New Special Economic Zone in Yili, Near Kazakhstan Border

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Sept. 1 – China has ratified a new special economic zone in Yili, in northwestern Xinjiang near the border with Kazakhstan. The area is already China’s only Kazakh autonomous prefecture, populated mainly by ethnic Kazakhs. The prefecture has a total population of four million with about 500,000 living in the city of Yining, also known as Ghulja. The 200-square-kilometer zone will transform the nearby border port at Khorgas into a center for trade with Kazakhstan, including container transportation, processing facilities and the promotion of tourism in both Kazakhstan and Xinjiang.

Yining is the principal city, agricultural market, and commercial center of the Ili River Valley. It is an old commercial trading center for products such as tea and cattle, and it is still an agricultural area with extensive animal husbandry. It has extensive fruit orchards, while iron, coal and uranium are mined nearby. The city’s roots run deep and its predecessor, the now ruined city of Almaliq, was an important trading city in the times of Chinggis Khan and was a major trading city during the Silk Road days.

Yining Airport is located just north of the city, and has commercial services to Urumqi, while a new electric railway line from Urumqi to Ghulja to Khorgos was completed in late 2009. A daily passenger service – an overnight Urumqi-Ghulja train – began on July 1 this year.

Khorgas is linked to the Kazakhstani city of the same name just across the border, which is linked with rail and road networks to Almaty and other destinations in Kazakhstan. The Khorgas Port is open year-round, making it attractive. It has well developed inspection facilities, banking, post and telecommunications infrastructure. Khorgas has over 2,500 branch offices and enterprises operating mainly in Sino-Kazakhstani trade and can accommodate three million passengers and 2 million tons of cargo each year.

China-Kazakhstan bilateral trade is worth about US$10 billion each year, and this figure has been growing significantly. China is now Kazakhstan’s second largest trading partner. The Yili SEZ will provide benefits in tax incentives and greater financial freedoms for businesses investing in the area, with the main focus being on trade with Kazakhstan and the rest of Central Asia. Khorgas Port is 380 kilometers from Almaty, Kazakhstan’s main economic center and a developing regional hub for Central Asia, with extensive air and rail connections to most major Central Asian cities. The Regional Financial Center of Almaty (RFCA) is a specific area developed to handle the development of Almaty in this manner, which also includes a stock exchange. James Wolfensohn, former president of the World Bank chairs the International Advisory Board of the RFCA.

“As we have been demonstrating this past week, great opportunities lie in Western China as China’s border areas open up to international and bilateral trade,” says Chris Devonshire-Ellis of Dezan Shira & Associates. “The development of a new SEZ in Yili confirms our opinion that the new markets to look at in China for growth are in the west, and in the case of Yili, businesses interested in developing trade links with the huge markets in Central Asia will do well here.”

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