The Illusion of Chinese Investment in Kazakhstan
Concerns about how Chinese businesses operate abroad — and the challenges already confronting Kazakhstani entrepreneurs — have resurfaced following a recent letter to the prime minister from an association of oil service companies reporting price dumping. Despite these developments, Kazakhstani experts remain hesitant to discuss the negative effects of China’s growing influence in the country’s real economy. Technological Dependence The reluctance is unsurprising. Astana’s official policy seeks broad rapprochement with Beijing, spanning economic, political, and cultural spheres. Given the power imbalance, Kazakhstan avoids public statements that might offend its wealthier partner, particularly in the media, which China monitors closely. As a result, the recent complaint by the PetroCouncil — an oil and gas association representing more than 150 domestic service companies — about dumping by foreign, mainly Chinese, firms has been met with silence from local experts. In a letter addressed to Prime Minister Olzhas Bektenov, the PetroCouncil warned that foreign firms, particularly from China, have been offering services to major Kazakhstani enterprises at prices 60–70% below market value. This, they argue, is forcing out local businesses, reducing Kazakhstani content, eroding tax revenue and employment, diminishing engineering expertise, and threatening industrial safety. We asked PetroCouncil Managing Director Daniel Zholdybaev why foreign companies have come to dominate Kazakhstan’s oil and gas sector and whether the competence of local personnel or service providers is a factor. According to Zholdybaev, the dominance is rooted in how foreign operators first entered Kazakhstan’s market: by bringing their own technologies. This created long-term dependency not only on their expertise but also on foreign suppliers. “Chevron, for instance, maintains a vetted list of approved suppliers, and wherever the company operates, it only works with those on that list,” Zholdybaev explained. While Kazakhstan continues to develop domestic manufacturing capabilities, local firms are still barred from participating in high-risk operations such as work on wells with extreme pressure or temperature conditions. Zholdybaev noted that Kazakhstan’s three major fields — Tengiz, Karachaganak, and Kashagan — account for 90 percent of oil and gas imports. The operators of these projects are mainly Western companies. Russia, due to international sanctions, plays only a marginal role in procurement despite maintaining a presence in Kazakhstan. However, it is Chinese companies, actively welcomed by the state, that have introduced the issue of price dumping. Chinese firms operating in Kazakhstan’s oil and gas industry maintain closed procurement systems, sourcing goods and services almost exclusively from Chinese suppliers. As a result, Chinese investment brings minimal benefit to Kazakhstan’s economy. Even construction contracts often return to China. Russian observers, typically sensitive to Central Asia’s dealings with China and the United States, have also remained largely silent on this issue. A rare exception was political analyst Yuri Baranchik, who posted a sharply critical comment on his Telegram channel: “This is a clear example of what happens when Chinese companies are allowed full access to the domestic market,” he wrote. “They dump prices to bankrupt local businesses, monopolize the sector, and then dictate terms. Now the Kazakh government must figure...
