How China Gets Lands in Kazakhstan in Circumvention of the Moratorium
How does the shortage of farming lands in China influence Kazakhstan?
The relationships between China and Kazakhstan are not easy. If the representatives of the state authorities speak about friendship between the countries, the society of Kazakhstan has developed anti-Chinese sentiment a long time ago that often result in protest actions. The situation in Xingjian Uighur Autonomous Region that contains the “internment camp” with over a million of Uighurs and Kazakhs does not contribute to better relations. China was criticised by over 40 countries for repressions against religious and ethnic minorities.
The government of Kazakhstan did not join the pool of critics.
In September 2020, the ex-president of Kazakhstan, now the chair of the Security Council, Nursultan Nazarbayev said that the relationships between China and Kazakhstan “have never been difficult.”
— We signed the Treaty of Good Neighbourliness, Friendship and Cooperation, solved all border issues. Our relationships have never been difficult and should remain the same. Kazakhstan supports many initiatives of China. One of them is the implementation of the One Belt One Road programme. It was announced by chairman Xi Jinping here, in Kazakhstan. We have done many things, and many projects are in progress, Nazarbayev said then.
However, this is not the only thing that bothers the citizens of Kazakhstan. China does not have enough lands for growing soy and rapeseed and it has asked Kazakhstan to allocate some lands to it for a long time, for a fee, of course. Despite the fact that the government of Kazakhstan takes this offer positively, they had to ban officially the land allocation to foreigners following the protest actions. Because of the moratorium, the Chinese have to devise smart schemes.
The government of Kazakhstan did not join the pool of critics.
In September 2020, the ex-president of Kazakhstan, now the chair of the Security Council, Nursultan Nazarbayev said that the relationships between China and Kazakhstan “have never been difficult.”
— We signed the Treaty of Good Neighbourliness, Friendship and Cooperation, solved all border issues. Our relationships have never been difficult and should remain the same. Kazakhstan supports many initiatives of China. One of them is the implementation of the One Belt One Road programme. It was announced by chairman Xi Jinping here, in Kazakhstan. We have done many things, and many projects are in progress, Nazarbayev said then.
However, this is not the only thing that bothers the citizens of Kazakhstan. China does not have enough lands for growing soy and rapeseed and it has asked Kazakhstan to allocate some lands to it for a long time, for a fee, of course. Despite the fact that the government of Kazakhstan takes this offer positively, they had to ban officially the land allocation to foreigners following the protest actions. Because of the moratorium, the Chinese have to devise smart schemes.
People demand to stop implementation of Chinese projects in Kazakhstan. Almaty,September 4, 2019. By Pavel Mikheyev, Reuters
The largest anti-Chinese protests broke out across Kazakhstan in 2016. Back then the Land Code was amended to let foreigners take land on lease in Kazakhstan and it was announced that bidding procedure for the lease of 1.7 million hectares of land in Kazakhstan would start soon. Amid the fact that Chinese companies, including public ones, have expressed interest for many year in the lease of farming lands to grow soy and rapeseed, the government’s announcement caused discontent among people. The situation was aggravated by earlier speeches – when the son-in-law of Nazarbayev, Rakhat Aliev, claimed that there was some “secret contract”, which bound Kazakhstan to allocate 1 million hectares of land for 99 years to China and to “let Chinese peacemakers in in case of protests.”
The protesters seemed to achieve their purpose – in December 2016, a moratorium was imposed on the sale and lease of farming lands to foreigners until 2021 (now the moratorium is considered for prolongation until 2027). However, despites prohibitions, Chinese companies manage to get the lands anyway. For that end, a set of schemes has been devised and implemented successfully.
The protesters seemed to achieve their purpose – in December 2016, a moratorium was imposed on the sale and lease of farming lands to foreigners until 2021 (now the moratorium is considered for prolongation until 2027). However, despites prohibitions, Chinese companies manage to get the lands anyway. For that end, a set of schemes has been devised and implemented successfully.
Oriental Patron
In 2009, China asked 1 million hectares of land for growing soy and rapeseed from Kazakhstan. At the same year, public Chinese companies, China Investment Corporation and OP Financial Investments Ltd., which is a part of Oriental Patron Financial Group, established the Jin Dou Development Fund. According to the Oriental Patron Financial Group report, it was established “to study possibilities for investment into agriculture of Kazakhstan, development of farm fields and production of soybeans for export.” The company was allocated 315 million dollars for this purpose.
The request of land allocation voiced by Nursultan Nazarbayev caused discontent in the public. However, it was not clear as the ambassador of China in Kazakhstan said he “knew nothing about it.”
Thereafter, they probably decided to keep it quiet.
In 2010-2011, which follows from the database, the members of Jin Dou Development Fund opened many companies specialising in soybean production.
Non-executive director of the Fund, Weidong Zhang, for example, together with Xingjian International Travel Firm ‘Western Region’ in the Republic of Kazakhstan ran ‘Ways Group’ LLP. ‘Ways Group’ LLP, via its executives and founders (one of frequent ones – Nurlan Bayadilov), is affiliated with companies that later became the stumbling stone between the ex-akim of Eastern Kazakhstan region and the public. These are ‘BATUA’ LLP, ‘Yrgyn’ LLP, ‘Manfagat’ LLP, ‘Daneker-Zhol’ LLP, where one of executives was some Askar Kiribayev, one of the deputy head of the ‘Western Europe – Western China’ Project in Southern Kazakhstan, and others.
Aidyn Yegeubayev, the member of the ruling party (he was excluded from it later on), told about some of them in 2017. He accused the akim of Aktyube region, Berdybek Saparbaev, of selling lands to the Chinese in circumvention of the moratorium, when he was the akim of Eastern Kazakhstan region.
The request of land allocation voiced by Nursultan Nazarbayev caused discontent in the public. However, it was not clear as the ambassador of China in Kazakhstan said he “knew nothing about it.”
Thereafter, they probably decided to keep it quiet.
In 2010-2011, which follows from the database, the members of Jin Dou Development Fund opened many companies specialising in soybean production.
Non-executive director of the Fund, Weidong Zhang, for example, together with Xingjian International Travel Firm ‘Western Region’ in the Republic of Kazakhstan ran ‘Ways Group’ LLP. ‘Ways Group’ LLP, via its executives and founders (one of frequent ones – Nurlan Bayadilov), is affiliated with companies that later became the stumbling stone between the ex-akim of Eastern Kazakhstan region and the public. These are ‘BATUA’ LLP, ‘Yrgyn’ LLP, ‘Manfagat’ LLP, ‘Daneker-Zhol’ LLP, where one of executives was some Askar Kiribayev, one of the deputy head of the ‘Western Europe – Western China’ Project in Southern Kazakhstan, and others.
Aidyn Yegeubayev, the member of the ruling party (he was excluded from it later on), told about some of them in 2017. He accused the akim of Aktyube region, Berdybek Saparbaev, of selling lands to the Chinese in circumvention of the moratorium, when he was the akim of Eastern Kazakhstan region.
One month later, the prosecutor’s office confirmed that ‘BATUA’ LLP, ‘Yrgyn’ LLP and ‘Manfagat’ LLP were the companies of Weidong Zhang and the lands of Urdzhar district, Eastern Kazakhstan region, were indeed leased out for 49 years. According to the prosecutor’s office, this act violated the regulations of the Land Code that prohibited allocating lands in circumvention of the bidding procedures.
Moreover, it’s interesting that 2,331 hectares of land allocated to ‘Daremet’ LLP are located in the protective zone.
Despite the fact that many violations were identified, Aidyn Yegeubayev lost the case to akim Berdybek Saparbaev, and the court resolved to recover 100 thousand tenge from him. Later on, Yegeubayev was sentenced to two years of custodial restraint – he was accused of libel against one of the founders of ‘BATUA’ LLP, Nurlan Bayadilov. Not a word mentioned the founder from China. The case was called political one.
Moreover, it’s interesting that 2,331 hectares of land allocated to ‘Daremet’ LLP are located in the protective zone.
Despite the fact that many violations were identified, Aidyn Yegeubayev lost the case to akim Berdybek Saparbaev, and the court resolved to recover 100 thousand tenge from him. Later on, Yegeubayev was sentenced to two years of custodial restraint – he was accused of libel against one of the founders of ‘BATUA’ LLP, Nurlan Bayadilov. Not a word mentioned the founder from China. The case was called political one.
What is next?
Afterwards, China again switched to Northern Kazakhstan.
In 2018, the delegation led by deputy chief of the state food administration of China, Zeng Liying, arrived at Northern Kazakhstan region and said it would buy soybeans there.
In 2019, the national programme “Northern Soy” was launched.
From Chinese sources, we have managed to find a 2019 document named “List of Kazakhstan enterprises interested in soy exports to China”. The list consists of 20 companies. Some of them are partially Chinese or affiliated ones.
· Double Win Trade
· GM Agricultural investment holding
· AKS Agro
· TamAli Trade
· Kelun-KazAgro
Kelun-KazAgro, whose founder is Chinese company SICHUAN KELUN PHARMACEUTICAL CO., LTD with authorised capital 22 billion dollars, was established in 2018, its activity is “Production of cereal and pulse crops, including seed raising”. The company immediately started to produce and delivers supplies to their homeland at an accelerated tempo. In 2019, the company was already listed on the list of registrations for soy export from Kazakhstan to China.
In 2018, the delegation led by deputy chief of the state food administration of China, Zeng Liying, arrived at Northern Kazakhstan region and said it would buy soybeans there.
In 2019, the national programme “Northern Soy” was launched.
From Chinese sources, we have managed to find a 2019 document named “List of Kazakhstan enterprises interested in soy exports to China”. The list consists of 20 companies. Some of them are partially Chinese or affiliated ones.
· Double Win Trade
· GM Agricultural investment holding
· AKS Agro
· TamAli Trade
· Kelun-KazAgro
Kelun-KazAgro, whose founder is Chinese company SICHUAN KELUN PHARMACEUTICAL CO., LTD with authorised capital 22 billion dollars, was established in 2018, its activity is “Production of cereal and pulse crops, including seed raising”. The company immediately started to produce and delivers supplies to their homeland at an accelerated tempo. In 2019, the company was already listed on the list of registrations for soy export from Kazakhstan to China.
Lands are a sensitive issue for China. Neither the protests, nor failed deals stop the state from investments.
In 2014, “Holding KAZEXPORTASTYK”, one of the largest agrarian companies of Kazakhstan, was in a difficult financial situation. Its creditors – the European Bank for Reconstruction and Development, Sberbank and others – wanted to sell the company to Chinese Oriental Patron. KazExportAstyk had the very million hectares of land that China was asking from Kazakhstan since 2009. However, they failed. In the interview to the media, the investment company said it very amply that “force majeure circumstances related mainly to the key obstacle of legal registration of rights to farming lands occurred during the practical implementation of the project.” Here, all we can do is guess how much Oriental Patron asked for.
One way or another, despite the moratorium and scandals-intrigues-investigations, China can achieve its purposes stealthily – via companies like Kelun-KazAgro.
In 2014, “Holding KAZEXPORTASTYK”, one of the largest agrarian companies of Kazakhstan, was in a difficult financial situation. Its creditors – the European Bank for Reconstruction and Development, Sberbank and others – wanted to sell the company to Chinese Oriental Patron. KazExportAstyk had the very million hectares of land that China was asking from Kazakhstan since 2009. However, they failed. In the interview to the media, the investment company said it very amply that “force majeure circumstances related mainly to the key obstacle of legal registration of rights to farming lands occurred during the practical implementation of the project.” Here, all we can do is guess how much Oriental Patron asked for.
One way or another, despite the moratorium and scandals-intrigues-investigations, China can achieve its purposes stealthily – via companies like Kelun-KazAgro.