Central Asia Flourishes Under 37 Billion USD Chinese Investments, but There Are Problems

China has nearly doubled its investment in Central Asian countries since 2016. Uzbekistan has shown record growth rates, becoming the driver of Chinese capital inflow.

The volume of accumulated Chinese foreign direct investment in Central Asia has grown from 19.6 billion USD in 2016 to 35.9 billion USD by mid-2025. About 90 percent of the investments are concentrated in three countries - Kazakhstan (32 percent), Uzbekistan (30 percent), and Turkmenistan (27 percent). Investments are primarily directed to the raw materials sector - 46 percent. However, the share of manufacturing and energy is increasing, which already accounts for more than a third of Chinese investments in the region. This data is presented in the report by the Eurasian Development Bank "China and the Eurasian Region: Analyzing Investment Flows," published in December 2025.

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

What contributes to the dynamics of Chinese investment growth in the region, what risks are associated with their high concentration in Central Asia, and why has Uzbekistan become the driver of capital inflow from China - in the DW material.

Changes in Central Asia

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

The second factor has been the change of leaders in four countries of the region - Kazakhstan, Uzbekistan, Kyrgyzstan, and Turkmenistan. While previous leaders adhered to a conservative course in terms of the economy and investments, the new ones follow a more liberal approach, says the expert. Previously, China, considering the conservatism of the region, did not view it as a priority for economic development and investment, explains the representative of the Institute of Prospective International Studies. However, after steps toward liberalization in the region, Beijing has gained trust in Central Asia, and Chinese investors have seen prospects and new opportunities for investments.

The changes have been particularly evident in the relations between China and Uzbekistan. Bobokhonov recalls that in May 2017, the first visit of Uzbekistan's President Shavkat Mirziyoyev to China took place: about 100 documents were signed worth more than 20 billion USD. "Thus, our country saw the opportunities of China... Our leader saw trust in us, and the business circles saw many opportunities for attracting investments and interacting with Chinese companies," he explains.

Uzbekistan as a Driver of Chinese Investments in the Region

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

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

In addition, the China expert points to the targeted diversification of China's investment portfolio in Central Asia. By increasing investments in Uzbekistan, Beijing gains additional negotiating leverage, and competition for access to Chinese funds intensifies within the countries of the region, notes the researcher at the Center for Comparative Political Studies.

Why Central Asia Chooses China as a Partner

Certain aspects of this trend can be traced at the level of specific countries. For Tajikistan, Chinese investments occupy a key position and remain the most attractive at the moment, emphasizes Tajik political scientist and international relations specialist Muhammad Shamsuddinov. According to him, China has become the main investor in the republic, surpassing Russia in investment volume in 2017.

An important role influencing the attractiveness of Chinese funds is played by geographical location, notes the political scientist: the common border of Tajikistan with China allows for the establishment of trade and logistics chains without significant difficulties. Moreover, Chinese investments differ, for example, from European ones by simpler mechanisms for attracting and are not accompanied by additional conditions, adds Shamsuddinov. According to him, Western investments are usually accompanied by questions regarding 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, acknowledges Shamsuddinov. "Risks exist not only in Central Asia but also in the overwhelming majority of countries where China invests," says the political scientist. Among them are partial control over various sectors of the economy and resources, which may lead to economic and political pressure in the future.

At the same time, Abbos Bobokhonov believes that Chinese investments in themselves do not pose a risk. However, insufficient project development and weak control over their implementation, and in some cases the presence of corrupt elements, can lead to negative consequences, including project failures, and consequently, countries falling into debt to China. For instance, a few years ago, Kyrgyz President Sadyr Japarov did not rule out that some important facilities in the country could be transferred to Chinese management if Bishkek fails to repay its debt to Beijing, recalls Bobokhonov. In this regard, attracting Chinese funds requires careful preliminary calculations, detailed agreements between the parties, and subsequent systematic monitoring of project implementation.

When asked about anti-Chinese sentiments in the region, Bobokhonov responds that such a position previously manifested mainly in border states - Kazakhstan and Kyrgyzstan, less frequently in Tajikistan. However, in 2025, critical statements were observed in Uzbekistan as well - social media reported alleged purchases of land and real estate in major cities of Uzbekistan by Chinese companies and individuals.

The interlocutor believes that this is related to the rapid increase in business ties with China and, accordingly, the growth in the number of companies with Chinese capital. Their number has increased from about 700 in 2016 to more than 5000 in 2025. Local businesses have been insufficiently prepared for such competition, and many believe that Chinese companies are taking away their market share and creating competition in the local labor market, explains Bobokhonov.