CPEC, BRI & Uzbekistan
China-Pakistan Economic Corridor (CPEC), the flagship project of BRI, has become a lifeline to Pakistan’s macro-economy, industrial development, socio-economic integration and above all greater regional connectivity. In this regard, the Republic of Uzbekistan has become one of the hottest regional economies. Uzbekistan President Mirziyoyev “Development Strategy 2022-2026” “Development Strategy 2022-2026 is the basis of Central Asia-South Asia greater regional connectivity and his famous ten initiatives have become Ten Commandments of the modern economy and connectivity.
The CPEC Phase-II has been started in the country whereas the BRI has also entered into its 10th year during which it has succeeded in winning the hearts of millions of people of the member countries. The BRI has been dubbed as connecting hub and bridging force between the continents, communities and corporations and interestingly Uzbekistan stands for reliable Middle Corridor to achieve the desired goals of greater regional connectivity between two regions i.e. Central Asia and South Asia because of its ideal geography. It seems that the CPEC Phase-II has the potential to further enhance the prospects of greater regional connectivity between South Asia, Central Asia and South Caucasus regions.
Under the visionary leadership of President Mirziyoyev, Uzbekistan has already developed systematic and supportive policies of greater regional connectivity. In this regard, the trans-regional railway project “(Pakistan-Uzbekistan-Afghanistan)” would be a “game changer” in the context of greater regional connectivity and trade in the days to come.
There is an immense potential of enhancing trade in the field of agriculture and agro-products which needed to be tapped. Maximum facilitation should be provided to the investors of Uzbekistan to help set up their businesses in the already established Special Economic Zones across Pakistan. There is also a huge scope for higher education cooperation through Dual Degrees and student and faculty exchange programs. The Virtual Allama Iqbal Universities are offering online education, which would be cheapest for the students of Uzbekistan.
In this connection, the 8th Session of Pakistan-Uzbekistan Inter-governmental Commission (IGC) on Trade-Economic and Scientific-Technical Cooperation was held in Uzbekistan. It was mutually agreed to extend cooperation in priority areas like transport and logistics.
It was decided to further increase bilateral trade which reached $240 million in 2022 (highest among CIS). Both countries mutually supported the adoption of concrete measures to accelerate the practical implementation of the Agreement on Preferential Trade and Diversification of Transport Corridors in order to create prerequisites for increasing the volume of mutual trade.
An agreement was also inked to accelerate the progress of the trans-Afghan railway construction project. Moreover, MOUs to increase the volume of multimodal cargo transportation, creation of terminals on the territories of both states for further joint export of products to the markets of third countries were also signed.
China’s economic and trade cooperation with the five Central Asian countries has achieved tangible results since diplomatic relations were established more than 30 years ago. China’s trade with the five Central Asian countries – Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan – increased to US$70.2 billion in 2022 from US$0.46 billion in 1992, when China established diplomatic ties with the five Central Asian countries.
Chinese investment in Uzbekistan is diversified and varies from oil and gas to agriculture and logistics. The Chinese conglomerate Jinsheng Group invested in a textile factory in Uzbekistan in 2017. Today, with an annual output of 22.000 metric tons of cotton yarn, 95% of this factory’s products are exported and half of them are sold to China.
Foshan-based Xin Zhong Yuan Ceramics began a US$150 million ceramics production line in Uzbekistan also in 2017, attracted by cheap raw ceramic material, low energy costs and a large local consumer market.
According to data from the International Trade Centre (ITC, 2022), exports from China to Uzbekistan surged from US$104 million in 2002 to US$5.2 billion in 2021. During the same period, the country’s imports from Uzbekistan increased from US$27 million to almost US$2 billion. While China’s exports to Uzbekistan remain diversified and consist of various industrial products, Uzbekistan mainly supplies mineral fuels, in particular natural gas and cotton.
It is important to note that China’s supplies to Uzbekistan have grown considerably since 2016. Using cooperation with China, Uzbekistan tries to diversify its infrastructural network and penetrate new export markets. In the Shanghai Cooperation Organization in Beijing, Uzbekistan presented its “Development Strategy of New Uzbekistan for 2022-2026” in Chinese language, which demonstrated that the country’s economic cooperation with China was deepening. One of the most important projects for Uzbekistan is the China-Kyrgyzstan-Uzbekistan railway, which opens the South Asian market for Uzbekistan. Most recently, Uzbekistan signed a five-year program on trade and investment cooperation with China.
The financing and support for building a common cross-border transport network provided by the BRI remain beneficial for Uzbekistan’s transport connectivity. Through participation in the BRI, Uzbekistan’s producers can connect to China, Iran, West Asia and India, Europe and Turkiye.
According to estimates, the BRI improvements in transport infrastructure are estimated to reduce Uzbek shipment time by almost 15%, the largest reduction among BRI countries. Falling shipment time will in turn raise Uzbekistan’s exports by between 13% and 23%. The higher estimated increase is the combined effect of completed BRI transport projects and reforms that halve border-crossing-delays.
Last but not the least, Uzbekistan has become one of the most connected and integrated Middle Corridor for achieving the goals of greater regional connectivity.
Uzbekistan has achieved significant economic progress since the presidency of Shavkat Mirziyoyev. In particular, foreign direct investment reached US$25 billion last year, with about 59,000 investment projects implemented over the last six years and more than 2.5 million new jobs created. Uzbekistan has also lifted one million people from poverty which is a significant achievement in the region.
The country set ambitious goals for economic transformation. Uzbekistan’s government aims to reach a US$100 billion GDP, double exports to exceed US$30 billion and have 80% of GDP produced by the private sector in which the role of the CPEC and BRI would be instrumental in the days to come.
