Azerbaijan Eyes More Cooperation With China Within Belt and Road Initiative

On April 24, Azerbaijani President Ilham Aliyev arrived in China to attend the second Belt and Road Forum for International Cooperation (Report.az, April 24). This was Aliyev’s second official visit to the world’s most populous country, since 2015. In light of growing Chinese involvement in the South Caucasus region more generally, the Azerbaijani leader’s attendance at the summit sought to further boost bilateral cooperation.

The ambitious Belt and Road Initiative (BRI—formerly called One Belt, One Road or OBOR), unveiled by Beijing in 2013, will link China and Europe via new or expanded overland and maritime transit corridors. The aim, the Chinese authorities proclaim, is to bolster trade and economic growth among all countries involved. Since BRI’s inception, China has invested roughly $90 billion in overseas loans for major infrastructure projects, including the construction of roads, railways and ports throughout Eurasia (Global Risk Intelligence, April 26). The South Caucasus region, with its important transit routes linking East and West, holds great geostrategic importance. Therefore, China has sought new opportunities to deepen its engagement with the South Caucasus countries, in turn providing additional impetus for the development of strategic regional transit projects like the Baku–Tbilisi–Kars railway, the Trans-Caspian International Transit Route, the South–West Transit Corridor, and others (see EDM, April 12, 2017; October 16, 2017; November 6, 2018; April 3, 2019). All these aforementioned transit projects are of geopolitical importance and would facilitate China’s efforts to ship its goods to Western markets across the South Caucasus.

Against that background, Baku is keen to enhance and intensify bilateral cooperation with Beijing in an effort to drive more of that investment its way. During President Aliyev’s visit to China last week, representatives of various Azerbaijani companies who accompanied his delegation signed ten new cooperation agreements with their Chinese counterparts. In total, the signed deals are reportedly worth $821 million and include plans to construct the Sumgait Chemical-Industrial Park to produce automobile tires, a 300 hectare greenhouse complex in Azerbaijan’s Kurdamir region, as well as agro-industrial development parks in Guba, Goychay and Khachmaz districts (AzVision, April 24). Additionally, the two sides signed agreements on establishing an Asian-European telecommunications corridor within the framework of the Azerbaijan Digital Hub program, coordinating the annual transit of 2,500 containers across Azerbaijan via the Trans-Caspian transport corridor, and exporting Azerbaijani wine to China (Turan, April 24).

Before his meeting with President Xi Jinping, Aliyev personally held several meetings with representatives of leading Chinese firms, including Huawei, China Poly Group, China Telecommunication Company, China CAMC Engineering Co., and others, underlining his country’s immense interest in Chinese direct investment (AzerNews, AzVision, April 25). The Azerbaijani leader had also spoken about attracting more Chinese investment for regional and local infrastructure projects days earlier, in his interview with the Chinese Xinhua news agency. “A range of Chinese companies are successfully operating in Azerbaijan, and we’d like to see more Chinese companies in our country as investors, traders and contractors. Trade turnover totals $1.3 [billion], and import from China grew by 40 [percent],” he noted (Abc.az, April 18).

While negotiations over economic cooperation were clearly at the top of Xi and Aliyev’s agenda, the two presidents also discussed some political questions during the summit. Specifically, Xi stated that China fully supports Azerbaijan’s territorial integrity (Turan, April 24). This pronouncement was certainly welcome in Baku. Although Azerbaijan might have liked to hear a more assertive Chinese position regarding the settlement of the Karabakh conflict with Armenia, it is important to keep in mind that historically Beijing has preferred not to deeply engage on the issue. That said, Chinese authorities have repeatedly declared their support for the current conflict resolution process, in line with international law and the relevant United Nations resolutions on the matter (AzerNews, September 16, 2015). Unlike his Chinese counterpart, Aliyev freely discussed the most recent Karabakh peace negotiations process with Russian President Vladimir Putin, on the sidelines of the Belt and Road Forum in Beijing (AzerTag, April 26, 2019). Russia has never openly expressed objections to deepening Chinese-Azerbaijani cooperation; although it does strive to maintain its position as Azerbaijan’s main trade and strategic partner (see EDM, September 18, 2018). With this in mind, Aliyev and Putin agreed to hold the next Moscow-Baku-Tehran trilateral summit in Russia, in August (Haqqin.az, April 26, 2019).

Thanks to its participation in a number of Chinese-led trans-continental transit corridors being developed under the BRI umbrella, Azerbaijan is well-positioned to be one of the biggest beneficiaries of these infrastructure projects. According to its proponents, the BRI project will reinvigorate regional economic growth and improve Eurasia’s connectivity with the West. And when it comes to the South Caucasus region and Azerbaijan more specifically, Chinese involvement can be expected to continue to grow through a shared promotion of promising projects in energy, logistics, and trade.