China boosting economic influence in South Caucasus region
China is forging ahead with plans to boost its strategic influence in the South Caucasus, focusing particularly on Azerbaijan, through recent agreements aimed at expanding East-West trade via the Middle Corridor. However, these deals, as they stand, seem more aspirational than substantial, with no concrete financial commitments involved.
In September, Beijing signed a memorandum of understanding with Georgia, which outlines plans to collaborate on developing infrastructure, streamlining customs procedures, and enhancing security and digitalization of logistics for trade. Gains from this agreement, according to Georgia's Ministry of Economy and Sustainable Development, could include establishing closer economic ties with China, attracting increased investment, and boosting Georgian exports to China.
A week later, Azerbaijan's state rail company announced China's impending membership in a joint venture established last year to enhance the efficient movement of cargo along the Middle Corridor route. Azerbaijan appears to be a key focus of China's interests in the Caucasus, with both countries looking to expand trade, investment, and political ties.
Over the summer, Azerbaijan sought to increase its role in the Shanghai Cooperation Organization and applied to join the BRICS group of emerging economies, organizations in which China plays a significant role. In July, Azerbaijan and China agreed to elevate their relationship to a comprehensive strategic partnership in political, cultural, and economic matters, similar to the arrangement with Georgia.
The partnerships with both countries highlight plans to cooperate on the expansion of Middle Corridor trade, with an aim to ensure the safety and stability of production and supply chains. At the signing ceremony, Chinese leader Xi Jinping noted that the agreement would advance the construction of the Trans-Caspian International Transport Route and ensure the stable operation of China-Europe freight trains.
The Middle Corridor has seen robust trade growth this year, with the route handling 3.4 million tons of cargo within the first three quarters of 2024, marking a 70% increase in volume over the same period in 2023.
Although details regarding a comprehensive strategic partnership between Georgia and China have not been explicitly outlined in the available information, Georgia has historically served as a crucial transit country for east-west trade routes in the South Caucasus, taking part in China's Belt and Road Initiative.
- The recent agreements between China and Azerbaijan, such as the one enhancing the efficient movement of cargo along the Middle Corridor, demonstrate a shared focus on boosting trade and investment between the two countries.
- The strategic partnership between China and Azerbaijan in political, cultural, and economic matters could potentially lead to increased health and wellbeing for Azerbaijani citizens, especially if it attracts more investments in the healthcare sector or improves access to finance for necessary medical resources.
- The burgeoning business relationships between China and the countries of the South Caucasus, evidenced by their joint efforts to expand East-West trade via the Middle Corridor, have the potential to significantly impact the local industries, particularly finance and logistics, by improving financial commitments and streamlining customs procedures.
