All Eggs in One Pipeline: Turkmenistan’s Dangerous Reliance on China

Turkmenistan holds the world’s sixth-largest gas reserves, yet its economy is one of the most fragile in Central Asia. Nestled between Iran, Uzbekistan, and the Caspian Sea, Turkmenistan is a secluded state held back by a corrupt regime that enriches itself by taking from its citizens. Turkmenistan has an abundance of fossil fuels, with 71.2 percent of its exports being natural gas, and petroleum accounting for another 20.2 percent. The nation’s reliance on natural gas prices leaves Turkmenistan vulnerable to price fluctuations or shifts in demand. This is even more evident considering that 63 percent of its exports go to China, creating an unstable economic situation. China’s strong trade relations with Turkmenistan are in part due to China’s disregard for the humanitarian crisis in Turkmenistan, as well as its neutral stance in global politics. 

In addition, Turkmenistan has experienced a trade fallout over the last two decades with two of its biggest gas importers: Russia and Iran. In 2009, Russia postponed gas imports because of disputes between the Russian-owned corporation Gazprom and Turkmenistan over a sudden pipeline explosion. Although they have resumed, Russia's imports have significantly decreased, from 70-80 billion cubic meters annually to 5.5 billion cubic meters yearly since 2019. Then, in 2016, Iran halted trade with Turkmenistan due to disagreements over unpaid dues from previous deals. The loss of these two trading partners has pushed Turkmenistan to rely more heavily on China for trade and loan security. This poses a significant concern for Turkmenistan, leaving the small nation vulnerable to fluctuations in China’s willingness to purchase. Not only does China purchase most of Turkmenistan’s exports, but unpaid debts to China for previous investments in infrastructure grant it considerable power over negotiations with Turkmenistan. Since China uses a credit-for-resources system — where countries repay loans through resources instead of hard currency — Turkmenistan owes China a consistent set amount of gas to repay its debt. This, combined with China’s decreasing demand for natural gas, means that China’s imports of Turkmen goods will decrease. 

Turkmenistan’s economic fragility became most evident with the global drop in oil prices between 2014 and 2016. When oil and natural gas prices fell, Turkmenistan’s economy was significantly affected. GDP per capita fell by 20 percent in 2015, while annual growth rates dropped from ~10 to ~6 percent and never returned to previous levels. Thus, the ongoing debt to China became much more challenging to repay. Turkmenistan’s situation worsened when the government ended its social security system in 2017. The program provided all Turkmen people with free access to essential utilities, like water and electricity. Foreign exchange trade and most travel abroad were also banned. By doing so, Gurbanguly Berdimuhamedow, the president of Turkmenistan at the time, offloaded the economic impact of the drop in oil prices onto the Turkmen people. The government no longer needed to cover everyone’s necessities, and citizens now had to pay for their utilities. Although the economy has recovered significantly since then, Turkmenistan remains vulnerable to policy shifts by China or fluctuations in gas prices. Thus, Ashgabat must find a long-term solution to resolve its dependent economic state. 

In 2022, after a symbolic change of power from Gurbanguly Berdimuhamedow to his son, Serdar, who now co-leads the country with his father, Turkmenistan attempted multiple strategies to adjust its dependence on trading gas to China. One attempt was to develop another industry to compete with natural gas. Having led the world in cotton production since its independence in 1991, Turkmenistan increased its control and focus on the textile industry. Turkmenistan is the world’s ninth-largest cotton producer, exporting yarn globally. However, cotton remains unlikely to provide a meaningful source of income for the country. Cotton products only account for one percent of the country’s exports. Furthermore, the government employs a quota system in cotton production that forces public industry workers to meet picking quotas to sell at under-market prices or face penalties. Those who fail to meet their quotas are often fired from their jobs, receive fines, or even lose their property. Due to the inhumane production conditions, Turkmenistan faces export bans in many global markets, including the U.S. In addition, the quota system, which offers little reimbursement, hinders the industry's ability to compete globally due to a lack of positive incentives. As such, without a more ethical and sustainable system for cotton-picking, cotton is unlikely to become a long-term solution to Turkmenistan’s vulnerabilities.

As an alternative, Turkmenistan has recently looked to foreign policy as a solution. With its vast natural gas wealth, it can afford to develop an advanced infrastructure connecting key parts of the region, potentially opening to foreign investment. In 2024, Ashgabat met with Taliban leaders regarding a 10 billion dollar pipeline mega project with Afghanistan, India, and Pakistan. The project envisioned a long, underground gas pipeline connecting Turkmenistan to South Asia through Afghanistan, providing Turkmenistan with new trading partners, Afghanistan with foreign investment, and India and Pakistan with a new source of natural gas. Once completed, this project would secure Turkmenistan two additional massive natural gas importers as trade partners, reducing its reliance on China’s market. Separately, in June of 2025, Turkmenistan met with Iran, Russia, and the U.S. to establish stronger diplomatic relations. As a neutral, ex-Soviet state, Turkmenistan can leverage its unique position among the three nations. These meetings mark the new president's efforts to establish a more substantial regional presence. They also show movement towards Berdimuhamedow’s goal to make Turkmenistan a “north–south and east–west transit hub.” However, the repressive political system significantly inhibits the country. Extensive censorship, widespread corruption, and a tribalist culture hinder its potential to globalize. 

If Turkmenistan can overcome these internal barriers, invest in other industries, and establish relations with regional and global actors, it will no longer rely on natural gas exports or China’s purchases. Nonetheless, unless Turkmenistan breaks free from its dependence on gas and China, its economic circumstances will remain hostage to an uncertain and unreliable future.