The Republic of Uzbekistan joined the Belt and Road Initiative (BRI) and the Asian International Investment Bank (AIIB) in 2015, subsequently signing over 100 bilateral agreements with China that have significantly strengthened their economic cooperation. Over the past 30 years, China-Uzbekistan bilateral trade has surged by an astounding 140 times, increasing by 21.8 percent to nearly US$9.78 billion in 2022-2023. In 2023, this trade reached 98.85 billion Yuan (approximately $13.93 billion), marking a year-on-year increase of 53.2 percent.
The Uzbek presidential visit to China in 2024 marked the beginning of a stronger partnership, as both countries upgraded their bilateral ties to an all-weather comprehensive strategic partnership for a new era. This enhanced cooperation is anticipated to yield win-win outcomes under the Belt and Road Initiative (BRI). Uzbekistan has expressed keen interest in collaborating with China on electric vehicles, the new energy industry, and digital initiatives. Additionally, the Qamchiq Tunnel has revolutionized regional connectivity, further facilitating these collaborative efforts.
Uzbekistan holds strategic importance in the development of the Belt and Road Initiative (BRI) as two of its routes pass through the country within the China-Central Asia-West Asia BRI Corridor, connecting Uzbekistan to China and Iran. Its ideal positioning also facilitates connections in the Kazakhstan-Uzbekistan-Turkmenistan Corridor and maintains a key role in the Kyrgyzstan-Uzbekistan-Turkmenistan-Iran Corridor, encompassing cities like Tashkent, Samarkand, and Andijan. Additionally, all four corridors of the China-Central Asia gas pipeline traverse Uzbekistan. Alongside a 25-year bilateral contract for natural gas sales, plans for a fifth route to transfer gas from Turkmenistan to Uzbekistan are also under serious consideration.
The World Bank projects Uzbekistan’s GDP growth in 2024 at six percent. The Asian Development Bank projected the country’s GDP increase in 2024 at six percent in October. The IMF also predicted GDP up to six percent. The European Bank for Reconstruction and Development (EBRD) also upgraded the GDP which would increase at six percent showing great confidence in the national economy of Uzbekistan. Moreover, over the past seven years, Uzbekistan has attracted US$78bn in foreign investment and it is poised to join the world’s top 60 economies by 2024.
Critical analysis of its economy confirms the country’s improved business environment and examines global best practices. It introduced a stability rating for business entities, incentivized law-abiding entrepreneurs, and cancelled 132 licenses and permits. The value-added tax (VAT) rate is reduced from 20 percent to 12 percent, and the business registration process is now significantly streamlined.
Uzbekistan’s economic growth has remained strong, with a growth rate exceeding 5 percent annually since 2017. The country’s GDP has surpassed US$100bn for the first time, further signalling its emergence as a key player on the global economic stage.
The Uzbek government launched over 1,000 projects and the production of 1,800 new types of goods. These efforts have contributed to the country’s economic diversification and modernization.
According to reliable Uzbek information 366 large-scale projects worth US$140 billion are currently being implemented in the country contributing good things to its economy. Each year, approximately US$15 billion is spent on importing equipment, raw materials, and construction supplies for these projects. President Mirziyoyev emphasized the importance of increasing the share of locally produced goods in these initiatives to further boost domestic industry and reduce dependency on imports.
In the energy sector, Uzbekistan plans to construct 164 facilities by 2030, with an investment of US$36 billion. Of these, 88 projects will be developed through public-private partnerships. Additionally, the mining industry is set to benefit from a US$1.2 billion program aimed at expanding its capacity and output.
The President also stressed the need for Uzbekistan to produce more competitive products and increase exports. Recently, investment projects totalling US$30 billion were approved, which include programs in transportation, social infrastructure, and utilities. The number of self-employed individuals in Uzbekistan has seen remarkable growth, reaching 4.08 million by October 1. This marks an increase of 1.89 million, or 86.8 percent compared to the same period last year. In the third quarter alone, 532,000 more people registered as self-employed inching towards self-reliance contributing to the national economy.
The government’s strategy to diversify the economy traditionally dependent on energy is now producing results, with increased investments in key sectors such as agriculture, textiles, and technology. This shift is also contributing to a positive trend in the labour market. The unemployment rate is projected to decrease from 6.8 percent in 2023 to 6.3 percent in 2024, with further projections indicating a drop to 5.8 percent by 2025.
In summary, the BRI has benefited the macro-economy of Uzbekistan which is now among the three fastest growing economies in Europe and Central Asia in 2024. The World Bank now forecasts that Uzbekistan’s GDP will grow 6 percent in 2024, 5.8 percent in 2025 and 5.9 percent in 2026.
It is suggested that the government of Uzbekistan should timely launch planned projects, development of transport and logistics, information technologies, agricultural and financial services in the country further consolidating the economy and contributing community development also.
There is an urgent need for financial sector reforms to align Uzbekistan’s banking supervision with international standards. Therefore, the policy makers of Uzbek should continue gradually phasing out directed lending practices, which would improve the efficiency of credit allocation while increasing access to credit for the private sector.
The Uzbek Central Bank should also take appropriate measures to monitor financial stability, such as defaults by major borrowers, economic downturns, liquidity shortages, declines in real estate prices, and risks associated with climate change. There should be a holistic and comprehensive road map for the reduction of the shadow economy through tight monitoring and concessions.
Last but not the least, further diversification of economy (metals, mining), green transformation, qualitative industrialization, hybrid agriculture, hydrogen-power generation, lithium batteries, EVs, SMEs, technical education and openness, modernization, digitalization and artificial intelligence in which the BRI would play an important role in the days to come.
Currently, more than 2,400 Chinese-funded enterprises are involved in investment and business activities in the country, spanning multiple sectors including petroleum, natural gas, rail, telecommunications, agriculture, chemicals, machinery and equipment, the electrical grid, and engineering contracting. With the launch of China-Europe freight trains has elevated the importance of Central Asian countries, including Uzbekistan, as crucial transportation hubs connecting East and West.
The early construction and launch of the railway project linking China, Kyrgyzstan and Uzbekistan would be a significant achievement. The project, as part of the China-proposed Belt and Road Initiative (BRI), is expected to enhance both hard and soft connectivity, while helping Uzbekistan further transition from a landlocked country to a land-linked country.
