China's Growing Economic Influence in Uzbekistan: Opportunity or Overreach?

Amid Russia's ongoing war in Ukraine, Central Asian countries have sought to strengthen economic ties with China, and Uzbekistan is no exception. As a result, China has become Uzbekistan's leading source of foreign direct investment (FDI) and loans, surpassing Russia in the number of joint-capital enterprises. However, many ordinary Uzbeks are increasingly uneasy about the growing dominance of Chinese companies, particularly in the country's mining sector.

Controversy Over Chinese Investment in Gold Mining

Debates over China’s economic footprint in Uzbekistan reignited following an online auction held last February on the E-auksion platform. During the auction, 31 gold mining sites in the Navoi region were sold for a total of 25.1 billion soums ($1.95 million). According to Ozodlik, most of the 12 companies that acquired these sites have ties to Chinese investors.

Media reports highlighted the surprisingly low starting prices for the sites, which ranged from 26.3 million to 52.5 million soums ($2,000 to $4,000). The most expensive lot, Sop-10/24 in the Nurotinsky district, was sold to Xinlong Mining Drilling for 3.6 billion soums ($279,000)—a price 110 times higher than its starting bid. The same company also acquired the Sop-14/24 site and secured the rights to develop eight additional gold deposits, collectively worth 9.1 billion soums ($700,000). Other Chinese-linked firms, including Neo Gold Mining and Zhonghuitong Mining Group, also secured multiple gold ore sites in the auction.

Concerns Over Auction Transparency

Experts interviewed by Ozodlik questioned the fairness of the auction, arguing that the initial lot prices did not reflect real market values and were deliberately set low to attract foreign investors. The auction results sparked intense debate on Uzbek social media, with critics alleging that mineral reserves were being handed over to Chinese companies “for a pittance.” Concerns over alleged "Chinese expansion" have been growing, fueled by skepticism about foreign control of strategic resources.

The news outlet Kun.uz also pointed out that Xinlong Mining Drilling, the main buyer, was established just months before the auction in the summer of 2024. Official records show that the company’s primary founder, Uzbek citizen Bakhtiyor Musurmanov, holds a 70% stake, while the remaining 30% is owned by three Chinese nationals: Zeng Xianming, Yang Dianlin, and Zhou Hongli.

In response to the controversy, Uzbekistan’s Center for Subsoil Use issued a statement refuting the concerns, emphasizing that only locally registered companies won the auction, with over 70% of the owners being Uzbek citizens.

China’s Expanding Economic Role in Uzbekistan

China's economic influence in Uzbekistan extends beyond mining. The number of Chinese-backed companies in Uzbekistan grew by 42.5% last year, rising from 2,432 to 3,467, surpassing Russia as the country’s leading foreign business partner.

China now accounts for 23% of all foreign direct investment and loans in Uzbekistan, followed by Russia (13.8%) and Turkey (8.5%). A key driver of this investment is China’s Belt and Road Initiative (BRI)—a global infrastructure strategy launched in 2013 to enhance trade and connectivity across Asia, Europe, and Africa. Central Asia, strategically located at the crossroads of Europe and Asia, plays a crucial role in this initiative, benefiting from substantial Chinese investments in transport, energy, and resource development projects.

At the same time, Russia’s economic presence in the region has waned due to international sanctions imposed following its invasion of Ukraine. As a result, Central Asian countries, including Uzbekistan, have increasingly turned to China for alternative sources of foreign investment.

The Double-Edged Sword of Chinese Investment

Experts argue that while Chinese investment has contributed to infrastructure development, job creation, and modernization, it also carries risks—particularly concerning debt dependency. Many projects in Uzbekistan are financed through Chinese loans, raising concerns about long-term financial sustainability.

Economist Y. Yusupov warns that Uzbekistan’s external debt is becoming a serious issue, both in terms of its size and lack of transparency. "The government is sinking deeper into debt. By the end of 2024, national debt approached $40 billion, amounting to 35.5% of GDP," Yusupov notes. In 2024 alone, Uzbekistan issued $4 billion in Eurobonds, with $1.5 billion coming from the Ministry of Finance and the remainder from state-owned banks and enterprises. Additional debt issuance is already planned for 2025, raising further concerns about the country's financial vulnerability.

Calls for a Balanced Approach

Uzbek experts emphasize the need for a diversified investment strategy to avoid over-reliance on any single foreign partner, particularly China. Alisher Ilkhamov, Director of the Central Asia Due Diligence Research Center, stresses the importance of economic diversification:

"Attracting foreign investment and fostering international trade is essential for economic growth. However, dependence on a single country poses risks to national sovereignty. Excessive reliance on one economic partner can lead to political leverage being exerted, as seen in Europe’s dependence on Russian energy."

As China’s economic presence in Uzbekistan continues to expand, the country faces both opportunities and challenges. While Chinese investment brings capital, infrastructure, and economic growth, it also raises concerns about debt dependency, market fairness, and national sovereignty. Experts stress the importance of transparency and diversification to ensure that foreign investment benefits Uzbekistan’s long-term development without compromising its economic independence.