Central Asia’s Financial Reliance on the PRC Grows

Central Asia’s Financial Reliance on the PRC Grows

Executive Summary:

• In October, Kazakh Finance Minister Madi Takiyev said Kazakhstan could borrow up to $2 billion from foreign markets in 2027, “focusing on China.” Kazakhstan’s debt to the People’s Republic of China (PRC) reached approximately $12.87 billion by the end of 2025, though its relatively large economy and diversified financing sources reduce its vulnerability to PRC financial leverage compared to the rest of Central Asia.
• The PRC’s expanding economic presence in Central Asia has increased the region’s dependence on Beijing. Uzbekistan’s debt to PRC state financial institutions reached approximately $3.9 billion by the end of 2025.
• Tajikistan and Kyrgyzstan face the greatest potential for dependence on PRC lending because of their smaller economies and significant infrastructure needs. Tajikistan faces high debt-distress risks, and Kyrgyzstan is pursuing major PRC-backed infrastructure projects, including the China–Kyrgyzstan–Uzbekistan railway.
• The main risk of this growing dependence is that economic crises, declining export revenues, or underperforming projects could undermine countries’ ability to repay large, long-term PRC loans, increasing financial pressure and potentially creating conditions for transfers of strategic assets or infrastructure rights.

Kazakh Finance Minister Madi Takiev announced in October that Kazakhstan will borrow up to $2 billion from foreign markets in 2027 to finance Kazakhstan’s state budget deficit, “focusing on China.” This plan underscores the continued expansion of Beijing’s financial role in Central Asia (Kursiv, October 14). Takiev said that this year, Kazakhstan “issued $1.5 billion in Panda bonds at a rate of 1.82 percent—a figure below the inflation rate. Servicing this debt costs [Kazakhstan] $28.1 million, which is less than if we had borrowed domestically.” Kazakhstan’s debt to the People’s Republic of China (PRC) rose from $9.29 billion at the end of 2024 to approximately $12.87 billion by the end of 2025. Kazakhstan also acquired more than $3.5 billion in new credit from the PRC over 2025 (Tengri News, April 14; The Times of Central Asia, June 3). In September 2025, the Development Bank of Kazakhstan signed an agreement with China Exim Bank for a credit line of up to $1 billion to support projects involving energy, raw materials, industrial and high-technology equipment, infrastructure, and construction (Development Bank of Kazakhstan, September 3, 2025). Baiterek National Holding, a state-owned Kazakh financial development institution, also secured a five-year, approximately $64.4 million loan from the Industrial and Commercial Bank of China (ICBC) in March 2025 to support agricultural financing (Baiterek National Holding, March 4, 2025). These examples illustrate the diversity of PRC financing arrangements in Kazakhstan. Debt to the PRC at the beginning of this year amounted to approximately 4.2 percent of Kazakhstan’s 2025 gross domestic product (GDP), which was approximately $306 billion (Bureau of National Statistics of Kazakhstan, accessed November 9). Kazakhstan has more diversified sources of financing and greater economic capacity compared to Central Asia’s smaller countries, reducing the comparative risk that financial ties with the PRC turn into one-sided financial dependence.

Indian academic Brahma Chellaney coined the controversial term “debt-trap diplomacy” in 2017 (Project Syndicate, January 23, 2017). It describes a PRC policy approach associated with the One Belt One Road (OBOR) initiative. The term is based on the argument that the PRC deliberately extends large loans to relatively low-income countries already burdened by debt, leaving them unable to repay their obligations. Borrowing countries, according to Chellaney, may be compelled to relinquish strategic assets to reduce their debt burden to the PRC through debt-for-equity swaps. 

Between 2008 and 2021, the PRC provided $240 billion in bailout financing to 22 countries that are “almost exclusively” borrowers under General Secretary of the Chinese Communist Party Xi Jinping’s signature OBOR initiative. Sri Lanka, Pakistan, Mongolia, Zambia, Congo, Djibouti, Kenya, and Ethiopia are among the countries that have received large PRC loans in recent years (AIDDATA, March 2023). Sri Lanka’s Hambantota Port is often cited as an example of the PRC’s debt-trap diplomacy, though analysts dispute the accuracy of the moniker and its ability to fully describe the situation. In 2017, Sri Lanka leased the port to China Merchants Port Holdings for 99 years in exchange for approximately $1.1 billion. Although the concession was distinct from the PRC loans used to finance the port, the deal has fueled debate over whether PRC lending can create strategic leverage, particularly as Beijing expands its port presence amid competition with India in the Indian Ocean (see China Brief, January 5, 2019, May 7, 2021, May 27, 2022).

The PRC’s expanding economic and commercial influence in Central Asia has been accompanied by a significant increase in regional debt to Beijing. In the first half of 2023, Central Asia’s total debt to the PRC reached $15.7 billion, accounting for 7.6 percent of the region’s total external debt (Berlinskii Tsentr Karnegi, April 18, 2024). 

Renminbi (RMB)-denominated lending and the role of PRC state banks in financing infrastructure and business investment in Uzbekistan increased in 2025. Uzbekistan’s public debt to PRC state financial institutions, including China Development Bank and China Eximbank, reached approximately $3.9 billion at the end of 2025, up from an estimated $3.5 billion at the end of 2024 (Kursiv Uzbekistan, February 26; AidData, May 2026). In April 2025, Uzbekistan’s National Bank for Foreign Economic Activity (NBU) signed an approximately $274 million deal with China Development Bank to finance projects, including transport, tourism, alternative energy, airport modernization, and small and medium-sized enterprises in Uzbekistan (Uzbekistan National News Agency, April 25, 2025). In October 2025, NBU and China Eximbank signed a strategic partnership agreement covering infrastructure, energy, transport, telecommunications, healthcare, and other sectors. The PRC bank also indicated its readiness to provide a new $100 million credit line (Uzbekistan National News Agency, October 30, 2025). In June, the two banks signed a financing agreement worth $100 million to support investment projects and the modernization of Uzbek enterprises (NBU, June 25). These developments illustrate the continued expansion of PRC financing through both sovereign borrowing and credit facilities extended to Uzbek financial institutions. Against Uzbekistan’s 2025 GDP of approximately $147 billion, public debt to PRC state financial institutions represented approximately 2.7 percent of GDP (World Bank, accessed November 9). 

PRC financing impacts Tajikistan more than the larger economies of Central Asia because of its limited economic capacity, substantial external debt burden, and reliance on the PRC as its largest bilateral creditor. Tajikistan owed the PRC approximately $821 million in public debt at the end of 2024, equivalent to 5.9 percent of GDP and about 26 percent of its total public and publicly guaranteed external debt (IMF, June 2025). A broader loan-level assessment estimated the amount Tajikistan owes to PRC creditors at $1.7 billion by the end of 2024, equivalent to approximately 12 percent of GDP and 57 percent of the country’s public and publicly guaranteed external debt (AidData, May 28). 

Both estimates underscore Tajikistan’s substantial exposure to PRC creditors. The IMF assessed the country’s overall and external debt-distress risks as high, highlighting vulnerabilities associated with debt-service obligations and external shocks (IMF, June 10, 2025). Concerns about the relationship between debt repayment and the PRC’s control over natural resources in Tajikistan are supported by local reporting. The PRC company TBEA obtained the right to extract gold from the Upper Kumarg and Eastern Duoba deposits until it recovered its costs for constructing the Dushanbe-2 thermal power plant. The company could also be granted rights to an additional deposit if the existing reserves proved insufficient (Radio Ozodi, October 22, 2019). Tajikistan’s high risk of debt distress and the links between PRC financing and access to strategic mineral resources indicate that financial vulnerability can lead to long-term economic dependence and reduced national control over valuable assets.

Kyrgyzstan relies on PRC financing because of its limited economic base and substantial infrastructure financing needs (see EDM, October 30, 2024). The PRC is also its largest bilateral creditor. At the end of 2025, the country owed China Eximbank approximately $1.50 billion, accounting for 28.1 percent of its total external public debt (KyrTAG, February 23). Against Kyrgyzstan’s 2025 GDP of approximately $22.6 billion, this represented about 6.6 percent of GDP (World Bank, accessed November 9).

In December 2025, a syndicate of PRC banks, including China Development Bank and China Eximbank, signed a loan agreement to finance the China–Kyrgyzstan–Uzbekistan railway (see EDM, January 27). The project is estimated to cost $4.7 billion, with approximately $2.35 billion in PRC loans to the joint project company and a repayment period of 35 years (Interfax, December 16, 2025). Although the joint company, rather than the Kyrgyz government directly, is the borrower, the project’s scale creates significant long-term financial exposure and raises questions about the distribution of risks and benefits.

The International Monetary Fund classified Kyrgyzstan’s overall and external debt-distress risks as moderate, while noting that public debt rose to 39.4 percent of GDP in 2025 and that major infrastructure projects, including the railway, would increase financing needs (IMF, July 2). Kyrgyzstan’s substantial debt to the PRC, the long-term financial commitments associated with major infrastructure projects, and its growing reliance on PRC financing for economic development create significant vulnerabilities. The combination of existing debt exposure and growing reliance on PRC financing for future infrastructure projects could deepen Kyrgyzstan’s long-term economic dependence on the PRC and constrain its room for maneuver in managing strategic assets and setting national economic priorities.

Turkmenistan’s financial relationship with the PRC differs from those of other Central Asian countries because it is centered on natural gas exports, energy infrastructure, and a lack of transparency surrounding public borrowing. Unlike Kazakhstan, Uzbekistan, Tajikistan, and Kyrgyzstan, Turkmenistan does not publish sufficiently detailed information to establish a reliable, up-to-date figure for its outstanding debt to PRC creditors. Earlier estimates suggested that its debt to the PRC had reached approximately $12 billion, primarily through financing for the construction of the Turkmenistan–China gas pipeline and the development of its Galkynysh gas field. In June 2021, however, the Turkmen government announced that it had fully repaid the PRC loans allocated to these projects, citing confirmation from the Xinjiang branch of the China Development Bank (State Concern Turkmengas, June 14, 2021; Carnegie Endowment for International Peace, August 19, 2024). 

The absence of transparent public debt data makes it difficult to independently verify the full extent of Turkmenistan’s financial obligations to the PRC or determine whether other forms of financing remain outstanding. These circumstances make Turkmenistan a distinctive case in the regional comparison. Its substantial natural gas resources and export revenues may provide greater capacity to service external obligations than is available to more economically vulnerable countries such as Tajikistan and Kyrgyzstan. At the same time, limited transparency prevents a comprehensive assessment of the financial terms underpinning its relationship with the PRC. 

Economic crises, declining export revenues, or projects failing to achieve projected financial returns could undermine Central Asian countries’ abilities to repay the PRC’s large, long-term loans. Under such circumstances, debt accumulation and additional costs arising from repayment delays could increase financial pressure and create conditions for the transfer of assets or operating rights over strategic infrastructure. Armenia’s 2002 “assets-for-debt” agreement with Russia is an example of the potential consequences of such vulnerabilities, which could be repeated in Central Asia, particularly in Kyrgyzstan and Tajikistan (see EDM, October 14, 19).