China spent more than $10 billion on goods from resource-rich Kazakhstan last year to become the most lucrative export market for Central Asia's largest economy, official Kazakh data released showed.

China, the world's second-largest crude oil importer, last year accounted for 17 percent of Kazakhstan's total exports in U.S. dollar terms, pushing Italy into second place and Russia into third, State Statistics Agency data showed. Oil, gas and industrial metals for China's rapidly growing economy form the overwhelming majority of Kazakhstan's sales across the border to its eastern neighbour, which is beginning to recoup billions of dollars of investment in Kazakh resources.

"China is hungry for all sorts of resources, while Kazakhstan is rich in those," said Milena Ivanova-Venturini, head of research for Central Asia at Renaissance Capital.

"The trading relationship between the two countries will continue to gain in importance."

China's growing clout in Kazakhstan and other former Soviet republics in Central Asia is underpinned by billions of dollars in investment in the region's oil, gas and metals reserves, including a $10 billion "loan-for-oil" deal agreed in 2009.

Beijing's foray across its 1,533-km (958-mile) border with Kazakhstan represents a challenge to Russia, which sees the country as part of its sphere of influence, as well as to European hopes that it can be a major new supplier of energy.

Kazakhstan has averaged annual GDP growth of more than 8 percent over the last decade, notwithstanding a sharp slowdown in 2008 and 2009, due to the global economic crisis.

Kazakhstan's courting of Chinese and other Asian investors also ensured that, despite the crisis, these same two years were the country's record years for foreign direct investment.

Trade Surplus Doubles
Kazakhstan's total exports rose 37.1 percent in 2010 to $59.2 billion. With imports up only 4.8 percent to $29.8 billion, its foreign trade surplus doubled to $29.4 billion.

Kazakhstan is the world's largest uranium miner and a major supplier of oil, copper and zinc. Mineral products accounted for 75 percent of its total exports in 2010, the statistics agency said.

The Kazakhstan-China oil pipeline has reached full annual capacity of 10 million tons, and with capacity set to double in the next three years, will be a major driver in future trade.

The two state energy companies have also agreed to build and finance the Kazakh leg of a natural gas pipeline network that will feed into a new trunk route running east from Turkmenistan, while Kazakh plans to increase uranium deliveries to China.

"The main trade between China and Kazakhstan is likely to continue being driven by the resources sector in the mid-term," Ivanova-Venturini said.

"If Kazakhstan is successful in developing its agricultural sector, then agri may gain importance some time down the line."

Russia retained the leading place among importers to Kazakhstan, accounting for 37.0 percent of all imports in 2010. China was second, with 13.3 percent. (Reuters)