Uzbekistan, one of the Central Asian countries with a rich cultural heritage and a strategic place in the historic Silk Road connecting South Asia, the Middle East, and Europe, has been undergoing significant economic reformation since President Shavkat Mirziyoyev came to power in 2016. From relaxing foreign exchange controls to encouraging privatization, reforms paved the way for the country’s economy to enter into global dynamics.
Under President Shavkat, Uzbekistan maintains a pragmatic foreign policy, balancing relations with major powers like China, Russia, and the United States. It paved the way for Uzbekistan to be included as one of ten countries worldwide in the European Union’s GSP+ system of trade preferences. Since 2016, it has deepened the diplomatic ties with China, focusing on bilateral trade, people-to-people exchange, and foreign investments.
Despite the apparent economic growth, the increasing presence of Chinese business in Uzbekistan raises concern among Uzbeks, worrying about the infamous debt trap, political interferences, and national sovereignty. This raises critical questions: Is the partnership with China really a win-win or a one-sided affair? Are Chinese investments truly sustainable for the long term?
The Uzbekistan-China relations
Uzbekistan and China established diplomatic ties in 1992 after the fall of the Soviet Union. This is the first diplomatic tie between a Central Asian country and China. It is one of the cofounders of the Shanghai Five in 2001, which became the Shanghai Cooperation Organization. The relationship between the two countries was strengthened by the China-Uzbek Treaty of Friendship and Cooperation in 2005.
This relationship became a comprehensive strategic partnership in 2016 after Uzbekistan became a partner in the Belt and Road Initiative (BRI) by signing a Memorandum of Understanding in 2015. In the same year, 2016, it joined China’s Asian International Investment Bank (AIIB).
Uzbekistan’s proximity to the Caspian Sea placed it in a strategic position to access the Persian Gulf and Black Sea region. The Central Asia-China Gas Pipeline starts in Turkmenistan and runs through Uzbekistan. The relationship between the two countries started to grow faster after the Uzbekistan president, Shavkat Mirziyoyev, came to power in 2016. Uzbekistan has been featured in many Chinese expos to promote the country as a main player in China’s foreign policy. Results prompted a surge in Chinese investment flooding to Uzbekistan.
A long-waited project, the China-Kyrgyzstan-Uzbekistan (CKU) Railway pipeline, which was originally planned in 1997, faced significant delays due to financial, political, technical, and geopolitical challenges. reemerged as China, Kyrgyzstan, and Uzbekistan signed a trilateral agreement in June 2024 to implement this project.
To strengthen further cooperation, Uzbekistan announced that Chinese citizens can enter the country visa-free for 10 days; meanwhile, Uzbeks need a visa to enter China. However, in late 2024, both countries signed an agreement allowing their citizens a 30-day visa-free stay in both countries. This move enhances tourism, cultural exchange, regional connectivity, and integration and boosts trade and investment.
Bilateral Trade and Investments
Since President Mirziyoyev came to power in 2016 and the market liberalization reforms were implemented, the bilateral trade between Uzbekistan and China steadily increased. By the end of 2024, the volume of Chinese investments in Uzbekistan had exceeded 10 billion USD, while the total trade turnover between the two countries reached a remarkable 13.1 billion USD. As of Feb 2025, China placed first in foreign-invested enterprises in Uzbekistan with 3576 companies, followed by Russia with 3016 companies.
The total number of enterprises and organizations with foreign investments operating in Uzbekistan reached 15,503, including 4,011 joint ventures and 11,492 companies fully owned by foreign investors. These companies are focused on key sectors such as energy, infrastructure, food production, light industry, and geological exploration.
China is set to finance the Mulalak hydropower plant on Uzbekistan’s Pskom River through loans from a Chinese bank. According to Uzbekhydroenergo’s Deputy Chairman Farrukh Nurullaev, the contractor will likely be Chinese, per agreement conditions. This indicates the increased significant role of China in Uzbekistan’s economic development, positioning China as the largest source of foreign direct investment in the Central Asian Country.
Uzbek-China Trade Snapshot as per Export Genius report. (March 2024 to Feb 2025)
Imports from China
- Total Import Value: $12.94 billion
- Share in Total Imports: 10.67%
- Number of Importers: 18,097
Top five imported categories
Exports to China
- Total Export Value: $2.10 billion
- Share in Total Exports: 7.12%
- Number of Exporters: 748
Top five exported categories :
Conducive environment
- Uzbekistan continues to provide a favorable environment for foreign investors, which attracts mainly the Chinese. With a population exceeding 33 million and the growing largest young population, it is a viable market. In the first two months of 2025, Uzbekistan imported 552,649 mobile phones from abroad, mainly from China (404,185 units), Vietnam (129,589 units), and India (14,269 units).
- China remains the major exporter of mobile phones to Uzbekistan. In 2024, Uzbekistan imported 4.2 million mobile phones worth $374.5 million, while 3.2 million mobile phones were imported from China.
- In 2024, Uzbekistan imported 74,700 passenger cars, including EVs, valued at $1.28 billion, with over 80% sourced from China, per the Statistics Agency. South Korea came in second place. This surge, spurred by a booming young population, underscores China’s grip on Uzbekistan’s trade but warns of overdependence on one supplier.
SF Airlines, a major Chinese Cargo Carrier, is expanding its network into Uzbekistan, signaling a strategic push to capture the emerging markets. The planned increase in flight frequency suggests confidence in sustained or growing cargo volumes. As of 1st January 2025, China ranked first in the number of foreign-invested companies operating in Uzbekistan. Over the year, the number of Chinese companies in the country increased by 45%.
During the meeting between the Deputy Minister of Transport, Jasurbek Choriyev, and the Executive General Director of the company’s foreign branch, Jimmy Chang, on April 2, 2025, the Chinese company Sino Road and Bridge Corporation expressed its interest in modernization and management of Uzbekistan’s railway stations, aviation and road sectors. However, Jasurbek encouraged the Chinese parties to develop a public-private partnership project (PPP), which is mutually beneficial.
This measured stance reflects Uzbekistan’s intent to balance foreign investment with strategic oversights, ensuring sustainable gains amid growing infrastructure demands. However, relying highly on China, a single foreign player could backfire and won’t serve well.
Uzbekistan’s strategic location and its efforts to balance relationships between major powers have made it an attractive investment destination. Uzbekistan understands it well, and the country has been actively diversifying its investments to avoid over-reliance on any single partner, particularly in sectors like mining, infrastructure, and energy. Results show that a surge in European and Western investment can be seen, though China and Russia are the top regional investors.
“Western investors are primarily interested in the development of the energy industry, particularly green energy, as well as trade and infrastructure. Uzbekistan is now the most dynamically developing market in the region”- Oybek Shaykhov, head of the European-Uzbek Association for Economic Cooperation.
The European Union has set aside €10 billion to advance the Trans-Caspian Transport Corridor, reducing travel time between Europe and Central Asia to just 15 days. In 2025, an investment forum will take place in Uzbekistan to promote the initiative, which seeks to enhance connections among five Central Asian nations and Europe. European firms have already invested €1.6 billion in a copper mining project in Uzbekistan, aiding in job creation and local processing efforts.
Central Asia possesses abundant critical resources such as manganese, lithium, and graphite. Furthermore, the European Bank for Reconstruction and Development (EBRD) aims to invest between €7 and €8 billion in raw materials and renewable energy initiatives by 2027. The European Investment Bank (EIB) is also planning to allocate €365 million to support sustainable transport, water regulation, and climate resilience projects in Uzbekistan, Tajikistan, and Kyrgyzstan.
Regional relations
It is worth mentioning that a significant shift in regional diplomacy occurred as border disputes between Uzbekistan, Kyrgyzstan, and Tajikistan came to an end as border delimitation was finalized in the historic trilateral meeting in Khujand, Tajikistan, on Mar 31, 2025. This is the first step toward stabilizing relations among regional neighbouring forces. This agreement has real-world significance for both security and economic growth. In a landlocked region where connection is critical, clear borders enable cross-border trade, infrastructure initiatives, and resource-sharing agreements.
These countries may have greater leverage when interacting with more powerful states like China and Russia, who have substantial regional interests through programs like the Shanghai Cooperation Organization and the Belt and Road Initiative, if they can show that they can run their affairs.
The creation of the Consultative Meetings of the Heads of State of Central Asia is one such step. Mirziyoyev proposed this platform in 2017 during his address to the UN General Assembly, and it met for the first time in Astana, Kazakhstan, in 2018. The leaders of Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan already meet annually to address important topics like trade, transportation, water management, and security.
Uzbekistan has strengthened its relations with regional allies and the UN on security. Building on the Central Asian Regional Information Coordination Centre (CARICC) in Tashkent, it co-developed the UNODC Regional Program for Central Asia in 2022–2025 to fight crime and drug trafficking.
Despite the difficulties caused by Taliban rule, Uzbekistan has also included Afghanistan as a regional stakeholder by hosting the conference “Afghanistan: Security and Economic Development” in July 2022 to incorporate it into efforts to promote stability in Central Asia.
Raising concerns
Growing Debt
In recent years, the growth rate of Uzbekistan’s external debt has continued to increase sharply. At the end of 2017, the state debt amounted to $11.6 billion, but by the end of 2023, it reached $34.9 billion, or a three-fold increase. As of January 2025, China has spent $105 billion to finance development in Central Asia over the past 22 years, of which $18 billion has been channeled to Uzbekistan. Half of this amount is in loans provided by the China Development Bank (CDB), an important financial instrument of China’s foreign economic policy.
In Uzbekistan, manufacturing, mining, and construction have accounted for the most of financial commitments over the last 20 years (63.3 percent). These industries include the biggest projects in the area, such as the “Golden Road” gas-to-liquids facility and the Central Asia-China gas pipeline. Transportation and warehousing, which is mostly associated with the acquisition of Boeing and Airbus airplanes, is the second largest sector.
The energy industry is in third place. China is constructing, investing, and building infrastructure, primarily in natural resource-related projects, according to AidData. The telecommunications industry is also significant, despite the tiny volume. In 2007, the China Development Bank made its first loan to Uzbekistan, giving Uzbektelecom $15.5 million.
Energy concerns
Uzbekistan is no longer self-sufficient in natural gas, with imports from Turkmenistan and Russia surging 2.41 times to $1.67 billion, though monthly imports dipped to $127.9 million, per the Statistics Agency. This marks the second year of a historic shift that began in 2023 when the country flipped from exporter to importer. This suggests declining domestic production or rising internal demand outpacing supply.
Gas exports to China dropped sharply in December to $34.2 million from $53 million in November, yet annual exports hit $627.6 million, up 18.4%. China’s customs data paints a different picture, claiming $726.2 million in imports from Uzbekistan, a 25.3% rise, despite a decline from $79.4 million in November to $58.8 million in December, still 8% above last year’s figure. The data discrepancy underscores transparency issues, while Uzbekistan’s growing reliance on imports signals a deepening energy dependence, risking overexposure to foreign suppliers like China.
When handling its debt relationship with China, Uzbekistan must exercise caution. Excessive debt can result in the loss of key assets and the reduction of economic independence. Additionally, ventures involving China run the risk of corruption. Reducing debt, utilizing domestic resources, and maintaining economic diversification are crucial in this respect.
Sinophobia
Recently, the presence of Sinophobia among Uzbeks flooded over social media with viral posts such as unverified land sales to Chinese investors and increased visibility of Chinese business and cultural elements, sparking debates and concerns on its impact on national identity and sovereignty.
The opinions are divided as some people fear over economic dependencies and dilutions; others welcomed investments as key to modernization. The government has responded with reassurances, emphasizing regulatory safeguards and highlighting successful projects like the BYD auto plant. These efforts aim to balance public concerns with strategic goals as Uzbekistan seeks to diversify its economy amid challenges in traditional sectors.
Way ahead
Since taking office in 2016, President Shavkat Mirziyoyev has implemented revolutionary economic changes and a practical foreign strategy that strikes a balance between the world’s superpowers. Uzbekistan’s growing ties with China, which are characterized by substantial infrastructure collaboration, commerce, and investment under programs like the Belt and Road Initiative, are at the heart of this change.
Chinese investments have sped up Uzbekistan’s economic growth and international integration, but they have also sparked questions about national sovereignty, debt dependency, and transparency.
The necessity for careful involvement is reflected in the expanding external debt, the bilateral trade deficit, and public concerns about Chinese influence. In order to prevent becoming overly dependent on any one country, Uzbekistan is trying to diversify its international alliances, especially with the European Union. Finding a careful balance between leveraging foreign capital and preserving the nation’s economic autonomy, transparency, and sense of national identity is essential to its long-term economic viability.
