In the early 2010s, Moscow undertook extraordinary integration efforts that led to the formation of the EAEU, an economic union of Belarus, Russia, Kazakhstan, Kyrgyzstan and Armenia. However, by the time the final agreement was signed in May 2015, Russia had already annexed Crimea, resulting in the first packages of sanctions and growing tensions between Moscow and the West. After the full-scale invasion of Ukraine and the imposition of broader sanctions, the fate of the integration project became unclear.
On the one hand, the countries of the union became a kind of offshore zone for bringing 'grey' imports into Russia; on the other hand, it became obvious that economic integration with Russia was no longer considered a strategic project by these countries. The trajectory of relations with Belarus is defined by a scenario of soft absorption, while all other countries are forced to seek support elsewhere. Economic isolation and the weakening of Moscow's political influence in the region (→ Re: Russia: Russia is losing political and military influence in Central Asia) are leading to Russia's displacement and its replacement by China as the Central Asian 'centre of gravity'.
By the end of 2023, China, surpassing Russia, became the largest trading partner for Central Asian countries. Kazakhstan, the last country where Russia maintained leadership, saw China's trade turnover increase by over 30% to exceed $41 billion, while Kazakhstan's trade turnover with Russia decreased by 3.7% to $26 billion.
Throughout 2023, the trade volume between China and Central Asian countries increased by 27%, reaching $89 billion, of which more than $60 billion accounted for Chinese exports, according to Emil Avdaliani, a professor of international relations at the European University in Tbilisi. China expanded trade with all countries in the region, except Turkmenistan (down by 5%).
However, according to the authorities of Kazakhstan, with the same 30% growth, the trade turnover with China amounted to $31.5 billion. Official data on trade from Central Asian countries often do not coincide with Chinese data, as noted by Eurasianet; this situation was observed even before the war. The main discrepancy with Chinese data is found in Kazakhstan, Kyrgyzstan, and Tajikistan. According to Re:Russia estimates, based on the data provided by the authorities of Central Asian countries, their trade turnover with China is $63.3 billion. This constitutes 26% of the total trade turnover claimed by their customs authorities. However, the trade turnover with Russia ($50.8 billion) is still 20% less than that with China. If we rely on Chinese customs data, the trade turnover between Central Asian countries and China surpasses that with Russia by 1.8 times.
But not only is the volume of trade growing – the format of economic cooperation is also changing, notes Avdaliani. If previously China in Central Asia was mainly focused on the extraction of natural resources (within the Belt and Road Initiative, BRI), now it is more actively investing in long-term projects. For example, large-scale green energy projects are being discussed with the Uzbek authorities.
China is already building two solar power plants in Uzbekistan with a capacity of 500 megawatts each. In May 2023, the countries announced an agreement to build other facilities with a total capacity of 6 gigawatts, requiring around $5-6 billion in investments. The world's largest electric car manufacturer, BYD, in partnership with UzAuto, will build a plant in Uzbekistan capable of producing up to 300,000 cars per year. In 2023, China opened 854 new enterprises in Uzbekistan – twice as many as in 2022. Russia, on the other hand, opened 745 enterprises in 2023 – almost a quarter less than the previous year. While there are more companies with Russian investments in the country (3044 compared to 2377 with Chinese investments), the gap could quickly narrow. At the China-Central Asia Summit in May 2023, Chinese leader Xi Jinping announced a regional investment and grant program worth $3.8 billion.
In addition, Russia's invasion of Ukraine and its break with the West, as well as attacks on merchant ships in the Red Sea, have given new impetus to the idea of the Middle Corridor (officially called the Trans-Caspian International Transport Route, TCITR), a trade route that would link Chinese and European markets via Central Asian and Caucasus countries, bypassing Russia. Previously, this route lost out to both the Southern Sea Route and the Trans-Siberian Railway, which runs through Russia, and did not attract much interest from outside investors. In early November, Kazakhstan hosted a conference on the issue with the IMF, EBRD and JP Morgan who expressed readiness to join the project. A special World Bank report released in late November 2023 forecasts that by 2030 the volume of traffic along the Middle Corridor could triple to 11 million tonnes.
Russia's invasion of Ukraine has hit Russia's position in the region hard, it had already started turning towards China earlier, said Nargis Kasenova of Harvard University's Centre for Russian and Eurasian Studies. As Russia distances itself from the West and its foreign policy becomes more aggressive and adventurous, 'China has come to be perceived in Central Asia as a reliable and predictable regional power'. Essentially, China is becoming for the region what Russia used to be. Russia, which, after breaking with the West, is itself turning into a 'raw materials appendage' of China (→ Re: Russia: Dead End U-turn), evidently has nothing to counter this trend.