China surpasses Russia as the largest foreign investor in Central Asia

China has surpassed Russia as the largest foreign direct investor in Central Asia, the resource-rich region that has long been in Moscow's sphere of influence but is now increasingly attracting Beijing's interest, according to data from the Eurasian Development Bank (EDB).

China's cumulative direct investment in Central Asia over the past decade has exceeded $35 billion by 2025, according to an EDB report published in December. Founded in 2006 by Russia and Kazakhstan, the bank promotes trade and economic integration among the seven former Soviet republics.

During a regional summit in October, Russian President Vladimir Putin emphasized that Russia's cumulative direct investments in Central Asia amount to about $20 billion, a figure that he himself assessed as more "modest."

Russian investment in Central Asia has declined since 2022, driven by the economic costs of the full-scale invasion of Ukraine and the Western sanctions that followed. During this period, China has significantly expanded its economic presence in the region.

China, the world's largest energy importer, has invested heavily in the oil and gas sector in Central Asia, while also expanding investments in clean energy, mineral processing, and transit transport infrastructure in the region.

Kazakhstan and Uzbekistan, the two largest economies in Central Asia, as well as energy-rich Turkmenistan, have been the main beneficiaries of Chinese investment. According to the EDB, these three countries account for about 90 percent of total Chinese capital invested in the region.

Among Beijing's largest projects is China National Petroleum Corporation's $9.4 billion investment in developing the Bagtyyarlyk oil field in Turkmenistan.

Another Chinese state-owned company, Sinopec, has invested $2.1 billion in the Aqtobe oil field in Kazakhstan.

Meanwhile, China Energy, a state-owned company, has invested about $2 billion in new solar power plants in Uzbekistan.

Chinese investment in Uzbekistan has grown from $2.1 billion to $10.7 billion over the past five years, outpacing the growth rate in all other Central Asian countries.

Uzbekistan's economy relies primarily on the export of natural resources, including gold and strategic minerals, as well as agriculture.

Central Asia expert Nargiza Muratalieva said Uzbekistan has secured Chinese investment in the energy and manufacturing sectors as it tries to move away from a "commodity-based economy."

"Tashkent is focusing on investments in manufacturing and energy, while climate challenges have made renewable energy and modernization of the energy grid a strategic priority," Muratalieva told Radio Free Europe.

In Kyrgyzstan and Tajikistan, the smaller economies of Central Asia, Chinese investments have focused mainly on large infrastructure and energy projects, including transport corridors, logistics centers, and hydropower development.

Experts say Russia continues to be an important economic and strategic partner for Central Asia, despite increased Chinese investment in the region.

They emphasize Central Asia's dependence on transit routes that pass through Russia, as well as the fact that millions of migrant workers from the region are employed in this country.

"Almost every family in rural areas of Tajikistan and Kyrgyzstan, and perhaps to a lesser extent in other Central Asian countries, depends on remittances coming from Russia," a university professor in the northern Tajik city of Khujand, who spoke on condition of anonymity for fear of reprisals, told REL.

"Moscow remains a significant power regardless of the level of its financial investments," he added.

Zhanibek Arynov, an international relations expert from Kazakhstan, said that “the idea of ​​a competition between Russia and China in Central Asia” is often exaggerated. According to him, Central Asian countries are attracting investment in their strategic sectors from both countries.

However, Arynov added that "from a political perspective," it is often easier for Central Asian countries to do business with China.

"Because China's approach is usually: 'business is business,'" he said.

"In the case of Russia, however, we sometimes see that Moscow cares not only about economic benefits and profits, but also about issues such as the status of the Russian language in the region, as well as other topics related to the internal politics of these countries," he concluded./ REL