Central Asia’s Financial Reliance on the PRC Grows

Jamestown Foundation | Vali Kaleji

Kazakhstan plans to borrow up to $2 billion from foreign markets in 2027 while focusing on China, according to Finance Minister Madi Takiyev. This projected borrowing highlights an expanding regional reliance on Beijing, evidenced by Kazakhstan's debt to the People's Republic of China reaching approximately $12.87 billion by the end of 2025.

Smaller economies in Central Asia face acute financial exposure due to heavy infrastructure borrowing and limited repayment capacity. Uzbekistan's public debt to PRC state financial institutions climbed to about $3.9 billion by the end of 2025, while Kyrgyzstan and Tajikistan carry substantial sovereign and external liabilities. Kyrgyzstan incurred significant long-term obligations through a $2.35 billion PRC loan for the $4.7 billion China–Kyrgyzstan–Uzbekistan railway. Tajikistan owes between $821 million and $1.7 billion to PRC creditors, registering high debt-distress risks with the International Monetary Fund. Repayment difficulties across these states could compel asset transfers or concessions regarding natural resources and infrastructure rights to Chinese entities.

Comment

Bilateral lending from the China Eximbank and the China Development Bank functions as an instrument of structural leverage across Central Asia. Smaller debtor states like Kyrgyzstan absorb substantial liabilities for regional transport corridors such as the China–Kyrgyzstan–Uzbekistan railway without equivalent domestic capital buffers. This mirrors the financial mechanics observed during the construction of the Hambantota Port in Sri Lanka, where prolonged debt service pressures eventually compelled sovereign asset concessions. Consequently, state creditors convert commercial default risks into long-term proprietary access over critical transit and extractive nodes.

Such financial exposure constrains national sovereignty during economic downturns when commodity export revenues contract. The reliance on renminbi-denominated credit lines further binds regional monetary management to Beijing's banking sector. This dynamic reduces the policy autonomy of Bishkek and Dushanbe independently of traditional security frameworks.

Strategic Question for Discussion

How does the financing structure of the China–Kyrgyzstan–Uzbekistan railway alter the balance of sovereign risk between Bishkek and its primary creditors at the China Eximbank?

The reliance on project-company borrowing rather than direct sovereign debt does not eliminate long-term fiscal exposure. The arrangement shifts default risks onto critical regional infrastructure, increasing vulnerability to sustained debt-service pressures.

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