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Geopolitics and Regional Integration: The Impacts of the BRI in Kazakhstan and Uzbekistan

China’s Belt and Road Initiative is turning Central Asia into a global transit hub. Kazakhstan currently leads as a strategic "Eurasian hub," but Uzbekistan is rapidly modernizing its industry and workforce. Despite economic growth, challenges like inequality and weak labor rights persist. However,

Introduction

In September 2013, in the capital of Kazakhstan, at the Nazarbayev University, the Chinese President Xi Jinping first unveiled the Belt and Road Initiative (BRI) (also known as One Belt One Road (OBOR), the Silk Road Economic Belt and the 21st-century Maritime Silk Road, or just the New Silk Road). At that time in 2013, already US$304.9 billion in contracts had been agreed upon along its route, highlighting its importance in the region, not only for short-term influx of capital, but also long-term access to markets and possibilities for growth. The Chinese have linked connectivity with development and security. Xi Jinping stated in 2014 that “For most Asian countries, development means the greatest security and [is] the master key to regional security issues.” (Lain, 2018). It is however important to note that the BRI is more than just the Chinese contributing to development and security. The project originates from several policy ideas coming from Chinese ministries. What is clear however, was the need to export China’s overcapacity in production and to address the slumping demand within China itself (Zhou and Ghiasy, 2017). At its core, the BRI is a way to interlink economies through large-scale infrastructure in coordination with local and regional development plans of specific states. China seeks to expand transport networks to facilitate capacity for export and import of goods, capital, energy, raw materials and, to some extent, information, people and culture (Zhou and Ghiasy, 2017).

This essay conducts an intra-regional comparison of Kazakhstan and Uzbekistan to demonstrate how these two states have utilized the BRI, and FDI in general in their development. While Kazakhstan is rapidly becoming a major strategic hub of Eurasia linking East and West, Uzbekistan is also seen reaping the benefits of investments to modernise and industrialise the country. As such, this essay seeks to answer the following research question:

“How has Chinese FDI influenced human development and economic stability differently in Kazakhstan and Uzbekistan?”

Methodology

To analyse the impacts of the BRI on Kazakhstan and Uzbekistan this essay will use an intra-regional comparative method. This will allow for an analysis of how similar characteristics, such as historical Soviet legacies and geographical landlockedness, coupled with specific variables and policies by either state may result in very different developmental outcomes.

II.a The logical comparison in the region: Kazakhstan vs Uzbekistan

Kazakhstan and Uzbekistan are two significant economies in Central Asia, yet only Uzbekistan is double landlocked, that means, it is surrounded entirely by other landlocked countries and thus, goods must cross at least two international borders to reach an ocean. Kazakhstan is the likely initial partner to receive most investments, both in terms of pure geographical benefits, but also in terms of economic benefits and risk management to investors. Uzbekistan is however likely to achieve rapid investments as it is set to modernise its industry and also host the China-Central Asia-West Asia BRI Corridor connecting China to Iran/West Asia. They also have the largest and youngest labor force in Central Asia as well as a significant agricultural and manufacturing capacity (World Bank, 2020b).

II.b Core Comparative Points

To analyse these two countries briefly but effectively, two key points will be covered:

Human Development

Looking into how BRI projects affects local livelihoods in terms of employment, longevity, access to knowledge, social and economical stability etc.

Economy

This point will address the impact to various actors, sectors and regions and how they benefit economically from various projects linked to the BRI.

The Chinese Strategy for Growth

In order to address the aforementioned domestic industrial overcapacity, China set out to export as much as possible in the form of investments in regional projects linked to a bigger-picture project called the Belt and Road Initiative. It is a complex mix of domestic and global needs. Chinese investments in the BRI will link Eurasia and grow the Chinese economy and global influence even further and more quickly. According to the ‘Vision and Actions’ white paper, two key objectives to Chinese leadership are: (1) finding new uses for Chinese capital surpluses; and (2) internationalizing the underpowered renminbi (RMB) (Zhou and Ghiasy, 2017).

Recent data from Deutsche Bank (2025), suggests that these financial objectives are being met at a rapid pace. By the end of 2024, the RMB share of global trade reached 6%, up from less than 2% the previous year. This shift is particularly visible in emerging economies such as those in Central Asia. The currency also saw a steep increase in its use in global SWIFT payments, up from 2% in 2023 to 3.5% in early 2025. This shows a significant increase in trust towards the Chinese currency. Perhaps most important for this essay is the increase in cross-border settlements in RMB which saw a 35% increase year-on-year, exceeding 10 trillion RMB. Finally, RMB-dominated direct investment reached almost 8 trillion RMB, up 17% year-on-year.

How the Chinese strategy plays into Kazakhstan and Uzbekistan can be seen in how these countries have diversified from the US Dollar and Russian Ruble to maintain stability and agency, while gaining much favor with the Chinese. Further, the Chinese overcapacities and BRI is in many regards a win-win strategy for the region as it wants to rapidly develop and overcome its landlockedness, at least in the short-term. Long-term overcapacity in China may of course hinder domestic production in the region of similar goods.

The Kazakhstan Model

Kazakhstan’s national strategy is linked with foreign investments (Chinese in particular) and plans to strengthen and diversify its industry, but also to improve governance and oversight (Zhou and Ghiasy, 2017). Kazakhstan has become a major hub in Eurasia, as several project routes run through the country. There are two main BRI corridors in Central Asia that connect China to Europe and West Asia through five different routes. Kazakhstan is the primary actor in these networks as three of the five routes pass through its borders and is set to be among the larger beneficiaries of the BRI (World Bank, 2020).

Figure 1: BRI corridors Source: (World Bank, 2020)

In 2014, the year following the launch of the BRI, Kazakhstan launched a program to modernise its national infrastructure. The goals of this program directly aligned with the BRI, focusing on seeking investments in several sectors such as agribusiness, manufacturing, trade and logistics, tourism, information technology and finance sectors. By launching this program Kazakhstan quickly integrated its domestic development with the Chinese vision, creating a rapid way forward for projects dependent on Chinese capital (Schagerl and Soldo, 2023).

IV.a The 2025 Shift

In an address on September 8, 2025, Kazakh President Kassym-Jomart Tokayev stated that the country could no longer remain a passive link in global supply chains. Instead, Kazakhstan has decided upon three pillars:

Resilience
Human capital
Digitalisation

The President emphasised: “We need to make full use of the emerging opportunities and become a transport and transit hub of truly global significance”(New Silk Road Network, 2025). This highlights a high degree of new agency by actively moving from being a “passive link” toward a major player in global supply chains. They also show an ability to attract investment from multiple actors, highlighting its agency and ability to gain investment capital from multiple sources other than China alone, expanded on in section IV.b 2, below.

IV.b Analysis of Core Comparative Points

Human Development

Since 2013 the unemployment rate has decreased on a yearly basis from 5.3% to 4.6% in 2025 (International Monetary Fund, 2025). Further, the HDI value has increased from 0.808 to 0.837 in 2023 and was ranked 60 that year, also gaining them the classification of ‘Very High’ Human Development. (United Nations Development Programme,2025)

Societal Tensions and Conflicts

In 2016, Kazakhstan was subject to the largest-scale protests since independence over a new Land Code that would allow foreigners to rent agricultural land for up to 25 years, instead of the previous 10 year limit. Many saw this as a way for Chinese companies to control land and push out local and domestic ownership (Taliga, 2021). This type of resource nationalism is also seen in the Energy Sector, where Chinese investments face more social opposition than Russian investment does (Zhou and Ghiasy, 2017). This friction and potential for conflict among both domestic workers and elites has the potential to trigger widespread social unrest if not addressed properly by either the government or investing parties.

Wages is another significant concern in Kazakhstan with varying levels across the country with some 25-50% wages in northern parts compared to the wages in Western Kazakhstan (Taliga, 2021).

Further, very few of the Chinese companies operating in the country have local trade unions affiliated with the national Trade Union of the Republic of Kazakhstan (FPRK). Chinese management often argues against them as they see ‘no value in social partnership’ (Taliga, 2021).

Finally, Kazakhstan has mandated that investors must recruit 70% of its workforce from Kazakhstan, yet many Chinese oil and gas companies still have a majority of Chinese workers, citing a lack of skilled workforce in Kazakhstan as the reason for not complying to the set policies (Taliga, 2021).

Economy

Kazakhstan has since 2013 seen major investments from China, but also from the EU. During the first half of 2025, some 23 billion USD had been invested from Chinese capital. The EU announced in April 2025 an investment package of 12 billion EUR (New Silk Road Network, 2025). Further, in 2025 Kazakhstan became the largest recipient of investment in greenfield projects (new from ground up) in the region, amounting to some 19 billion USD, up 266% from the previous year (ESCAP, 2025).

This influx of capital shows its key positioning in the region, poised for rapid growth and human development should domestic needs be addressed in cooperation and alignment with investing parties.

The Uzbekistan Model

Uzbekistan has been recognised as a significant economic reformer, which has boosted and liberalised its economy, improving growth in the private sector in recent years (World Bank, 2025). They have also seen a higher growth rate in terms of GDP compared to Kazakhstan every year since 2007, seen in Figure 2 below. In a partnership with the World Bank, the institution is set on a strategy focused on three objectives for Uzbekistan, : Increasing private sector employment, developing human capital, and finally, fostering greener growth to improve livelihoods and resilience (World Bank, 2025).

The Uzbekistan 2030 Development Strategy consists of five key focuses (UNITED NATIONS UZBEKISTAN, 2025):

Social Systems: Modernising education, healthcare, and social protection.
Economic Growth: Achieving Upper-Middle-Income status.
Environmental Sustainability: Ensure favorable living conditions.
Governance: Building a just and modern state serving the people.
National Security: Maintaining the country’s sovereignty and safety.

The 2030 strategy highlights that they can seek more agency and a proactive stance in their negotiations with investing parties in order to align with domestic goals and needs.

Figure 2: GDP Growth Comparison: Uzbekistan vs. Kazakhstan: (World Bank, 2021)

V.a Analysis of Core Comparative Points

Human Development

Uzbekistan currently stands at 4.5% unemployment compared to Kazakhstan’s 4.6%. Important here is recent data-trends which highlights the Uzbek’s ability to regain strength following a difficult time, visible in Figure 3. Uzbekistan is thus set to have lower unemployment rates in upcoming years.

Figure 3: Unemployment Comparison: Uzbekistan RED vs. Kazakhstan YELLOW: (World Bank, 2021)

Further, the HDI value was 0.740 2023, ranked 107th that year, gaining them the classification of ‘High’ Human Development. (United Nations Development Programme,2025b)

The income poverty is on track with the national goals, but importantly, 18.4% of the adult population still face multidimensional poverty, meaning they lack access to key infrastructure and services. They reached levels in several indicators such as, Educational attainment (13.7%), Food security (11.7%) and Informal employment (11.5%), which helps highlight this multidimensional poverty (UNITED NATIONS UZBEKISTAN, 2025). This is especially noticeable in rural areas, which shows that development benefits from investments mainly become visible in urban areas. However, development programs targeting the infrastructure and poverty in rural areas are underway.

Further, significant progress has been made to protect vulnerable groups, with new laws to combat violence against women. There is also new and improved access to education for children alongside nutritional programs to improve health among children. Reforms have also improved human rights and increased women’s participation in politics and reduced corruption (UNITED NATIONS UZBEKISTAN, 2025).

Economy

As Uzbekistan is aiming to transition its economy toward “Upper-Middle-Income”, its economy has opened up rapidly with structural reform and privatisation. Much focus has been on modernising its industry and export sector. Growth rates in terms of GDP have been high, with more than 6% growth most years in the last two decades, as seen in Figure 2. However, despite reforms and growth, Uzbekistan has seen increases in income inequality, primarily driven by high inflation, unfair subsidies and remaining state-owned monopolies gaining unfair terms.

While the country is on track for further privatisation, moving away from state-owned enterprises, key challenges remain to decrease the economic inequalities. BRI and other investments must continue to develop not only urban areas and populations, but reach the rural areas to achieve development and move away from poverty in those areas as well.

Critical Comparative Analysis

While many similarities exist, very clear differences become visible as we analyse in depth. The comparison between the two reveals distinct institutional strategies in adapting towards FDI. Kazakhstan has already come a long way in its development, on track to become a strategic “Infrastructural Hub”, both connecting regional states, but also the entirety of Eurasia. Meanwhile, Uzbekistan is still in reforming stages moving rapidly towards international standards and liberalising its market.

Kazakhstan is ahead in most measurable variables related to development, whether it be economic or human. This can of course be explained by several reasons, such as them being the first primary target for Chinese BRI investments, and still to this day is a major receiver of such capital influx. Another reason is simply its geographical benefits, neighbouring both China and Russia, while being rich in natural resources, giving them the extra edge compared to Uzbekistan.

I would argue that while significant growth and development have occurred in both countries, a risk remains of over-reliance on specific exports. In 2023, according to WITS (2025) Kazak raw materials totaled at 66.44% of their export. Uzbek have the same issue, but instead of the categorical “raw material", their big share is in intermediate goods, totaling at 68.78% of their export, but this is of course their massive gold export (WITS, 2025b), which is just as volatile as oil and gas.

Both countries have relatively similar goals in recent strategies, yet I would argue that Uzbekistan shows more focus on developing and catching up in human development and inequality. I would further argue that both countries show signs of being top-down driven as they build their massive projects, with little regard to local needs or labor force inclusion. The worst issues are perhaps seen in Uzbekistan, where state-controlled harvests and the agriculture sector in general have been documented in having forced labor and workers having extremely limited ways to organise, i.e. freedom of association (Human Rights Watch, 2025).

Conclusion

While it is visible that Chinese FDI influenced economic growth and diversification in both countries, the countries have also successfully built and developed their infrastructures in order to address their earlier geographical isolation. Kazakhstan has been the major winner thus far, with a clear advantage in most FDI received. What is not very clear however, is whether or not Chinese FDI has had any impact on development in terms of equality, labor rights, or domestic employment. Comparatively, the World Bank with their partnership, at least with Uzbekistan, has targeted private sector employment, developing human capital, and on improving livelihoods and resilience.

China seems more interested in their own strategy and national goals, and whether or not this helps improve human development along the routes of their investments is likely only a byproduct.

Kazakhstan is likely to stay the stronger economy with stronger development for some time, but as the BRI corridor routes in Kazakhstan matures, focus may shift to the China-Central Asia-West Asia BRI Corridor connecting China to Iran/West Asia, Uzbekistan is then very likely to see even more rapid growth rates and development once that focus shifts. If Uzbekistan keeps its current focus of modernising its industry, privatisation and employment, while also aligning investments with their national strategic goals, they are in line to have very beneficial development for its population both short-term, but also long-term with plenty of FDI coming their way as their young population and industry matures.

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