. Activities of carrier companies are also apparently subject to legal regulation. Ideally they propose
13

“The Policy of Investment Attraction”, Ibid., p. 207.

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service for the delivery of a consignment from the initial location to the destination, including the border crossing. In reality these companies tend to draw attention when they pass through customs. By law the owner of the goods must submit documents for the customs declaration, but he might not have them because Chinese vendors, working under preferential tax treatment, often do not issue invoices for their purchases.
Therefore intermediaries take over the delivery of someone else’s goods via illegal schemes. They do not conclude contracts with load owners on the supply of goods and do not give the addresses of registered companies in Kazakhstan or China, so that the owners can protect themselves if the load is seized due to contraband. If the carrier cannot reach agreement with the customs, consignees become hostages of the situation and the goods are considered smuggled. Entrepreneurs then start looking for officials willing to clear the goods in exchange for bribes. In the worstcase scenario, the carrier disappears, throwing away the product, and the owner cannot find it. Thus officials do not want to introduce a system of contractual relations between shuttle-traders and carriers in order to legalize the relationship, because confiscated products benefit highranking custom officers.
The Chinese side has a grudge against Kazakhstan because of the level of transit and trade corruption. According to Chinese businessmen anyone crossing the border, even if he is a mid-level official or influential figure, is forced to give a bribe three times. The first, about 50 dollars, goes to customs, even when passing without the goods, so that personal belongings do not get confiscated. The next, about 20 dollars, goes to border guards and then varying amounts to policemen. These “tariffs” are applied even if the Chinese citizen has all required documents. For a few years some Central Asian states, including Kazakhstan, have declared their intention to fight corruption, which has provoked a reverse reaction. As a consequence the customs points at the KazakhstaniChinese border partially stopped taking bribes, but the price of illegal taxes increased almost fourfold. Businessmen are now forced to address their requests to the central customs office and ministry officials, which are in the regional centers or the capital, and charge more expensive
“fees.” Because of this situation, most medium-sized Chinese businesses have shifted to corruption methods of trade with Kazakhstan. In 2007 and
2008, according to some Chinese businessmen, corruption became intolerable, with Chinese businesses losing a lot of money due to
Kazakhstani corruption.
In the growing competition between Kazakhstan and Kyrgyzstan for the transit of Chinese goods, many small Central Asian entrepreneurs now prefer to deliver Chinese goods across Kyrgyzstan. Goods are sent in transit to Kyrgyzstan, where they clear customs and then return to
Kazakhstan. It thus seems to be advantageous to go an extra 500
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kilometers than to clear customs in Kazakhstan, even if the corruption situation works with similar schemes in Kyrgyzstan. Bishkek uses the mistakes of Kazakhstani officials in its favor. If the fee increases in
Kazakhstan, Kyrgyzstan reduces or removes it completely. That is why the Kyrgyz market of Dordoi now provides a quarter of revenue for the neighboring country’s budget. When the tax committee of the
Kazakhstan Ministry of Finance decided to introduce changes in the workings of markets, Kazakhstani businessmen settled in Dordoi. Now up to 60 percent of Almaty wholesalers work there, and the transit of loads and passengers in Khorgos partially fell. According to local unofficial sources, one cubic meter of cleared load on the Urumqi-Almaty route accounts for 280 dollars, but on the Khorgos-Bishkek-Almaty route, it does not exceed 160 dollars.
For all these reasons information on trade between China and
Kazakhstan differs. The Chinese side honestly registers the volume of products leaving the country, while Kazakhstani customs officials record the volume of officially passed goods. In 2006, Finance Minister Natalia
Korzhova mentioned a difference in trade of about 3 billion dollars a year.
An inter-governmental commission thus visited China to standardize
Chinese and Kazakhstani statistics under the personal request of the vicePrime Ministers of both countries.14 However, the situation has not changed. In 2007, according to Chinese data, Kazakhstan brought in
Chinese goods in the amount of 9 billion dollars, while Kazakhstan’s data mentions 1.5 billion dollars. In short, the difference vanished in
Kazakhstani officials’ pockets.
Trade with China is actually built on two schemes, called red in
Russian when conducted through state authorities, and black when conducted through underground and criminal schemes. However either option still relies on influential figures in power. For instance at the
Kazakhstani customs post in Dostyk, smuggling processes were monitored by the so-called brothers Karimov, known by another name as the Rybachinsk group, and in Khorgos by the “four brothers.” The
Krykbaev group controlled the transit of Chinese goods over the KyrgyzKazakhstan border. In 2007, Marat Adbuali, and Ergali and Kayrat
Krykbaev were sentenced respectively to 25 and 18 years in prison for an array of criminal activities. Incidentally one of the Krykbaev brothers was once a deputy of the presidential Nur-Otan party. In Uzbekistan two famous criminals, Gafur Rakhimov and Salim Abduvaliev, manage illegal trade. In Tajikistan control over all Chinese business and trade is in the hands of Hassan Saidullaev, the president of the “Ismaili Somoni
14

“Minfin nameren ustranit’ raskhozhdeniia v statistike Kitaia i Kazakhstana po vzaimnoi torgovle” [The Ministry of Finance wants to eliminate differences in Chinese and Kazakh trade turnover statistics], November 2006, (September 12, 2008).

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21st Century” holding company and relative of President Rakhmon. In
Kyrgyzstan, the dominant group is that of Kolbaev Kamchibek, but
Kydyraliev Sanzharbek, a former member of the Kyrgyz parliament, controls the south part of the republic. Earlier criminal affairs were monitored by the deputy Bayaman Erkinbaev, and by Ryspek
Akmatbaev, who ran for parliament but was killed before acceding to this position. All these Central Asian criminal groups work closely with each other, thus creating a transnational criminal network. Moreover they often have very close relations with political authorities, as some relatives of the presidential families are personally engaged in business with China. For instance, in Kyrgyzstan, the spouse of the ex-president, Mairam Akaeva, processed the export of scrap metal. In the south of Kyrgyzstan, the export of raw materials, mainly colored metals, was monitored by the late criminal authority Bayaman Ereinbaev, whose business was intercepted by other groups. In Uzbekistan, part of trade with China seems to under the control of the eldest daughter of Islam Karimov,
Gulnara Karimova, with the help of her aunt Tamara in the Fergana region. All kinds of raw materials from Uzbekistan are freely exported to
China via Kyrgyzstan. In Kazakhstan, the main actors of this process also surround the president.

Conclusion
One can infinitely draw nuances and give examples on trade ties and schemes between China and Central Asia. However this economic relationship is still at an early stage of development and for this reason, there is some randomness in commercial processes and relationships.
This can be partly explained by the reality of corruption in Central Asia and the high level of interaction between business and politics. From the earliest years of independence, smuggling with China, especially the export of metals and the import of consumer goods, has proved to be a very profitable venture for high-level officials. This now makes it difficult for the implementation of effective customs legislation. Yet this is the condition for the average Chinese firms, which even with in-depth knowledge of the situation, agreed to enter a Central Asian market denounced as too corrupt and too risky.

THE CHINA AND EURASIA FORUM QUARTERLY • February 2009