China Almost Doubles Investments In Central Asian Countries

Uzbekistan has become a driver of Chinese capital inflow.

China's accumulated foreign direct investment in Central Asia rose from $19.6 billion in 2016 to $35.9 billion by mid-2025. About 90 percent of investments are concentrated in three countries - Kazakhstan (32 percent), Uzbekistan (30 percent) and Turkmenistan (27 percent). Investments are mainly in the raw materials sector - 46 percent. However, there is a growing share of manufacturing and energy, which already account for more than a third of Chinese investment in the region. Such data are given in the report of the Eurasian Development Bank "China and the Eurasian region: analysis of investment flows", reports "Deutsche Welle".

Kazakhstan retains the position of the largest recipient of Chinese foreign direct investment in Central Asia - $11.4 billion. After 2022, Uzbekistan became the second recipient in terms of funds. At the same time, the volume of investments in the Uzbek economy has increased 35 times - from less than $300 million in 2016 to $10.7 billion in the first half of 2025.

What contributes to the growth dynamics of Chinese investments in the region, what are the risks of their high concentration in Central Asia and why Uzbekistan has become a driver of Chinese capital inflows?

The volume of Chinese investments in Central Asian countries is growing rapidly, confirms Abbos Bobokhonov, head of the Center for Asia-Pacific Studies at the Institute for Advanced International Studies in Uzbekistan. According to him, this can be explained by a number of reasons. First, the dynamics of Chinese investment growth is facilitated by the "One Belt, One Road" initiative, within the framework of which Beijing invests mainly in sectors that directly meet its interests - infrastructure, energy, industry.

The second factor is the change of leaders in four countries of the region - Kazakhstan, Uzbekistan, Kyrgyzstan and Turkmenistan. While the former leaders followed a conservative course in terms of economy and investment, the new ones are following a more liberal course, the expert said. Previously, China did not view the region as a priority for economic development and investment because of its conservative nature, the Institute for Advanced International Studies explained. But after steps towards liberalisation in the region, Beijing has gained confidence in Central Asia, and Chinese investors have seen the prospects and new opportunities for investment.

The changes have been particularly evident in relations between China and Uzbekistan. Bobokhonov recalls that in May 2017, Uzbek President Shavkat Mirziyoyev paid his first visit to China: about 100 documents worth more than $20 billion were signed then. "By doing so, our country saw China's capabilities ... Our leader saw trust in us, and business circles saw a lot of opportunities to receive investments and interact with Chinese companies," he explains.

Uzbekistan as a driver of Chinese investment in the region

Uzbekistan has significantly increased its role in China's investment projects largely due to a focused strategy implemented by both the Chinese and Uzbek sides, confirms Chinese scholar and leading researcher at the Center for Comparative Political Studies in Kazakhstan Ruslan Izimov. As the main factor, he names the institutional liberalization measures taken almost 10 years ago in Uzbekistan, which have begun to bring tangible results. "With the establishment of more clear and transparent conditions <...> by the Uzbek authorities, investors from China gradually began to increase their presence," the expert explains.

Another factor, according to the Chinese expert, is related to the scale of the market. Uzbekistan, as the most populous country in the region, has a significant domestic investment demand. The interests of the parties coincided in the structure of investments, Izimov notes: more than half of China's foreign direct investment in Uzbekistan went into energy and manufacturing.

In addition, the China expert points to the purposeful diversification of China's investment portfolio in Central Asia. By increasing its investments in Uzbekistan, Beijing gains additional negotiating resources, while competition for access to Chinese money is intensifying within the states of the region, says a member of the Center for Comparative Political Studies.

Why Central Asia chooses China as a partner

Some aspects of this trend can be traced at the level of specific countries. Thus, for Tajikistan, Chinese investments occupy a key place and currently remain the most attractive, emphasizes Tajik political scientist and international relations specialist Muhammad Shamsuddinov. According to him, China is the main investor of the republic, having overtaken Russia in terms of investments in 2017.

The geographical location plays an important role influencing the attractiveness of Chinese funds, the political scientist notes: Tajikistan's common border with China allows building trade and logistics chains without significant difficulties. In addition, Chinese investments differ from European investments, for example, in that they have simpler mechanisms for attracting investment and are not accompanied by additional conditions, Shamsuddinov added. According to him, Western investments are usually accompanied by issues related to environmental and ethical requirements, and sometimes the socio-political situation in the country.

Risks of Chinese money

At the same time, there are certain risks associated with Chinese investments, Shamsuddinov admits. "Risks are present not only in Central Asia, but in the vast majority of countries where China invests," the political scientist said. Among them is partial control over various sectors of the economy and resources, which could lead to economic and political pressure.

At the same time, Abbos Bobokhonov said Chinese investments are not in themselves a risk. However, insufficient elaboration of projects and weak control over their implementation, and in some cases - the presence of corrupt elements - can lead to negative consequences, up to the failure of projects, and as a consequence - to the states falling into debt to China. For example, several years ago, Kyrgyz President Sadyr Zhaparov did not rule out that some important facilities in the country could be transferred to China if Bishkek fails to repay its debt to Beijing, Bobokhonov recalls. In this regard, the attraction of Chinese funds requires careful preliminary calculations, detailed agreement between the parties and subsequent systematic monitoring of project implementation.

When asked about anti-Chinese sentiment in the region, Bobokhonov says that in the past such a position was mainly manifested in the border states - Kazakhstan and Kyrgyzstan, and less often in Tajikistan. However, in 2025, critical statements were also observed in Uzbekistan - there were reports in social networks about Chinese companies and individuals allegedly buying up land plots and real estate in major cities of Uzbekistan.

The interlocutor believes that this is due to the rapid increase in business ties with China and, accordingly, the growing number of companies with Chinese capital. Their number has grown from about 700 in 2016 to more than 5,000 in 2025. Local businesses have been underprepared for this competition, and many feel that Chinese companies are taking market share away from them, as well as creating competition in the local labor market, Bobokhonov explains.

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