The Chinese General Administration of Customs says bilateral trade in the first 10 months of this year reached US$1.5 billion - an increase of 38 percent on a year-on-year basis. Kazakhstan has become China's second largest trade partner in the CIS.

The two countries are also reportedly negotiating a free trade zone in the border area.

Nazarbayev, who arrived here Sunday for a four-day state visit to China, told a China-Kazakhstan business forum that Kazakhstan is ready to provide raw materials such as energy and iron ore to China and expects Chinese entrepreneurs to set up machinery factories in Kazakhstan.

He said Kazakhstan is "very interested" in cross-border transportation between the two countries, hoping that China would become a major passage for Kazakhstan to enter the South Asian market, while it could further tap the European market through Kazakhstan.

Though the current scale of cooperation between China and Kazakhstan is still small, Yu Xiaosong, president of the China Council for the Promotion of International Trade, expressed his confidence in promoting bilateral relations,.

Kazakhstan holds advantages in oil and natural gas industries while China has advantaged in textile, information technology, electrical and mechanical, home appliance and light industries, Yusaid. The two nations could further cooperation in those fields.

Nazarbayev arrived on Sunday for a four-day visit to China. President Jiang Zemin and Nazarbayev held talks on Monday and signed the China-Kazakhstan Good-Neighbourly Treaty of Friendship and Cooperation.

They also witnessed the signing of agreements relating to fighting terrorism, separatism and extremism, preventing dangerous military activities and economic cooperation.

(Edited by china.org.cn December 25, 2002)