China, Kazakhstan Plan Free-Trade Zone
China and Kazakhstan plan to develop and open a free-trade
zone on their two borders as a major step in developing
trade between the two countries.
China's Xinjiang Uygur Autonomous Region, once known
as Chinese Turkestan, shares a long border with the Central
Asian country. In recent years, Kazakhstan has opened
a large portion of its territory to seasonal grazing rights
for Chinese sheep farmers. Chinese farmers also regularly
cross into Kyrgyzstan for grazing rights.
Because of Kazakhstan's large natural oil reserves, and
China's increasing demand for energy resources, the two
governments have lately been negotiating a natural oil
line to China. The free-trade zone has been in the planning
and negotiation stage for several years.
On a state visit to Kazakhstan in 2003, Chinese president
Hu Jintao discussed the free trade zone with Kazakhstan
president Nazarbayev. The issue was brought up for the
fourth time by President Nazarbayev, and the Chinese president
promised to give added impetus to the issue on the Chinese
side.
Since that meeting, the two governments have discussed
issues including taxation, security and border issues.
Both sides have accepted the proposal to make it a tax-free
zone to encourage free trade between the two sides. The
Chinese side of the zone will cover 130 hectares, while
the Kazakh side will cover 70 hectares, and will be near
the border town of Khorgoz.
The Chinese government has said that 8-9 information
technology firms have already pledged to open offices
and plants in the free trade zone. The largest investment
will come from Zhejiang province's Carson Enterprises,
which has pledged 200 million yuan to open a factory there.
Carson is the world's largest maker of sofas.
China and Russia are the two leading members of the Shanghai
Group, which has included the countries of central Asia,
and have pledged to work together on trade and security
issues. On the economics side, the leading issue is China's
growing economic power and strength, while the central
Asian economies are still far behind.
This free trade zone is seen as a first step in narrowing
that gap.
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