Categories
AP and Reuters

China And The South Caucasus: Investment and Trade Dynamics – Selected Articles – The News And Times – 4:08 PM 9/20/2023

By Emil Avdaliani

Amid the reshuffling of Eurasian connectivity as a result of the Ukraine conflict, the South Caucasus has grown in importance as a vital transit hub between the European Union (EU) and China. Comprising of Georgia, Armenia and Azerbaijan, this region serves as the shortest geographic point between these two Eurasian economic hubs. Consequently, the South Caucasus nations have attracted attention from both Beijing and Brussels.

According to Chinese customs statistics, during the period from 2001 to 2020 trade between China and the South Caucasus increased from US$25 million to US$3.7 billion, while the collective Caucasian national statistics put recent figures as trade valued at US$1.1 billion in 2009 to almost US$4 billion in 2020.

However, China’s place in the ranking largest trading partners of the countries the region is still not very large. The World Bank data shows that in 2005-2018 period China’s trade turnover with Armenia increased about 2070%, with Azerbaijan 380% and with Georgia around 1885%.

More recently, from 2016 to 2020, bilateral trade between China and the South Caucasus region almost doubled, from US$1.9 to US$3.6 billion.

In 2020 China was the 4th largest trading partner both for all three countries of the South Caucasus combined, and for Azerbaijan and Georgia separately (after the EU, Russia, and Turkey). At the same time, the share of China in the trade turnover of countries region ranges from a minimum of 7.5% to Azerbaijan to a maximum of 13.6% in Armenia and is growing steadily, if slowly.

As is typical for China’s trade with the developing world, China’s imports from the South Caucasus are dominated by raw materials (ores and oil), while exports are dominated by machinery and equipment. From the South Caucasus, China mainly imports ores and oil, while imports of other goods are extremely insignificant: in 2020, more than 97% of China’s imports from Armenia were copper and molybdenum ores/concentrates (in fact, almost a third of Armenia’s exported copper ore and 85% of molybdenum ore accounted for to China), 94% of all Chinese imports from Georgia are copper and precious metal ores/concentrates (more than half of Georgian exports of these goods go to China), 89% of China’s imports from Azerbaijan are oil and oil products.

The raw material component of exports of the South Caucasian countries to China is therefore pronounced and can even be considered excessive. All of the countries of the South Caucasus as regards their China trade are experiencing trade balance deficits.

According to their national statistics, in 2020, Armenia’s imports from China exceeded exports to China by 2.3 times (674 against US$290 million), Georgia – by 1.5 times (709 against US$477 million), and Azerbaijan – 3.3 times (1414 against US$477 million. Armenia as a regional South Caucasus nation has the least developed economic relations of the three.

In 2017, China and Georgia signed a free trade agreement, based on the Georgian government hoping the country’s location on the Black Sea would prove a transit benefit. Yet this did not materialize. Reasons vary, but they mostly range from geographic disconnect to geopolitical aspects.

The South Caucasus is poorly connected to Central Asia where China has been building its presence, as was apparent at the latest successful summit held in May in Xi’an between Chinese and Central Asian states leaders.

Some of the regional projects such as the BTK railway corridor have thus far failed to deliver what was promised in terms of volumes, although a late recognition in terms of resolving BTK bottlenecks is now underway.

Investments

Although China does not yet consider the South Caucasus as a primary region for extending its economic influence, Georgia and Azerbaijan have always been considered in the context of the historical Great Silk Road right from early 1990s. On a practical level, the TRACECA project initiated by the EU in 1993, the INOGATE project starting in 1996 and later supported by US through the Silk Road Strategy Act adopted in 1999. Dozens of silk road projects are still functioning successfully today.

For the period from 2014 to 2019 accumulated direct foreign investment (FDI) of China in countries of the South Caucasus exceeded US$700 million per annum.

Azerbaijan

Between 2000-2017, China invested US$581 million in Azerbaijan. Beijing has also provided loans to Baku to purchase Chinese goods for smaller projects, such as the expansion of an aluminum plant in Ganja.

Chinese businesses are active in a number of Azerbaijan’s industries such as oil, banking, finance, banking, and communications. For instance, in October 2018 a memorandum of understanding was signed on the creation of a joint venture between SOCAR and the China National Petroleum Corporation (CNPC).

Armenia

In Armenia the overall level of Chinese investment is smaller. In 2011, China announced that it would invest around US$500 million in Armenian iron production. Yet the investment promise made by Hong Kong’s Fortune Oil did not materialize. In another case, a Chinese company from Guangdong pledged to invest about US$100 million in furniture production which also did not proceed. In 2019, a Chinese aluminum company announced plans to invest US$100 million to develop an aluminum industrial zone in Armenia.

However, a new “Smart Science City” will be built in Armenia with Chinese investments of US$10-15 billion. Another project is based on a 15-year project agreement between China Technology Academy, China Technical Development Company and ADCARS Agency for Reconstruction and Development of Armenia.

Georgia

Traditionally major Chinese investment in the South Caucasus have been going to Georgia. For example, in 2019 investments worth US$671 million were sent as outbound investment. In 2022 Chinese investments reached US$109 million. the numbers remain negligeable. In the same year Georgia received US$$2 billion in total inbound FDI. Investments in Georgia or other South Caucasus countries are dwarfed by what China sends to Central Asian states or Pakistan.

The largest project implemented during this period was the construction of a special economic zone in the suburbs of Tbilisi called Hualing Tbilisi Sea New City, for which the Eximbank of China provided a loan of US$195 million. China funded the construction of the Khadori Hydropower Plant. Another project is the US$100 million Nenskra hydropower plant, funded via the AIIB.

In 2017 the AIIB provided Tbilisi with US$114 million to improve the country’s connectivity. One of the elements of the planned project is the bypass road around Georgia’s port city of Batumi with the goal to increase international transit from China to Europe. In 2019, the Chinese company China Railway 23rd Bureau Group (China Railway) announced that it will build the new 22.7 km Kvesheti-Kobi road in Georgia. The total cost of the project is estimated at 1.2 billion laris (US$428.6 million). China Railways will build 13 km of the road, which is part of the International North-South Transport Corridor.

There is also work going on along the Khulo-Zarzma road, which will represent the shortest route between Georgia’s poorly connected Samtskhe-Javakheti and Adjara regions. The refurbished section will go from Khulo and to Zarzma village in Adigeni via the Goderdzi Pass significantly reducing travel time between Georgia’s two southern regions.

Summary

Overall, China has a tailored geo-economic approach to each of the three South Caucasus state. The countries recognize that China’s economic interests overlap with their own development goal of transforming their respective countries into full-fledged connectivity hubs between Europe and Asia. For China, cooperation with Georgia and Azerbaijan will remain central as both countries represent a continuous transit corridor on the route to the EU. Increasing investment into the South Caucasus countries can be expected as a result of the INSTC development and the Middle Corridor routes.

Emil Avdaliani is a professor of international relations at the European University in Tbilisi, Georgia, and a Belt & Road Initiative scholar.

Related Reading

Silk Road Briefing is written and produced by Dezan Shira & Associates. As global geopolitics change the way supply chains are developing, we provide regional analysis of the emerging trends and where opportunities for foreign investors are. Our firm provides market research and intelligence for issues affecting all the Belt and Road Initiative countries with assistance from our wide business network of over 100 regional offices. To learn more about how we can help your business evaluate the changing dynamics, email us at silkroad@dezshira.com or visit www.dezshira.com  

For months, the negotiations over the fate of Nagorno-Karabakh seemed to be going in Azerbaijan’s favor. Armenia’s government had publicly and explicitly said it recognized the breakaway territory — which is the center of the two countries’ decades-long conflict — as part of Azerbaijan. All that was to be worked out, in essence, were the details. So why did war break out again?

The Backdrop To War

At issue is Nagorno-Karabakh, a mountainous enclave of Azerbaijan that historically has been home to both Armenians and Azeris. On the eve of the collapse of the Soviet Union, the population of what was then the Nagorno-Karabakh Autonomous Oblast was roughly 75 percent ethnic Armenian. A nationalist movement in the 1980s sought to separate the territory from Azerbaijan and join it with Armenia. The ensuing war in the early 1990s killed some 30,000 people and resulted in Armenian-backed separatists seizing the territory from Azerbaijan.

Diplomatic efforts to settle the conflict brought little progress, and the two sides fought another war in 2020 that lasted six weeks before a Russian-brokered cease-fire effectively recognized the loss of Armenian control over parts of the region and seven adjacent districts.

In 2022, Baku and Yerevan embarked on negotiations aimed at finally resolving the conflict. Azerbaijan’s stated goal has been to regain full control over the rest of Karabakh, and Armenian Prime Minister Nikol Pashinian has indicated that he was willing to comply.

But the Karabakh Armenian leadership has been more recalcitrant, fearing that Azerbaijani promises to peacefully “reintegrate” ethnic Armenians amounted to a smokescreen for a plan to eventually squeeze them out of the territory for good. International mediators had been trying to find a compromise to the standoff but with little to show for it.

So Why Did Azerbaijan Attack Now?

On September 19, Azerbaijan launched a wide-scale attack against Nagorno-Karabakh and the remnants of its armed forces, forcing residents of the region’s capital, Stepanakert

 NT-News-and-Times.png

Selected Articles – The News And Times – 4:08 PM 9/20/2023

By Emil Avdaliani Amid the reshuffling of Eurasian connectivity as a result of the Ukraine conflict, the South Caucasus has grown in importance as a vital transit hub between the European Union (EU) and China. Comprising of Georgia, Armenia and Azerbaijan, this region serves as the shortest geographic point between these two Eurasian economic hubs….
posted 1m ago via silkroadbriefing.com
 

For months, the negotiations over the fate of Nagorno-Karabakh seemed to be going in Azerbaijan’s favor. Armenia’s government had publicly and explicitly said it recognized the breakaway territory — which is the center of the two countries’ decades-long conflict — as part of Azerbaijan. All that was to be worked out, in essence, were the details….
posted 1h ago via rferl.org
 

Thousands gathered at Stepanakert airport on September 20. Thousands of panicked ethnic Armenians converged on the airport in Nagorno-Karabakh where Russian peacekeeping forces are based after de facto leaders of the breakaway region agreed to lay down their arms and accept talks to “reintegrate” the territory into bitter rival…
posted 1h ago via rferl.org
 

UPDATES with analyst quotesArmenian Prime Minister Nikol Pashinyan swept to power promising change, but a humiliating military defeat to Azerbaijan and a dramatic escalation in Nagorno-Karabakh tarnished his reputation in the poor ex-Soviet country. In the three years since his military was defeated in the breakaway mountainous region, Pashinyan has…
posted 1h ago via barrons.com
 

Karabakh Armenians face a very uncertain future in Azerbaijan. UK journalist Thomas de Waal, who is also a senior fellow with Carnegie Europe specializing in Eastern Europe and the Caucasus region as well as an expert on the Nagorno-Karabakh conflict, told this to The Guardian. “A ceasefire is positive, obviously, if it lasts, as the threat of mass…
posted 1h ago via news.am
 

VATICAN CITY (CNS) — Inspired by the dignity of each human being as revealed by Jesus, Christians are called to fight “every form of slavery,” whether physical, social or spiritual, Pope Francis said. “Jesus, God made man, elevated the dignity of every human being and exposed the falsehood of slavery,” the pope told people gathered in St. Peter’s…
posted 1h ago via usccb.org
 

Armenian Prime Minister Nikol Pashinyan addresses parliament following an escalation in hostilities over the Nagorno-Karabakh region along the border of Armenia with Azerbaijan, in Yerevan, Armenia, September 13, 2022. Tigran Mehrabyan/PAN Photo via REUTERS /File Photo Acquire Licensing RightsYEREVAN, Sept 20 (Reuters) – Here are some key facts about…
posted 4h ago via reuters.com
 

WASHINGTON There is no way ex-US President Donald Trump avoids conviction on federal election charges as he prepares to head to trial, Henry “Enrique” Tarrio, leader of the far-right militant group Proud Boys, told Anadolu just days after he was sentenced to over two decades in prison.Tarrio, the ex-national chairman of the group, was found guilty…
posted 4h ago via aa.com.tr
 

Pope Francis speaks at his general audience on Sept. 20, 2023. / Daniel Ibanez/CNA Vatican City, Sep 20, 2023 / 05:50 am (CNA). One day after Azerbaijan launched a new military operation against Nagorno-Karabakh, Pope Francis made a public appeal for both sides to “silence the weapons.” Speaking to more than 15,000 people in St. Peter’s Square…
posted 5h ago via catholicworldreport.com
 
Pope Francis appeals for peace in Nagorno-Karabakh: ‘Silence the weapons’  Catholic World Report
 
The Pope’s Reign and Ruin  National Review
 
Azerbaijan, Armenia reach cease-fire deal for breakaway Nagorno-Karabakh  Hindustan Times
‘Lost Control’: The FBI Had To Conduct A Poll To Find Out How …  Daily Caller
 
Attorney General Garland faces his GOP critics as Justice Department is under heavy scrutiny  WWSB

We speak to Arjun Sethi, a Sikh community activist, civil rights lawyer and professor at Georgetown Law, about Canadian Prime Minister Justin Trudeau’s public accusations that the Indian government arranged the assassination of a prominent Sikh leader and Canadian citizen outside a Sikh temple in British Columbia in June. India has denied the allegations….
posted 5h ago by Democracy Now! via Democracy Now!
 
Путин заявил, что с удовольствием принял приглашение Си Цзиньпина посетить Китай в октябре  СБ-Беларусь сегодня
Today, the Federal Bureau of Investigation (FBI) and the Cybersecurity and Infrastructure Security Agency (CISA) released joint Cybersecurity …
posted 5h ago via Google Alert – fbi
 
Putin Doomsday Plane base faces bomb strike as saboteurs claim victory  Metro.co.uk
posted 5h ago via putin – Google News
 
Trump will ‘100%’ be convicted on election charges, says jailed …  Anadolu Agency
 
The News And Times Information Network – Blogs By Michael Novakhov – thenewsandtimes.blogspot.com
Advertisements
The World News And Times – theworldnewsandtimes.com – The News And Times | News Reviews In RSS Pages | Audio and Video Posts | AP and Reuters | Israel and the Middle East | Hamas – Wagner Group Attack: Analysis | Wagner Group and Gaza war | Israel and Orthodox Judaism