Opinion | How China’s greener investments are driving Central Asia energy shift
May 11, 2024
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The growing cooperation between China and Central Asia on green energy fits into Beijing’s own agenda of making more sustainable investments which take heed of environmental issues, creating a “greener” version of the Belt and Road Initiative. The shift in China took place in 2021, when the emphasis moved to investing in solar and wind energy projects. Overall, Beijing wants to mitigate fears about debt financing among Central Asian states.
China’s shifting preferences in Central Asia also indicate the initiative’s adaptability in the face of local demands and political factors. For instance, Chinese companies in Kazakhstan helped develop eight wind and solar power projects from 2018 to 2022. Those were mostly a result of state-to-state cooperation in green energy. In contrast, in Uzbekistan, China invests through tenders and auctions.
Both Central Asian countries have signed agreements with China on green energy cooperation, Kazakhstan in 2015 and Uzbekistan in 2022. The latter deal evolved into a state-to-state cooperation agreement signed in 2023. The two countries have also made significant regulatory strides to allow more and fairer competition for tenders related to green energy. For both, China serves as a crucial investment partner.
Astana and Tashkent might also see the growing engagement with China’s experience in green energy as an effective way to reconsider some aspects of their relations with Russia. Since Russia’s invasion of Ukraine began in February 2022, Moscow has pushed the two Central Asian states to create a gas union wherein imports of Russian gas would only increase. Uzbekistan and Kazakhstan, meanwhile, seek to lessen this uncomfortable dependence.
In a recent manifestation of the growing engagement on green energy between China and Central Asia, greater collaboration and Chinese support for Uzbekistan’s green development were discussed during Uzbek President Shavkat Mirziyoyev’s visit to China in January.
At the time, Uzbekistan’s presidential office highlighted a fivefold increase in Chinese investments in the country’s economy. Mirziyoyev said at an international investment forum earlier this month that the country is working on 28 energy sector projects with a goal of creating more than 20 gigawatts of renewable energy capacity by 2030. This follows agreements signed during the inaugural China-Central Asia Summit in Xian in May 2023.
Tangible progress is evident in the ongoing development of photovoltaic power stations by China Gezhouba Group in the Bukhara and Kashkadarya regions of Uzbekistan, each with a capacity of 500 megawatts. Some of these projects have already commenced operations.
President Xi Jinping and Uzbek President Shavkat Mirziyoyev at the Great Hall of the People in Beijing on January 24. Photo: Xinhua
In a demonstration of Beijing’s commitment to sustainable investment in Uzbekistan, Mirziyoyev explored the possibility of establishing a regional branch of the Export-Import Bank of China in Tashkent. In addition, the regional government of Samarkand has bought 100 electric buses from Chinese manufacturer Yutong, with projected costs of about US$62 million.
For Uzbekistan, these agreements are not only about investment in green energy but also reducing the dependence on fossil fuel-based technologies. During his visit to China, Mirziyoyev toured vehicle manufacturer BYD’s headquarters in Shenzhen. He also took part in an online ceremony marking the construction of a new facility in Uzbekistan’s Jizzakh region, which is expected to produce around 50,000 hybrid and electric vehicles annually.
The collaboration between BYD and UzAuto, a state-owned Uzbek car manufacturer, has been progressing since an initial investment agreement with Uzbekistan’s Ministry of Investment, Industry and Trade in October 2023. These cars are expected to be exported to Central Asian markets and Russia, the latter being particularly attractive because of increased demand following the invasion of Ukraine and subsequent Western sanctions.
Central Asia has gained strategic importance for China amid geopolitical shifts such as the Red Sea crisis. The disruption in maritime trade routes has prompted China to seek alternative trade corridors. Expanding green energy investments is a powerful tool in strengthening China’s role in the landlocked region.
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Chinese President Xi Jinping arrives in Kazakhstan on first trip abroad since pandemic began
Chinese President Xi Jinping arrives in Kazakhstan on first trip abroad since pandemic began
China’s push for green energy engagement also fits in with the strengthening of its presence in Central Asia, a move evident through its expanding bilateral trade with the region. During Mirziyoyev’s visit to China, the two countries elevated their bilateral relations to an “all-weather” comprehensive strategic partnership, aiming to boost annual trade to US$20 billion.
However, Central Asian nations are unlikely and somewhat unable to fully transition away from fossil fuels because of the nature of their economies. Uzbekistan, for instance, still heavily relies on fossil fuels for more than 90 per cent of its power generation.
Additionally, while Chinese investment shows promise, Central Asian states have experienced challenges with previous projects, indicating a need for diverse partnerships and Western expertise in their renewable energy transition. Given that, Uzbekistan and Kazakhstan are working on attracting investment from Gulf countries, the European Union and the United States to avoid becoming dependent on Chinese investment.
Emil Avdaliani is a professor of international relations at European University in Tbilisi, Georgia, and a scholar of silk roads
