Azerbaijan Strengthens Ties with China through New Investment Deals
Azerbaijan’s Growing Partnership with China Signals New Opportunities in the South Caucasus
Azerbaijan is making significant strides in bolstering its presence in the South Caucasus region, with China emerging as a key partner in this endeavor. Over the past two months, Baku has solidified its ties with Beijing through a series of agreements that could pave the way for increased Chinese investment and influence in Azerbaijan.
The momentum in Azerbaijan-China relations began in July when Azerbaijani President Ilham Aliyev and Chinese leader Xi Jinping elevated their bilateral ties to a new strategic partnership during a meeting at the Shanghai Cooperation Organization (SCO) summit in Astana. This partnership encompasses closer cooperation in economic, military, and political spheres.
Subsequently, Azerbaijan applied for an upgrade from a dialogue partner to an observer status within the SCO, signaling its desire to potentially become a full member of the organization. Additionally, Azerbaijan sought to join the BRICS group of emerging economies led by China and Russia, indicating its commitment to expanding its economic partnerships.
The strategic importance of these developments lies in China’s growing presence in the region as an investor and trade partner, particularly following Russia’s actions in Ukraine, which have prompted a search for alternative trade routes. Azerbaijan’s strategic location at the crossroads of the Caspian Sea has positioned it as a key player in the Middle Corridor, an alternative trade route that bypasses Russia and connects Central Asia and the South Caucasus to the European Union.
Zaur Shiriyev, a scholar at the Carnegie Russia Eurasia Center, emphasizes the significance of Beijing’s support for the Middle Corridor, highlighting the importance of establishing a reliable China-Europe trade route in the long run. The Middle Corridor’s revitalization has attracted billions of dollars in new investments, further cementing Azerbaijan’s role as a central trade hub in the region.
The strategic partnership agreement between China and Azerbaijan, signed in July, prioritizes Chinese investment in the Middle Corridor, alongside cooperation in green energy, technology, and defense. Additionally, the agreement aims to boost bilateral trade, with China recently becoming Azerbaijan’s second-largest import source.
Hikmet Hajiyev, Aliyev’s foreign policy adviser, has expressed Baku’s desire for increased Chinese investment across various sectors of the economy, underscoring the mutual benefits of enhanced trade and cooperation. The partnership may also facilitate Azerbaijan’s accession to the World Trade Organization and potentially open up new markets through BRICS membership.
In light of shifting geopolitical dynamics in the South Caucasus, closer ties with China offer Azerbaijan a measure of strategic flexibility. By deepening its engagement with Beijing, Baku seeks to maintain a balanced relationship with regional powers, such as Turkey, Iran, and Russia.
Vadim Dubnov, a regional expert, notes that China’s growing interest in Azerbaijan reflects a broader trend of shifting alliances in the region. With Azerbaijan’s rising regional influence and stable relations with China, Baku stands to benefit from increased stability and investment opportunities, including the potential for new trade routes connecting Azerbaijan to Turkey.
As Azerbaijan capitalizes on its strategic location and economic potential, the partnership with China represents a significant step towards achieving its long-term goals of economic diversification and regional integration. By leveraging its geographic position and aligning with key partners like China, Azerbaijan is poised to play a central role in shaping the future of trade and investment in the South Caucasus.
