Executive summary

This report evaluates the shifting economic and strategic equilibrium in Central Asia, driven by the developing relationship between New Delhi and Beijing.

The two powers are presently contending for dominance concerning the region’s natural resources, economic conduits, and logistical framework. Despite their selective cooperation, predominantly in counterterrorism, their overarching regional aspirations continue to be in direct contention.

Significant economic interdependence persists, however, which currently mitigates the risk of kinetic escalation over the disputed territories of Arunachal Pradesh and Aksai Chin.

Key Takeaways

1. Beijing and New Delhi view Central Asia as an indispensable link between European and Asian markets. Their regional natural resources and infrastructure lay the foundation for their bilateral relationships with the five former Soviet republics.
2. The persistent rivalry over Arunachal Pradesh and Aksai Chin, compounded by Indo-Pakistani volatility, continues to throttle bilateral cooperation and threatens broader Central Asian stability.
3. The PRC and India assign conflicting strategic roles to the Shanghai Cooperation Organisation (SCO), reflecting their competing visions for regional governance.

Background Information

Central Asia is a crucial connection between the Middle East, Asia-Pacific, and Europe. Its abundant reserves of fossil fuels, rare earth elements (REE), and critical raw materials (CRMs) support the industrial development of both China and India. Between 2022 and 2025, bilateral trade expanded from $121 billion to $155.62 billion. China maintains a dominant trade position, propelled by two primary drivers:

1. Export Expansion: Chinese exports to India surged from $107 billion in 2022 to $135.9 billion by 2025. The electronics, chemicals, and steel sectors represent approximately 80% of this volume.
2. Indian Export Stagnation: India’s export growth to China remains sluggish. In 2025, Indian exports totalled only $19.75 billion, handing Beijing a massive $116.15 billion trade surplus.

Beijing uses this trade disparity as a strategic move to solidify its dominance in the region and limit India’s aspirations, particularly concerning energy resources, territorial claims in Aksai Chin, and its relationship with Pakistan. Despite lacking a direct land border, India has countered through its Connect Central Asia Policy, utilising the Shanghai Cooperation Organisation (SCO) and enhanced diplomatic outreach to the five republics to secure its interests.

Geopolitical Scenario

Central Asia’s significance rests on its dual role as a resource powerhouse and a primary transit corridor. Kazakhstan, Turkmenistan, and Uzbekistan are dominant players in the regional energy landscape.

• Kazakhstan: Holds 30 billion barrels of oil and 85 billion cubic metres (bcm) of proven gas. In 2024, gas production hit 60 bcm. The Tengiz, Kashagan, and Kurmangazy fields remain the primary production anchors.
• Turkmenistan: Manages approximately 19.5 trillion cubic metres (tcm) of natural gas, primarily within the Galkynyş and Daulatabad mega-fields. It also produces 260,000 barrels of oil per day.
• Uzbekistan: State-owned Uzbekneftegaz oversees 594 million barrels of oil and roughly 65 Tcf of gas.

Kyrgyzstan and Kazakhstan serve as the region’s mineral hubs. Kazakhstan controls 14% of global uranium reserves (accounting for 40% of global output) alongside significant manganese, nickel, and lithium deposits.

The enhancement of logistical infrastructure continues to be a primary aim for Beijing, New Delhi, and Central Asian republics.

• Trans-Caspian International Transport Route (TITR): This route links China to Europe via Kazakhstan and the Caucasus. It slashes transit times to 18–23 days, nearly half the time required by the Suez Canal route. In 2024, it moved 4.5 million tonnes of freight.
• Rail and Port Growth: The Kazakhstan–China railway saw freight jump 13% to 32 million tonnes in 2024.Meanwhile, the Caspian ports of Aktau and Kuryk handled 50,000 TEU in 2025, with projections reaching 85,000 TEU by 2029.

India’s Connect Central Asia Policy employs a three-tiered approach: multilateral engagement (joining the SCO in 2017), regional summits, and deepened bilateral ties. A key success is the relationship with Kazakhstan; bilateral trade hit $1 billion in 2024, underpinned by a 1991 recognition of independence.

Conversely, China uses the Belt and Road Initiative (BRI) to accelerate good transit to Europe and mitigate the “Malacca Dilemma” since the strait is a critical choke point for the oil market.

Beijing’s regional trade reached $94.82 billion in 2024, with Kazakhstan serving as the primary partner ($43.82 billion). The Central Asia–China Gas Pipeline remains the cornerstone of this relationship, supplying 10% of China’s total gas demand.

Border disputes continue to define the Sino-Indian security architecture. The Line of Actual Control (LAC) remains a flashpoint, highlighted by the 2020 Galwan Valley clash.

• Arunachal Pradesh: India views this as a strategic energy hub, containing 31.23 million tonnes of coal and significant hydrocarbon reserves. New Delhi is aggressively developing 18,000 MW of hydroelectric capacity here.
• Aksai Chin: China prioritises this region for its mineral wealth—notably the Huoshaoyun lead-zinc mine—and its role in linking Xinjiang and Tibet. For Beijing, control over Aksai Chin is vital for internal stability and monitoring the Indo-Pakistani dynamic in Kashmir.

Indicators to Monitor

• India’s reduction of its reliance on Chinese electronics and chemicals or if the deficit continues to widen.
• Operational capacity of the TITR and the expansion of the Central Asia–China Gas Pipeline.
• Troop rotations, permanent infrastructure construction, and the frequency of “patrol face-offs” along the LAC.
• Shifts in Central Asian voting patterns in multilateral forums that might signal a tilt toward either New Delhi or Beijing.

Conclusions

Competition in Central Asia remains a high-stakes balancing act. Although India’s economic dependence on Chinese imports offers a temporary stabilising factor in their relationship, it does not mitigate the fierce competition for regional dominance in energy and logistics.

Central Asia is now the primary arena, not a peripheral theatre, where local governments and foreign actors will establish the outcomes for Eurasian energy security and trade.

India and China’s future success is reliant on their proficiency in furthering infrastructure development, while simultaneously ensuring that localised border tensions do not escalate into larger regional confrontations.