Silk Road Monthly: March 2025
Trade and Investment Bolster Chinese Ties to Central Asia
New Rail Routes Launched in Central Asia, Bypassing Russia
New rail routes have been established across Central Asia, providing alternative trade corridors that bypass Russian territory. These developments reflect regional efforts to diversify logistics networks amid the obstacle of Russian sanctions. On March 4, a container train left Chengdu, China, destined for Lodz, Poland. The travel time will take 40 days and will pass through Kazakhstan, Turkmenistan, Iran and Türkiye before connecting to the European rail network. A secondary route, which was approved this past June, will cross the Caspian Sea from Kazakhstan and will traverse through the Caucasus and Türkiye.
Gold Plot Auction Highlights Chinese Investments in Uzbekistan
Uzbekistan’s gold plot auction has reignited debates around the growing influence of Chinese investments in its resource sector. Critics argue that these investments, despite bringing much-needed capital and technology, also raise stark concerns over resource sovereignty and transparency. The government insists that foreign investment is crucial for economic modernization, but public skepticism persists, fueled by perceptions of unequal benefits in these partnerships.
Uzbekistan’s Navoi Mining and Metallurgical Company is the fourth largest in the world, and accounted for over 15% of Uzbek state revenue as of 2023. The state-owned company is planning an initial public offering in the London Stock Exchange as a means to attract foreign investment.
Criticism of Chinese Economic Practices Surges in Uzbekistan
Anti-Chinese sentiment is on the rise in Uzbekistan, particularly through social media channels after reports surfaced indicating that Chinese individuals and entities are buying up properties in Uzbek cities. China is Uzbekistan’s largest trading partner, with total turnover reaching $13.8 billion last year and $11.8 billion of that figure making up Chinese imports. With an increasing presence in many of Uzbekistan’s industries, including auto, gold, and agriculture, many citizens are concerned of China’s increasing presence in the double-landlocked country.
New Border Warehouse to Boost Kyrgyz Agricultural Exports to China
Kyrgyzstan has launched a new border warehouse to enhance agricultural exports to China, improving logistics and market access for farmers. The facility is expected to streamline storage and customs processes, addressing inefficiencies that previously hampered cross-border trade. The warehouse is located in western Kyrgyzstan, in the city of Ulugqat, near the Xinjiang border, and will serve as a hub for shipments passing through the border checkpoints of Irkeshtam and Torugart.
Kazakhstan and China Strengthen Water Cooperation
In a committee meeting on March 19, Kazakhstan and China signed a Memorandum of Understanding to collaborate on managing shared water resources, putting emphasis on transboundary river systems. The agreement aims to improve water allocation, prevent ecological conflicts, and address rising concerns over resource scarcity.
China Adapts to Tajikistan’s Security Demands
Tajikistan is increasingly turning to China for military support. Despite Tajikistan’s impoverishment, this is not a one-sided partnership. With Chinese support to silence Pamiri dissent in Gorno-Badakhshan and mitigate security threats emanating from Afghanistan, Tajikistan is able to establish regime stability and act as a buffer between Afghanistan and China to deter instability.
Central Asia’s Critical Minerals Draw Global Interest
The global race for critical minerals has intensified, with Central Asia becoming a key battleground. The U.S., EU and China are vying for access to the region’s rich deposits, each pursuing distinct strategies to secure supply chains. While the U.S. and the EU have displayed interests, and even with France signing a $5 million mineral deal during President Shavkat Mirziyoyev’s visit on March 11, they both remain years behind Chinese involvement. China has established control of nearly all leases for rare earth mining in both Kyrgyzstan and Tajikistan and is heavily involved in Kazakhstan and Uzbekistan as well.
Turkmenistan’s Push for Greater Regional Engagement
Turkmenistan is moving away from isolationism — at least when it comes to gas. Recent gas deals with Iran and Türkiye will see Ankara supplied with 1.3 billion cubic meters of gas by the end of this year. Additionally, Kazakhstan’s state-run QazaqGaz will expand a pipeline connecting it with Turkmenistan, which would see an expected doubling of Turkmen gas headed to Kazakhstan. Turkmenistan’s diversification efforts would see it lower its reliance on gas exports to China. Currently Turkmenistan sees around 90% of its gas headed through the China-Central Asia pipeline, an industry that was dominated by Russia prior to the pipeline’s construction in 2009.
Declining Caspian Water Levels Threaten Key Transport Corridors
Falling water levels in the Caspian Sea pose a serious threat to critical trade routes connecting Central Asia, Russia and China. Experts warn that declining levels could disrupt shipping lanes and harm regional trade, as cargo capacity has decreased by over 20% in the Caspian in the past year. Falling water levels can also impact shore lines and ports, possibly requiring new deep-sea ports or downsizing cargo ships
$400 Million Cotton Cluster Investment in Southern Kazakhstan
The Chinese company Xinjiang Lihua Group announced plans to invest in a $400 million cotton-textile cluster in Kazakhstan’s Turkestan region, aimed at modernizing the textile sector. The project includes advanced processing facilities and supply chain upgrades to boost production efficiency.
New Investment in Uzbek Hydropower Plant
The Bank of China is planning to finance the construction of the Mulalak Hydropower Plant on Pskom River in northeastern Uzbekistan. The project, overseen by Uzbekhydroenergo, has undergone evaluations and received government approval, allowing implementation to begin. The contractor for the project is expected to be Chinese, as stipulated in agreements between Uzbekistan’s Ministry of Finance and the Chinese government.
The Mulalak Hydropower Plant is part of Uzbekistan’s strategy to enhance energy security and boost renewable energy sources. The funding process follows strict feasibility studies to ensure technical and economic viability before government approval. Similar projects, such as the Pskom and Chatkal hydropower plants, have successfully passed expert reviews and received presidential endorsement. The investment payback period has been considered, though specific financial details remain undisclosed. Once final agreements are signed, a tender will be announced for the project’s execution.
Kazakh Business Leaders Look to China for EV Market Growth
Kazakh tycoon Kenges Rakishev, chairman of the Fincraft Group, is pivoting from oil and gas to cleantech, focusing on electric vehicles (EVs), batteries, and solar panels. Recognizing China's dominance in the EV sector, Rakishev sees Kazakhstan as a natural partner for China due to its mineral abundance in nickel, cobalt, and lithium. His company, Kaznickel, already supplies these minerals to Chinese businesses, and he aims to strengthen ties further. Rakishev believes China's early investments in securing mineral supplies and its advancements in EV technology give it a significant edge over Western competitors. Kazakhstan's strategic location and mineral wealth position it as a key player in the global EV supply chain. With 80% of Chinese goods to the EU passing through Kazakhstan, Rakishev sees an opportunity for the country to serve as a hub for Chinese EV manufacturing.
New Coffee Processing Plant Coming to Kazakhstan
The European Bank for Reconstruction and Development is providing a loan of around $10 million to Empire Manufacturing Kazakhstan (EMK) to build a $30 million modernized coffee processing plant in the Khorgos Free Economic Zone on the Chinese border. Once operational, the plant will export around 50% of its coffee products to markets in Central Asia and the Caucasus. EMK is a subsidiary of Food Empire Holdings, a multinational corporation listed on the Singapore Stock Exchange.