Emil Avdaliani

Opinion | How China’s greener investments are driving Central Asia energy shift

The growing cooperation between China and Central Asia on green energy fits Beijing’s agenda of making more sustainable Belt and Road Initiative investments

Central Asian states, particularly Uzbekistan and Kazakhstan, have embraced the opportunity to improve their energy security and gain distance from Russia

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A solar power plant built by China’s Dongfang Electric Corporation in Samarkand, Uzbekistan, on April 29. Central Asian states, particularly Uzbekistan and Kazakhstan, have been a focus for China as it attempts to turn its investments in the Belt and Road Initiative towards green energy. Photo: Handout

Emil Avdaliani

Published: 5:30am, 12 May 2024

China’s investments in Central Asia have traditionally been characterised by inflow of cash into large projects focused on resource extraction and physical infrastructure such as pipelines, roads or attempts to establish railway connectivity.

Lately, however, China is pushing to focus more on green energy and related investments. Though the region is generally seen as rich in green energy resources, Beijing is focusing on Kazakhstan and especially Uzbekistan.

Despite being rich in traditional energy resources, these two countries have faced acute difficulties in winter because of the inadequate spread of infrastructure across their vast territories. Kazakhstan and Uzbekistan are now trying to create conditions for a major shift in their economies by turning to greener energy resources, in particular solar and wind power.

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.