China expanding economic presence in South Caucasus

China is hoping to expand its strategic footprint in the South Caucasus, signing agreements with Azerbaijan and Georgia in recent months designed to expand East-West trade via the Middle Corridor. Those deals, however, appear at this point to be more aspirational than substantial, as they do not involve firm financial commitments.

The most recent deals concluded by Beijing were signed in September. The first was a memorandum of understanding with Georgia covering trade – an economic version of a more far-reaching strategic partnership agreement announcement last year. Among the MoU’s provisions were commitments to jointly develop infrastructure, streamline customs procedures, and improve security and digitization of logistics.

“The signing of the memorandum gives us the opportunity to establish closer trade and economic ties with China, to attract additional investments in the country, and also to increase the export of Georgian products to China,” Georgia’s Ministry of Economy and Sustainable Development said in a statement.

A few days later, on September 19, Azerbaijan’s state rail company announced that China was set to join a joint venture founded last year to enhance the efficient movement of cargo along the Middle Corridor route.

Azerbaijan appears to be a focal point of China’s interests in the Caucasus. The two countries have not only sought to expand trade and investment, but also have tightened political ties. Azerbaijan over the summer sought to increase its role in the Shanghai Cooperation Organization and applied to join the BRICS group of emerging economies, two entities in which China plays a major role.

In July, Azerbaijan and China agreed to elevate relations to a strategic partnership in political, cultural, and economic matters, an arrangement similar to the one announced with Georgia last year. The joint declaration specifically referenced plans to cooperate on the expansion of Middle Corridor trade, adding that the countries aim to “jointly ensure the safety and stability of production and supply chains.”

At the signing ceremony, Chinese leader Xi Jinping said the agreement would “advance the construction of the Trans-Caspian International Transport Route, and ensure the healthy and stable operation of China-Europe freight trains,” according to a statement issued by China’s State Council.

Middle Corridor trade traffic has surged so far in 2024. During the first three quarters of this year, the route handled 3.4 million tons of cargo, marking a 70 percent increase in volume over the same period in 2023, the Trend news agency reported, citing official figures compiled by Kazakhstan’s Transport Ministry.

Source:Eurasianet