Does China Want to Integrate Central Asian Countries into Its Supply Chain?

In July of this year, during Chinese leader Xi Jinping’s visit to Tajikistan, several agreements were signed, including in the mining sector, indicating China’s intent to establish a supply chain in Central Asia by implementing transport projects connecting Kyrgyzstan, Tajikistan, Afghanistan, and Uzbekistan.

Prior to Xi’s visit, a BYD electric vehicle plant opened in Jizzakh, Uzbekistan, on June 27. It became BYD’s first facility outside China. On July 10, Ulugbek Rozukulov, head of “Uzavtosanoat,” presented the factory’s results and plans to President Mirziyoyev.

The presentation focused on boosting car production and localization. China is moving production to Central Asia due to rising EU and US sanctions, aiming to:

1. Expand exports to Turkey and the EU under a “Central Asia” brand;
2. Retain the Central Asian market;
3. Gradually integrate Central Asia into its production chain due to threats of maritime trade restrictions.

BYD Uzbekistan currently produces 50,000 cars annually, with plans to increase this to 200,000 and eventually 500,000. Car production requires batteries, which depend on rare earth metals from Tajikistan and Afghanistan.

Xi and Rahmon discussed lithium extraction and transport. Tajikistan’s mountainous terrain limits railway development, especially in Gorno-Badakhshan, necessitating road transport development. Tajikistan’s location offers a strategic link for China, Afghanistan, Tajikistan, and Uzbekistan around the Jizzakh plant.

China Road and Bridge Corporation (CRBC) is restoring the Kalai-Khumb-Vanj-Rushan section, reducing its length to 92 km with two new tunnels. The Chinese government is providing a $230 million grant, and work is set for completion by late 2024.

Additional financing is being sought for reconstructing other sections (296 km total) of the Dushanbe-Khorog-Kulma highway (1,008 km).