Strengthening Economic Grip in Bishkek: China's Advancement in Kyrgyzstan's Capital
Going East: Why Kyrgyzstan's Heading Towards China
Politically, Kyrgyzstan may still appear like a miniature Russia, but economically, it's all about China. The shift in Kyrgyzstan's trade and investment landscape is a direct response to the stalemate in the Russia-Ukraine war and serves as an intriguing case study of evolving geopolitical dynamics.
Vladimir Putin's first foreign trip post-ICC arrest last fall was, unexpectedly, to Kyrgyzstan. This trip underscored Russia's view of the country as an essential client state in Central Asia. However, Kyrgyzstan's ruling authorities seem to admire Russia's autocratic playbook, as shown by a recent law requiring foreign-funded organizations to register as foreign agents – a move eerily reminiscent of Russian legislation.
Concerned voices question whether this law will become yet another tool for repression against independent media and civil society. The president dismissed such concerns, guaranteeing "no persecution." Nonetheless, Kyrgyzstan's political affinity with Russia doesn't extend to the financial realm.
China has now surpassed Russia as Kyrgyzstan's primary source of foreign direct investment (FDI). In 2023, Chinese FDI amounted to $220.8 million, accounting for nearly 28% of the country's overall FDI total. Russian FDI trailed closely behind at $147.4 million.
Kyrgyzstan's allure lies in its manufacturing and mining sectors, capturing the interest of foreign investors to the tune of $395.6 million in 2023. Notably, in early April, Chinese mining concern Huaxin signed a deal with a state Kyrgyz enterprise to develop the Kol-Jangak coal field.
When it comes to commerce, China is now Kyrgyzstan's top trade partner, despite Kyrgyzstan's membership in the Moscow-dominated Eurasian Economic Union (EAEU). China accounted for almost 35% of Kyrgyzstan's annual trade turnover total in 2023, outdoing the EAEU's 28%.
Since the Russia-Ukraine war, Kyrgyzstan has emerged as a crucial transit hub for Russia's sanctions-busting goods. However, there are signs that Bishkek is growing increasingly wary of the potential consequences of secondary sanctions. In a notable move, Kyrgyz banks will cease transactions via the Russian Mir payment system from April 5, making it harder to move money between the two countries.
As for the historical context, China and Kyrgyzstan have enjoyed strong trade ties for years, especially in the re-export of Chinese goods to neighboring countries. Economically, Kyrgyzstan stands to gain significant growth opportunities, diversification of markets, and infrastructure development by deepening its relationship with China. However, the complex dance of balancing political allegiances and economic interests between Russia and China may pose challenges for Kyrgyzstan as it navigates this new path.
[1] China-Kyrgyzstan-Uzbekistan Railway: The Next Chapter for Central Asia[2] Kyrgyzstan's Agribusiness: Opportunities Amidst Challenges[3] China's Belt and Road Initiative and its Impact on Central Asia[4] Kyrgyzstan's Export Strategy: Opportunities in the Chinese Market[5] Re-exporting Chinese Goods: A Contributor to Kyrgyzstan's Trade with Neighboring Countries
- In the realm of news, the growing economic ties between China and Kyrgyzstan are a significant development, with China surpassing Russia as the primary source of foreign direct investment.
- The politics of Kyrgyzstan, despite its perceived similarities with Russia, is increasingly leaning towards China in terms of finance and investing, as evidenced by the unprecedented amount of Chinese foreign direct investment in 2023.
- General news reports suggest that China has become Kyrgyzstan's top trade partner, accounting for almost 35% of its annual trade turnover in 2023, thanks to its interest in the country's manufacturing and mining sectors.
- Policy-and-legislation developments in Kyrgyzstan indicate a shift in its economic strategy, as it moves towards China for opportunities in growth, market diversification, and infrastructure development, despite the complex geopolitical dynamics of balancing relationships with both China and Russia.
