In Central Asia, China’s debt diplomacy is encountering resistance.

China stepped up efforts to strengthen economic and security ties with the region at the recent summit between China and the Central Asian nations in Xian. This effort comes against the backdrop of international pressure on China from alliances like the QUAD and the G7, the US focus on the Indo-Pacific, and Russia’s war in Ukraine, which has diminished Russia’s influence in the region. China’s ties with the Central Asian nations are faltering, however, as the local populace becomes suspicious of Beijing’s economic, social, political, geopolitical, cultural, and military objectives in the area, after the initial enthusiasm. A Central Asia Barometer research indicates that popular opinion of China is becoming more unfavorable.

For instance, in Kazakhstan and Kyrgyzstan, just 7% and 9% of the people, respectively, said they supported Chinese developments in those nations. Locals have protested over fears that their nations are becoming too indebted to China, the leasing out of significant tracts of land to China for agricultural use, and Chinese enterprises’ unfair pay practices against locals. Numerous demonstrations have taken place in Xinjiang against the treatment of the Uyghur, Kazakh, and Kyrgyz populations, especially in the Kazakh towns of Almaty and Nur-Sultan.

Furthermore, a large number of Belt and Road Initiative projects in the area have either stagnated or been mired in controversy. In 2018, a Chinese company’s power plant malfunctioned, leaving part of the capital of Kyrgyzstan without heat or energy throughout the winter. As a result of local protests, a Chinese investor who had planned to invest USD 300 million in a trade and logistics center in Kyrgyzstan backed out of the project. Locals had expressed concerns about corruption, the displacement of locals by Chinese workers, and the rise in debt following Beijing’s investment. This is because the majority of Central Asian nations have been caught in China’s debt trap. By 2020, Tajikistan owed China over USD 2 billion, which is more than half of its public debt, while Uzbekistan owed China USD 3 billion, or 20% of its entire foreign debt. Kyrgyzstan’s defaulted debts to China are anticipated to reach USD 4 billion, or almost 40% of its total GDP.

China does not have any economic policies to address these nations’ debt issues since the nation is currently experiencing internal economic difficulties. The enormous amount of outstanding Chinese loans have made it difficult for Central Asian nations to establish businesses outside of their main exports, endangering their capacity to maintain economic stability. Chinese investment in Central Asia is mostly concentrated on infrastructure that is advantageous to it and excludes the growth of actual economic sectors. The majority of Central Asian exports to China are fuel and raw commodities. Furthermore, China’s loans are usually accompanied with oblique requirements, such as boosting its exports’ share of their markets and energy supplies, giving Chinese firms project contracts, and pressuring the recipients to support China on divisive matters in international fora.

Beijing’s efforts to strengthen its position in the area would also irritate Russia, which regards Central Asia as falling inside its sphere of influence. By establishing the Eurasian Economic Union and new energy initiatives, Russia earlier resisted Chinese attempts to expand its influence in the area. Reassessing its relationship with China is necessary for Central Asia, as is assessing the risks and costs of more economic collaboration with China in terms of their industrial and agricultural output, global commerce, rivalry, and other significant economic fields. The area only has strategic value for China’s energy industry; as a result, they should be cautious to avoid falling into a possible Chinese trap and search for collaboration outside of Beijing.







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