Since the rise of Mirziyoyev to power, Uzbekistan has witnessed a significant economic transformation. The country’s external trade turnover has been increasing annually by 90-120% since 2016, as per the OSCE Academy in Bishkek.
Growing trade with China
Trade with China has been steadily growing since the onset of the 21st century, particularly since 2015. During peak years, the annual growth rate reached up to 48%. China has largely solidified its position as Uzbekistan’s primary trading partner, occasionally being surpassed by Russia.
Imports from China
Imports from China to Uzbekistan have been on an upward trajectory since 2016, exceeding $7.5bn in 2022. By August of 2023, Uzbekistan had already imported goods worth $9.1bn. China accounts for a quarter of Uzbekistan’s global imports.
In recent years, there has been a growth in the supply of motor cars (China’s share in the supply of these goods to Uzbekistan has increased from 9 to 23%) and rail locomotives powered by electrical accumulators (from 1 to 27%), and during the pandemic, supplies of vaccines and other pharmaceutical products (accounting for more than $200 mn). One of the main reasons for this growth is the establishment of Chinese factories in Uzbekistan.
Exports to China
Gradual opening of Uzbek economy to foreign capital
The increase in Chinese enterprises operating in Uzbekistan is indeed noteworthy. However, the Uzbek economy is still only gradually opening up to foreign capital. Out of over half a mn registered legal entities in the country, a mere 2% (or 15,801 according to the State Statistics Committee for January 2023) are foreign-owned. In other words, Chinese companies constitute only around 14% of those with foreign capital. Furthermore, when considering this metric, China trails behind Russia (3,156) and Türkiye (2,204).
China as a primary investor in Uzbekistan’s economy
In the first half of 2023, China has continued to play the role of primary investor in Uzbekistan’s economy, with investments totalling over UZS 139 trillion (equivalent to $2.2bn). In the same period, Uzbekistan attracted investments worth $11.4bn, indicating that approximately one-fifth of these investments originated from China. Other significant investors include Russia, Türkiye, and Saudi Arabia.
Rising debt to China
Simultaneously, Uzbekistan’s debt to China has been on the rise. During the tenure of Islam Karimov, the authorities propagated the widely held belief that the Uzbek economy was free of external debt to any country. However, Tashkent now officially discloses data on external debts. In 2022, Uzbekistan’s public debt amounted to $29.2bn, equivalent to 36.4% of the country’s GDP.
China accounts for 16.7% of Uzbekistan’s debt: The China State Development Bank ($2.2bn) and the Exim Bank of China ($2bn) rank as the third and fourth largest creditors for Uzbekistan. The Asian Development Bank ($5.2bn) and the World Bank ($4.3bn), which collectively account for 36.1% of Uzbekistan’s total public debt, are the first and second largest debt holders.
Law enforcement exchange
According to the Stockholm International Peace Research Institute (SIPRI), China is the second main supplier of weapons and military equipment to Uzbekistan, following Russia. Since 2010, Uzbekistan has imported 24% of all its weapons from China (with 40% from Russia and 18% from France).
Is China replacing Russia in Uzbekistan?
Uzbekistan’s stance on Russia’s aggression aligns with its previous reactions to similar incidents, such as the invasion of Georgia in 2008 and the annexation of Crimea in 2014. In response to the current conflict in Ukraine, Uzbekistan, through its former Minister of Foreign Affairs Abdulaziz Kamilov, has issued a statement refusing to recognize the eastern territories of Ukraine as new Russian territories.
Shift in Uzbek foreign policy
However, since Shavkat Mirziyoyev assumed power in Uzbekistan, a discernible shift in Uzbek foreign policy towards Russia has been evident. Economic relations between the two nations have strengthened, and Tashkent has joined the Eurasian Economic Union as an observer state.
Even in the delicate realm of security, collaboration with Moscow has intensified: Shavkat Mirziyoyev attended a Collective Security Treaty Organization (CSTO) meeting on Afghanistan, the Uzbek military conducted joint exercises with Russia, and a visit from Russian Defence Minister Sergei Shoigu sparked widespread speculation on Uzbek social media about the potential establishment of a Russian military base in Uzbekistan.
On the other hand, since 24 February 2022, Russia does not appear to align with Uzbekistan’s vision for future development. Any further economic convergence between Uzbekistan and Russia at this juncture would likely result in a one-way journey towards “isolation.” This trajectory is in stark contrast to the policy of openness that Mirziyoyev has prioritized in his economic strategy.
Exploring alternatives: China
Uzbekistan will inevitably need to explore alternatives to Russian influence on certain issues. The most immediate alternative that comes to mind is China. However, the Chinese direction of Uzbek foreign policy has its own set of constraints. The political elites of the two nations are largely unfamiliar with each other. While Tashkent has extensive knowledge of and numerous informal ties with the Russian elites, speaking the same language and sharing a common understanding, the situation with China is markedly different.
In the primary areas where Uzbekistan is reliant on Russia, China is unable to assist. To date, no country has been able to supplant Russia as the primary destination for Uzbek labour migrants: approximately 3mn Uzbek citizens travel to Russia for work annually, a trend that has persisted despite Russia’s isolation and economic crisis due to sanctions.
Written by Sabina Aliyeva
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