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THE TALE OF HORGOS: CHINA SELLS, KAZAKHSTAN BUYS

Anushka Dwivedi writes “The investment and development plans of the BRI had many pre-formulated principles the most important being balanced and sustainable development in partner countries.

Anushka Dwivedi writes that Horgos or Khorgos (as it is known to the Kazakhstan side), a young city on the China-Kazakhstan border has been touted as one of the success stories of the proposed Belt and Road Initiative. The two day Belt & Road Summit in Beijing utilized this success narrative to its full extent by playing promotional videos of Horgos on loop at the press centre. But it seems all is not well in this fairytale world as questions are now being raised regarding the booming Horgos economy.
The investment and development plans of the BRI had many pre-formulated principles the most important being balanced and sustainable development in partner countries which in this case is Kazakhstan. But the initial apprehensions regarding BRI have come to the fore with Horgos becoming a gateway for dumping cheap Chinese products upon the poor Kazakh population. Dmitri Ivanov, an Almaty-based interpreter in a Forbes interview described Horgos being “just a place where old Kazakh ladies go to buy cheap things from China to take back here to sell.” Another fact to be noted is that though the Horgos development plan was perceived way back in 2015, the Kazakh side with next to zero connectivity and a lower income population lags far behind.
Being a part of the Eurasian Economic Union, it also has restrictions on importing Chinese products to the limit of 50 kilos or 1,500 Euros of value per person, per month contradicting the Chinese Visions and Actions document statement of “barrier free trade”. Also, as per the article the Chinese markets here have been getting less than expected visitors and revenues due to the city’s remoteness as well as the typical “Made in China” products they have been selling rather than the high end quality products now being demanded by its middle income population. The SEZ has also become a tax haven with many a companies registering themselves to avail the tax benefits and other incentives but having no intention to operate from here further lowering the employment and development opportunities.
But since the coin has two sides, the Kazakh side hasn’t lost the sight of the Khorgos dream. The investments in the city has led to employment opportunities being created with many citizens who were primarily traders switching to service based jobs and more local children going to schools. As construction of all the proposed shopping malls, railway lines and roads will be finished, citizens will tend to gain by the increase in the economic activities in the area.
The need of the hour, therefore, is to fast track the infrastructure building work and to sort out the contradictory or overlapping policies of the various trade agreements impeding free flow of goods and services. Also, since Khorgos serves as a dry port where Chinese containers are lifted on Kazakh trains to be transported to Europe due to different gauge rail tracks, it is important to further develop this already established and effective business opportunity because this will reap quicker results and more payoffs for Kazakhstan rather than the services sector which might take decades to break even and start making profits and will be more prone to market based fluctuations.

Linked article is available at http://www.reuters.com/article/us-china-silkroad-horgos-idUSKBN18V15Z

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