Over the past decade, the economic relationship between China and Central Asia has shifted from transactional trade to deep strategic investment. China's foreign direct investment in the region is not merely growing in size but transforming regional economies, creating new value chains and laying the foundation for mutually beneficial long-term cooperation. Data show that China has emerged not only as a dominant economic partner for Central Asian nations, but also as a source of stable capital during a period of global retreat in FDI flows.

As of mid-2025, China's accumulated FDI stock in Central Asia reached $35.9 billion. This figure represents a near doubling over the last decade and reflects sustained investment growth even as global FDI flows declined. According to UNCTAD, total global FDI contracted by 11 percent in 2024, yet Chinese investment in Central Asia continued to expand systematically.

The distribution of this stock reveals both established partnerships and emerging centers of cooperation. Kazakhstan remains the largest recipient of Chinese FDI in Central Asia, with $11.4 billion — accounting for roughly 32 percent of the regional total. Uzbekistan, however, has become the fastest-growing destination, having grown from $300 million in 2016 to $10.7 billion by mid-2025, a 35-fold increase in less than 10 years. Turkmenistan stands third with $9.5 billion, while Kyrgyzstan is showing robust growth with an approximate compound annual growth rate (CAGR) of 11 percent.

Together, these figures sit alongside China's accumulated FDI in Russia, the largest recipient among former Soviet states outside Central Asia, which totaled $17.5 billion by the first half of 2025. When taken with Mongolia and other CIS countries, China's total FDI stock in the broader region reached $66.1 billion, an 80 percent increase compared with 2016. Importantly, Central Asia accounts for over 54 percent of that total, underscoring the region's central place in Chinese investment strategy.

A decade ago, China's investment in Central Asia was often characterized as predominantly resource-focused: pipelines, hydrocarbons, and transit corridors. Today, the data show a sectoral transformation that points to deeper economic integration:

The share of raw materials in Chinese FDI, while still large, declined from 68 percent to 54 percent, even as absolute investment in commodities grew. Manufacturing now constitutes 22 percent of Chinese FDI, an increase to $14.5 billion, indicating an emergence of higher-value upstream and downstream industrial investments. Energy investments, including renewables, represent 12 percent ($8.1 billion) of the regional FDI stock.

This structural shift is evident in concrete projects: automotive factories by Chinese firms such as BYD,Chery, and Geely in both Uzbekistan and Kazakhstan embody true foreign direct investment — building plants, establishing supply chains, and creating skilled employment — rather than simply exporting finished products.

The rapid rise of manufacturing investment suggests that China is not only securing resources but also transferring industrial capacity to the region in ways that enhance economic diversification.

The dramatic acceleration of Chinese FDI in Uzbekistan marks one of the most important developments of the last decade. Starting from a low base of $300 million in 2016, Uzbekistan's FDI stock surged to $10.7 billion by mid-2025. This growth exceeds that of any other Central Asian state in percentage terms and reflects a broader opening of the Uzbek economy through privatization, regulatory reform, and market-oriented policy incentives.

Unlike in Kazakhstan, where investment is concentrated on energy and logistics, China's investment in Uzbekistan spans manufacturing, infrastructure, and technology sectors. This diversification suggests a strategic pivot — one that places Uzbekistan as a dual core alongside Kazakhstan in China's Central Asian engagement model.

If recent trends persist, projections indicate that Uzbekistan could overtake Kazakhstan in total accumulated Chinese FDI as early as 2026-27.

Looking toward 2030, several structural trends point to deepening cooperation. First, China and its Central Asian partners are likely to prioritize primary processing of minerals within the region. Plans for processing facilities in Tajikistan and Kazakhstan, particularly for rare earth metals and other critical minerals, will reduce dependence on raw ore exports and create higher-value outputs locally.

Second, China's domestic demand for lithium, copper, and uranium — essential for energy transition technologies — aligns with Central Asia's resource endowments. Joint investment in extraction and processing will strengthen supply chain security for both sides.

Third, Belt and Road Initiative projects, now codified in strategic documents such as the Astana Declaration of the Central Asia-China Summit in 2025, will accelerate cross-border rail, digital infrastructure, and logistics corridors.

These developments not only expand the scale of cooperation but also embed Chinese capital in sectors that generate shared economic benefits, incentivize technology transfer and support regional industrialization.

The FDI data and structural trends are unequivocal: China's investment in Central Asia has moved beyond resource acquisition to become a catalyst for industrial transformation. This evolution reflects a maturing partnership in which economic cooperation is not a zero-sum game, but a platform for shared growth.

For Central Asian countries, China offers stable capital, market access, and integration into global value chains. For China, the region provides resources, strategic economic corridors, and a favorable environment for outward industrial expansion.

The future potential for cooperation is not hypothetical — it is already underway. By 2030, deeper industrial linkages, advanced processing facilities, and expanded manufacturing presence will make China-Central Asia cooperation a defining axis of Eurasian development.

In a world where global FDI is declining and geopolitical uncertainties abound, the China-Central Asia investment partnership stands out as a model of durable, mutually reinforcing economic engagement. This is not a temporary trend but a long-term strategic alignment with economic logic at its core.

The author is a former prime minister of the Kyrgyz Republic.

The views don't necessarily reflect those of China Daily. 

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