The war in Iran has evolved into a global economic crisis, driving up energy prices and forcing major shifts in shipping and trade routes. Ongoing military strikes have caused significant disruptions at critical chokepoints like the Strait of Hormuz, forcing governments to urgently secure alternative supply sources and reevaluate supply chain resilience. Previously, we reported that the conflict has exposed Japan's vulnerability due to extreme energy dependency on Asian producers. Japan relies on the Middle East for over 90% of its crude oil and roughly 11% of its LNG, with the closure of the Strait of Hormuz effectively blocking the route for ~95% of these imports. Asia’s second-largest economy is now frantically diversifying its oil supply and securing alternative sources, including from the United States, Central Asia, South America, and Canada.
China is similarly recalibrating its strategic focus toward Central Asia to mitigate mounting geopolitical risks in the Middle East and Russia. Road transport now accounts for over 50% of China's trade with Central Asia, up from less than 20% just a few years ago.
Beijing is accelerating the development of land-based connectivity to reduce its heavy reliance on the Strait of Hormuz, which currently carries roughly one-fifth of global oil and gas. China is increasingly relying on the ‘Middle Corridor’ (aka the Trans-Caspian International Transport Route, or TITR) that connects China to Europe via Kazakhstan and the Caspian Sea, bypassing both the conflict-prone Middle East and the politically sensitive Russian northern routes.
TITR offers a shorter alternative to the Northern Corridor via Russia by ~2,500 km, bypassing Russian territory to improve supply chain resilience and security. TITR has gained immense popularity in the post-2022 era as China looks to skirt sanctions and geopolitical risks in the Northern Corridor.
Upgrading the Baku-Tbilisi-Kars (BTK) railway, a key Middle Corridor route, has increased its annual capacity from 1 million to 5 million tons following major modernization completed in early 2024. The line features 105 km of new track between Kars and Akhalkalaki (29 km in Georgia, 76 km in Turkey), featuring a 4,070-meter tunnel at the Turkish border. A major, year-long rehabilitation of the Georgian section (Marabda to Kartsakhi) was completed in early 2025, involving upgrades to infrastructure. Azerbaijan Railways (ADY) and Georgian partners created a joint venture in 2024 to manage infrastructure and optimize transport along the 184 km Georgian section. The line is projected to handle 17 million tonnes of cargo annually by 2034, with long-term goals targeting up to 50 million tonnes.
Meanwhile, unlike the distant Middle East, China shares direct borders with Kazakhstan, Kyrgyzstan, and Tajikistan, allowing for more secure, state-to-state infrastructure projects. Kazakhstan, in particular, has moved to the centre of Beijing's regional thinking due to its stability and ample resources. As a significant oil producer and the world’s leading producer of uranium (over 40% of global supply), Kazakhstan offers a more stable investment environment than the volatile Gulf region.
Bilateral trade between China and Kazakhstan reached a record $48.7 billion in 2025, representing an 11% year-on-year increase, cementing China's position as a top trading partner. The surge was mainly driven by increasing investment and energy cooperation, helping to transform the economic relationship between the two countries. The collaboration is shifting from traditional oil/gas to include significant investments in machinery, automobiles, green energy, and agriculture. Kazakhstan is now the largest recipient of Chinese capital in the region, with over 200 joint projects.
Further, China’s Belt and Road Initiative (BRI) is shifting away from a single integrated system to fragmented "mini corridors" that prioritize stability over sheer volume. The BRI is increasingly breaking down into specialized, smaller-scale regional initiatives rather than monolithic, continent-spanning projects. This encompasses increased reliance on alternative routes such as the Central Asia-Russia corridor, coupled with a focus on smaller, high-visibility projects in Myanmar and South Asia.
BRI is actively pivoting towards soft infrastructure, prioritizing digital connectivity, technology, and green energy over traditional hard infrastructure through initiatives such as the Digital Silk Road (DSR) for 5G, fiber optics, and AI, alongside sustainable energy projects designed to build a Green Silk Road.
The shift away from massive trophy projects toward sustainable investments with clearer economic returns is helping reduce the exposure to risky, unstable regions and focuses on securing supply chains in areas where China has a stronger influence, such as Southeast Asia, Central Asia, and Africa. Indeed, Africa has become a key beneficiary of China’s BRI engagements, with the continent recording a 283% surge to $61.2 billion in 2025.
By Alex Kimani for Oilprice.com
Related Stories
