China has solidified its position as Uzbekistan's premier trade and investment partner, surpassing Russia in key metrics according to the latest data from 2023. The statistics reveal a dramatic transformation in the economic landscape of Uzbekistan, underscoring China's growing influence in Central Asia.
As per the data, China has emerged as the largest trading partner of Uzbekistan, commanding a 22% share, while Russia trails behind at 16%. This trend extends across various sectors, with China leading in the establishment of new companies, investments in fixed assets, and the supply of passenger cars and mobile phones.
The transition towards closer economic ties with China has been swift. Just a year earlier, Russia held the top spot in many economic indicators, but the winds of change have propelled China to the forefront. This shift has been further underscored by recent geopolitical developments, which emphasize the strengthening alliance between Uzbekistan and China amid changing global dynamics.
The culmination of this trend was seen during Uzbek President Shavkat Mirziyoyev's state visit to China in January 2024. The visit marked a significant milestone as the relationship between the two nations was elevated to an "all-weather" comprehensive strategic partnership, akin to the partnership China shares with Pakistan. This move signals China's strategic interests in Central Asia, particularly in light of the Belt and Road Initiative and the potential of Afghanistan as a nexus of resources and transit.
During the visit, President Mirziyoyev met with Chinese President Xi Jinping and Premier Li Qiang, resulting in a slew of agreements and announcements aimed at bolstering bilateral cooperation. Of particular significance was the Joint Investment Forum in Shenzhen, which yielded agreements spanning multiple sectors including energy, mining, infrastructure, and transport.
The economic impact of Chinese investment in Uzbekistan has been substantial, with the volume of investment skyrocketing to $14bn by the end of 2023, accompanied by a tripling in the number of joint ventures. Trade turnover between the two nations reached $14bn, with ambitious targets set for the future.
One of the most notable announcements from the visit was the collaboration between BYD and UzAuto to assemble hybrid and electric cars in Uzbekistan, a move poised to transform the automotive industry in the region. Additionally, China's push for the commencement of the China-Kyrgyzstan-Uzbekistan railway underscores its commitment to enhancing connectivity and trade routes, further consolidating Uzbekistan's position as a transport hub in Central Asia.
Belt and Road Initiative
The Belt and Road Initiative (BRI), also known as the "One Belt, One Road" initiative, is a strategic endeavor initiated by China to enhance connectivity between Asia, Africa, and Europe through both land and maritime networks. The primary goal is to promote regional integration, boost trade, and stimulate economic growth.
The "One Belt, One Road" project includes two main components: land and sea routes. Uzbekistan, particularly interested in the land route, became part of this initiative, which was conceived in 2006 and involves roads passing through Russia, Kazakhstan, and now Afghanistan. This strategic move aims to lower the costs of exporting products to Europe. For instance, China can process Uzbek cotton within Uzbekistan, turning it into finished goods for sale in Europe. This collaboration could generate tax revenue for Uzbekistan, create job opportunities, and be mutually beneficial.
Uzbekistan's participation in this project ensures revenue from transit goods transportation, along with the imposition of state duties if these products remain within the country. Additionally, China plans to build infrastructure to market its products within Uzbekistan. An attractive aspect is the potential relocation of some Chinese manufacturing companies to countries along this route, particularly Uzbekistan and Kazakhstan.
Earleir it was reported that in 2023, China significantly strengthened its position in Uzbekistan's automotive market, exporting 58,000 cars, marking a remarkable 5.2-fold increase from the previous year and solidifying its dominance in the sector.
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