Geopolitical Risk and Chinese Investment Financing in Kazakhstan

Abstract

This article examines how geopolitical tensions and Western secondary sanctions imposed since 2022 have restructured the financial architecture supporting Chinese investment in Kazakhstan. Drawing on the theoretical frameworks of weaponized interdependence and infrastructural geoeconomics, the study integrates qualitative analysis of policy documents and regulatory cases with quantitative evidence on banking de-risking, payment-system fragmentation, and yuan internationalization. Empirical findings show that, despite intensifying compliance pressures, Chinese investment has accelerated rather than retreated: Kazakhstan was the largest single recipient of Belt and Road Initiative investment in 2025 (USD 25.8 billion), while bilateral trade reached USD 43.8 billion the same year. The architecture of that investment, however, has been recomposed. The yuan share of Kazakhstan-China trade settlement rose from approximately 4 per cent in 2022 to 12 per cent by mid-2024, with a Ministry of Trade target of 20 per cent by end-2025. Kazakhstan became the first Central Asian state with direct CIPS access; the Astana International Financial Centre hosted the region's first panda bond in April 2026; and the Sberbank Kazakhstan-Bereke Bank-Lesha Bank divestiture sequence demonstrates the operational logic of correspondent-banking de-risking. The study concludes that Kazakhstan exemplifies a strategy of infrastructural multi-alignment: parallel exposure to Western and Chinese financial systems engineered to preserve sovereign autonomy under conditions of accelerating geoeconomic fragmentation. The contribution extends the small-state literature on weaponized interdependence by showing that, at the periphery of the dollar system, agency operates recompositionally rather than substitutionally — through the layering of parallel infrastructures rather than the replacement of dominant ones.