ECONOMIC ASPECTS OF AZERBAIJAN–CHINA COOPERATION IN THE CONTEMPORARY PERIOD

Abstract

Expanding mutually beneficial cooperation with the world’s leading states is currently one of the key directions of the foreign policy of the Republic of Azerbaijan. In this context, relations with the People’s Republic of China (PRC) are of particular importance. Historically, China maintained close economic, trade, and cultural ties with the South Caucasus region, of which Azerbaijan is a part, located along the Great Silk Road. Following the incorporation of the region into the Russian Empire in the early nineteenth century, and especially during the existence of the USSR, these ties were completely severed. Profound changes that occurred in the world and the region at the end of the twentieth century, the collapse of the Soviet Union, and the independence of the South Caucasus republics created new conditions for the restoration of these relations. The favorable geographical position of the South Caucasus and the rich oil and gas resources of the Caspian Sea increased China’s interest in the region, as was the case with other global actors. In recent years, the PRC has begun implementing large-scale projects in the region in order to strengthen its positions. Naturally, while pursuing its policy toward the South Caucasus, China seeks to take into account the interests of both neighboring states with traditionally strong influence in the region (Russia, Turkey, Iran) and extra-regional powers such as the EU and the United States making significant efforts to extend their influence there. In the 1990s, the South Caucasus was not of major geopolitical interest to the PRC, and China focused primarily on expanding its economic presence in the region. After consolidating its position in geographically closer Central Asia, China began to incorporate the South Caucasus into its sphere of interests and to establish close political relations with the states of the region. These relations are primarily based on the South Caucasus’s favorable transport and communication infrastructure and its abundant energy resources. Beijing seeks to achieve its objectives both through the implementation of various infrastructure projects and through investment. The largest of these projects is the Belt and Road Initiative (BRI). China’s main goal in implementing this initiative is to strengthen its position in post-Soviet countries, including the South Caucasus. As a result of this policy, China has, within a relatively short period, become one of the key trade and economic partners of the South Caucasus countries. At the same time, the states of the region regard the strengthening of relations with the PRC as an important factor in safeguarding their economic interests, particularly in terms of diversifying foreign economic and trade relations. Since the launch of the Belt and Road Initiative in 2013, China’s economic presence in the South Caucasus has gradually expanded. The purpose of this article is to trace the dynamics of China’s economic penetration into the South Caucasus countries especially the Republic of Azerbaijan and, based on an analysis of official Chinese and Azerbaijani statistical data on trade, investment, lending, and other areas, to assess the current scale of China’s economic involvement in the South Caucasus, including Azerbaijan.