Chinese Investment Reshapes the Eurasian Economic Landscape: A New Pattern of Cooperation in Central Asia and the South Caucasus

Over the past decade, China's cumulative foreign direct investment (FDI) in Central Asian countries has reached US$35.9 billion. This investment is primarily concentrated in Kazakhstan, Uzbekistan, and Turkmenistan, which together account for nearly 90% of China's total investment in the region.

Meanwhile, Chinese investment in the South Caucasus has also continued to grow. Over the past decade, cumulative Chinese direct investment in the region has increased 1.5 times, from US$280 million to US$690 million. The majority of investment has flowed to Azerbaijan (approximately 60%) and Georgia (approximately 40%), focusing on the manufacturing and energy sectors.

01 Reshaping the Investment Landscape

China's investment in the Eurasian region has grown by 80% over the past decade, reaching a total of US$66 billion by the first half of 2025. This data indicates that China has become the largest investment partner in the Eurasian region, and its investment growth rate has remained steady despite a global decline in FDI.

In Central Asia, Kazakhstan remains China's largest investment destination, with cumulative investments exceeding US$11 billion. Uzbekistan saw the most significant growth, with Chinese direct investment nearly doubling in the past year and a half, reaching a cumulative US$10.7 billion.

The investment structure has also undergone significant changes. The share of resource-based industries decreased from 68% to 54%, while the share of processing and manufacturing industries rose from 13% to 22%, and the share of the energy sector increased from 4% to 12%. This shift signifies that Chinese investment is transitioning from a resource-oriented model to a diversified and sustainable one.

The combined GDP of the five Central Asian countries reached US$519 billion, a 400% increase since 2000. Over the past four years, the combined GDP of the Central Asian countries has grown by 80%, a positive correlation between this economic growth and the increase in Chinese investment.

02 Strategic Alignment and Institutionalized Cooperation

The establishment of the China-Central Asia Summit mechanism marks a shift in bilateral cooperation towards an institutionalized platform. In May 2023, the China-Central Asia Summit was held in Xi'an, Shaanxi Province, China. Through regularly holding summits of the leaders of the six countries, establishing coordination mechanisms in key areas, and clarifying cooperation agendas, the summit aimed to institutionalize cooperation.

Strategic alignment has become a key characteristic of China-Central Asia cooperation. All parties are committed to further strengthening the coordination and alignment between the Belt and Road Initiative and the development initiatives and strategies of Central Asian countries, such as Kazakhstan's New Economic Policy and Kyrgyzstan's National Development Program until 2026.

At the second China-Central Asia Summit in June 2025, all parties formally signed the Treaty of Permanent Good-Neighborliness, Friendship and Cooperation between the People's Republic of China and the Republic of Kazakhstan, the Kyrgyz Republic, the Republic of Tajikistan, Turkmenistan, and the Republic of Uzbekistan, enshrining the principle of lasting friendship in law.

This institutionalized cooperation transcends traditional geopolitical zero-sum game thinking, aiming to transform geographical proximity into development synergy through the "five connections" pathway: policy coordination, infrastructure connectivity, unimpeded trade, financial integration, and people-to-people bonds.

03 Infrastructure Connectivity

Infrastructure connectivity is the most direct and fruitful area of ​​the Belt and Road Initiative. The China-Europe Railway Express has become the most symbolic logistics artery across Eurasia, with over 120,000 trains operated as of November 28, 2025, carrying goods worth over US$490 billion.

The China-Kyrgyzstan-Uzbekistan Railway project officially commenced in December 2024. This nearly 500-kilometer-long railway will connect Xinjiang, China, with Central Asia, West Asia, and even Southern Europe more closely, significantly shortening transportation distances and times. Upon completion, it will become a key transportation artery of the "China-Central Asia-West Asia Economic Corridor."

In the South Caucasus region, the Gudori Tunnel project showcases the technological strength and international cooperation spirit of Chinese enterprises. The tunnel, approximately 9 kilometers long, utilizes the "Caucasus," the world's largest diameter full-face hard rock tunnel boring machine independently developed by China, and is currently Georgia's largest infrastructure project.

These infrastructure projects have not only transformed the economic geography of Eurasia, transforming inland Chinese cities like Xi'an and Chongqing, as well as landlocked Eurasian countries like Kazakhstan and Belarus, from the "periphery" of opening up to the outside world to the "frontier," but also activated the economic potential of inland regions.

04 Diversified Transformation of Investment Sectors

China's investment in Eurasia is undergoing a strategic transformation from primary resource trade to deep integration of the industrial chain. A clear trend towards diversification in investment structure is evident, with rapid growth in investment in manufacturing and the power sector, which together now account for nearly 40% of China's total investment in Central Asia.

In 2016, China's investment in the power sector in Central Asia was almost zero, but by mid-2025, investment in this sector has reached $6.6 billion. The rapid advancement of renewable energy projects is the main driving force behind this change.

In the field of green technology, Chinese new energy vehicles, photovoltaics, and other green products are accelerating their entry into the Central Asian market. For example, Yutong Bus has delivered over 1,000 new energy buses to Central Asia by 2025, becoming a core supplier for the region's public transportation electrification.

Digital economy cooperation has also become a new highlight. Central Asian countries are actively adopting China's practical experience in smart agriculture, digital government, and digital payments to promote the construction of their own digital systems. Chinese enterprises are deeply involved in regional digital transformation in areas such as 5G communications and e-commerce, creating new highlights for the "Digital Silk Road."

05 Financial Cooperation and Localization Process

Financial cooperation is vital. Local currency settlement in the Eurasian region is progressing rapidly. Russian Finance Minister Siluanov stated that the proportion of local currency settlement in Sino-Russian trade has reached an extremely high level. The internationalization of the RMB is steadily advancing in Eurasia, with the expansion of the clearing bank network and the acceleration of Panda bond issuance, providing the region with diversified financing options and exchange rate risk hedging tools.

A special loan of RMB 10 billion equivalent has been established for China-Central Asia cooperation to support domestic and international project cooperation between China and the five Central Asian countries in areas such as trade, investment, transportation, agriculture, energy resources, and infrastructure. As of the end of March 2023, China's cumulative direct investment in the five Central Asian countries exceeded US$15 billion, with completed projects generating US$63.9 billion in revenue.

Localization has become a key factor for the successful implementation of projects by Chinese enterprises. Taking the Gudoli Tunnel project as an example, China Railway Tunnel Group procured major raw materials such as cement and steel locally, hired local workers, and provided professional technical training, promoting local employment and skills enhancement.

Chinese private enterprises are also increasing their investment in Eurasia. Over the past 10 years, their share in the investment structure has risen from 22% to 27%. This change indicates that Chinese investment in Eurasia is shifting from being dominated by state-owned enterprises to involving enterprises of various ownership structures.

06 Regional Value Chain Restructuring

Chinese investment is driving the Eurasian region to evolve from isolated "channels" into a well-connected "hub" network with smooth internal circulation and close global connections. This regional value chain restructuring is unfolding at multiple levels.

At the trade level, in 2024, the total trade volume between China and Central Asian countries reached US$94.8 billion, an increase of US$5.4 billion from the previous year, representing a growth rate of 7.2%, and more than a hundred times the US$460 million at the beginning of diplomatic relations. China has consolidated its position as the largest trading partner of Central Asian countries.

From an industrial chain perspective, cooperation models are upgrading from "EPC general contracting" to "EPC+F+I" (investment-led) and localized operation. A number of industrial parks, such as the China-Belarus Industrial Park and the China-Kazakhstan Production Capacity Cooperation Park, have become platforms for technology transfer, job creation, and industrial cluster development.

A similar trend is emerging in the South Caucasus region. In Georgia, Chinese investment in port construction is expected to reach $5 billion; in Armenia, investment cooperation in education and infrastructure is prominent; and in Azerbaijan, China is active in information technology, high-tech industries, and smart city construction.

This value chain restructuring transcends the traditional "center-periphery" dependency model and unilateralist power logic of international relations, creatively transforming Chinese-style modernization concepts into practical value for global governance.

With the China-Kyrgyzstan-Uzbekistan railway entering the substantive construction phase in 2025, and the continuous increase in the proportion of local currency settlements between China and Eurasian Economic Union member states, Eurasian economic integration is entering a new stage.

The joint construction of the Digital Silk Road and the Green Silk Road is not only a new engine for cooperation between China and Eurasian countries, but also a profound practice of a new paradigm for more equitable, inclusive, and interconnected global development.

The diversification of investment structures, the institutionalization of cooperation models, and the deep integration of regional value chains—these trends collectively paint a new picture of Chinese investment in Eurasia, and offer a definite answer regarding cooperation and development in this world full of uncertainties.