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China-Kazakhstan Free Trade Centre Delayed

Saturday 3 September 2011

URUMQI (China Daily) – A trans-national free trade centre on the border of China and Kazakhstan has been experiencing operational delays due to slow infrastructure construction and insufficient trade policy collaboration between the two countries, Chinese officials said Saturday.

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Khorgas Port Exhibition Centre (173,992 m²)

Trial operations for the China-Kazakhstan Khorgas (Horgos) International Border Cooperation Centre have been delayed until December, according to He Yiming, head of the commerce bureau of northwest China’s Xinjiang Uygur autonomous region. The centre was previously scheduled to go into operation in July; the opening was then delayed until September.

Under an agreement signed between China and Kazakhstan in September 2004, the Khorgas centre will be developed into a “free port” with free trade and investment opportunities. The centre will also serve functions related to processing, manufacturing, trade, merchandise procurement, financial services, tourism and entertainment. The integrated trade centre, spanning the China-Kazakhstan border river near the port village of Horgos, covers 3.43 km² of land on the Chinese side and 1.85 km² on the Kazakh side.

Construction on both sides started in June 2006. A total of 880 million yuan (US $137 million) has been spent to build the infrastructure on the Chinese side. Favourable policies have been created as well; in-house companies on the Chinese side will be exempted from paying tariffs, with individuals permitted to buy up to 8,000 yuan in goods per day. Visiting businessmen will also be given a 30-day visa-free stay in the centre.

He stated that while China has finished construction on its own side, infrastructure construction on the Kazakh side has yet to be completed. He added that Kazakhstan has not yet finalized its own policies for in-house companies at the centre. “"It depends on the other side. If they say the centre will be put into operation in a week, we can also do that,” he said.

The most recent date for the start of the centre’s test operations was chosen by Kazakhstan’s Deputy Prime Minister Aset Isekeshev, who attended the first China-Eurasia Expo held in Xinjiang’s capital of Urumqi from September 1 to 5.

He Yiming said that the next move for both sides will be to set up a team of experts to collaborate on new policies that will be implemented at the centre.

Horgos is the largest land port in northwest China and is poised to become one of the most important ports in the country. The port is located near a cross-border highway and a natural gas pipeline that stretches between both countries. The Shanghai Cooperation Organization (SCO)’s Secretary-General Muratbek Imanaliev applauded the Khorgas centre as an important project that may be reproduced in other border areas, as it will have the effect of boosting trade, improving transportation logistics and streamlining customs policies between the SCO’s member states of China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan.

Trade among SCO members since the organization’s establishment has grown seven-fold over the past decade, reaching $8.4 billion in 2010, Vice Minister of Commerce Zhong Shan said at a forum held at the China-Eurasia Expo. He called for SCO member states to consider arranging a free trade agreement (FTA) within the group at a proper time to further facilitate trade and create a sound environment for regional economic cooperation.

Officials from Pakistan said at the expo that Islamabad is keen to establish a similar trans-border free trade centre near the border city of Kashgar in southern Xinjiang. During a meeting with senior officials from Xinjiang, Pakistan President Asif Ali Zardari proposed a system of integrated border management in Kashgar, with the eventual development of a trans-border Special Economic Zone between southern Xinjiang and northern Pakistan. Pakistan’s ambassador to China Masood Khan said the proposed zone would be similar to the Horgos centre and that the idea has been discussed "at the highest levels of both governments."

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