Although Azerbaijan was of little importance to China in the early years of independence, in recent years the foundation has been laid for growing cooperation in socio-cultural, socio-economic and military-strategic spheres. Until a few years ago, China, like all major powers, was traditionally more active in Azerbaijan’s energy sector.
The situation changed in favor of the non-oil sector with the announcement of the Belt and Road Initiative by the Chinese head of state Xi Jinping in 2013, as well as with the Azerbaijani government pursuing a policy of economic diversification and encouraging foreign investment in various areas of the country’s economy since 2015. Thus, in the context of expanding mutual investment ties, China has been cooperating with Azerbaijan in recent years not only in the energy sector, but also in economic projects related to the non-oil sector, such as industry, agriculture, trade, tourism, ICT, transit, logistics, high technology, mechanical engineering and others. In this regard, the official visits of President Ilham Aliyev to the People’s Republic of China in 2015 and 2019 are of particular importance in terms of the development of state-to-state relations.In particular, the personal participation of the President of Azerbaijan in the Second Belt and Road Forum of International Cooperation in Beijing in April 2019 gave an impetus to a qualitatively new stage in bilateral relations. In order to expand the scope of the non-oil sector, Azerbaijani and Chinese companies signed 10 documents in various areas worth a total of $821 million at the forum. The agreement includes construction of a tire plant in the Sumgayit Chemical Industrial Park, construction of a modern 300 hectares greenhouse complex in Kurdamir District, establishment of agrologistic industrial parks in Guba, Khachmaz and Goychay, building of an Asia-Europe Telecommunications Corridor as part of the Azerbaijan Digital HUB, transportation of up to 2500 containers through the Trans-Caspian Transport Corridor to Baku and through the territory of Azerbaijan to other countries, export of Azerbaijani wine and other alcoholic beverages to China, establishment of an Azerbaijan trading house in China, and other joint undertakings. At the same time, Beijing is closely watching the construction of a vast infrastructure for railway, sea and land cargo transportation as part of the development of Azerbaijan’s international transit routes. In this regard, it is worth mentioning the equipment worth $2 million donated by the Chinese for the Alyat port, which annually increases the volume of freight traffic. Also, 4 memorandums of understanding on friendship and cooperation between the Alyat Port and Lianyungang Port Holding Group of China, COSCO Group and the Guangzhou Port Authority were signed at the ceremony held during the World Ports Conference in Baku in 2018.
Azerbaijan, who has the highest trade turnover with China in the region, continues to be one of the most active participants in the Belt and Road Initiative. Even years before the initiative was officially announced, Azerbaijan had begun large-scale work to increase the region’s transit capacity and trade turnover, as well as to strengthen regional cooperation. One example of this is the construction of the Baku-Tbilisi-Kars railway, which was completed in 2017 and which plays a significant role in regional integration. Even though China provided no financial support for the construction of the BTK railway, the participation of Chinese officials in its inauguration ceremony attests to the importance of the railway on the regional and international scale.
By the way, Beijing has invested a total of over $800 million in Azerbaijan, where about 120 companies of Chinese origin operate. Azerbaijan, which continues to increase investment in foreign countries, has so far invested $1.7 billion in China.
Furthermore, Azerbaijan became one of the founding members of the Asian Infrastructure Investment Bank (AIIB), established in 2016 as part of the Belt and Road Initiative (Azerbaijan’s share in the bank was 0.25%, i.e., $245.1 million). The activities of this international financial institution with the $100 billion starting capital mainly cover such areas as satisfying the necessary infrastructure and financial needs of the Belt and Road Initiative member countries. In 2016, for example, the AIIB provided a $600 million loan for the construction of the Trans-Anatolian Natural Gas Pipeline (TANAP). Last year, a $100 million loan was allocated to support the Azerbaijani government in the fight against the coronavirus pandemic. It should be noted that there are also plans for multilateral cooperation with the AIIB in the field of implementation of green and smart concepts in Azerbaijan under the Sustainable Development Goals for 2030.
Along with trade and commercial ties, China continues to expand its digitalization activities in Azerbaijan. Huawei, a major Chinese multinational company that has been operating in Azerbaijan’s ICT sector for a long time, launched a 5-year Seeds for the Future ICT program in 2016 to cultivate a new generation of Azerbaijanis in the field of engineering and IT research. For example, the National and Regional Socio-Economic Development Strategy provided for ICT internships for Azerbaijani students at the Huawei summer training center in the Chinese city of Shenzhen. To date, dozens of Azerbaijani students have completed two-week internships at the company as part of the program. To continue cooperation in technology, the Ministry of Digital Development and Transport of the Republic of Azerbaijan, ADA University and Huawei signed a trilateral memorandum of understanding to establish a joint research and development center in December last year. The center will operate at the ADA University, training local ICT professionals. Furthermore, the implementation of several projects of smart villages using Huawei’s digital technologies is already underway in the territories undergoing reconstruction in Karabakh.
As China continues to invest in geo-economic projects in Azerbaijan, its attention to the development of digital infrastructure, in particular the introduction of next-generation 5G technology in the country, is increasing significantly. Huawei, the world’s second largest smartphone manufacturer after Samsung before the US embargo, is now fully focused on the development of next generation wireless networks and advanced artificial intelligence. Taking into consideration the important geopolitical role of the South Caucasus, the large-scale introduction of Huawei’s technological solutions will gradually lead to national security issues and geostrategic controversies. It goes without saying that in the context of the ongoing struggle for technological dominance between the US and China, the expansion of Huawei’s presence in the region and the establishment of digital infrastructure of Chinese origin will continue to be the subject of discussion.
The establishment of sustainable and effective socio-cultural ties continues in order to develop constructive cooperation between the countries and form closer coordination between the parties. The number of joint humanitarian technical and support projects between China and Azerbaijan in this area is increasing every year. For example, following the Memorandum of Cooperation between the Heydar Aliyev Foundation and the Chinese People’s Association for Friendship with Foreign Countries signed in November 2017, events dedicated to the extensive promotion of Azerbaijani culture are held in various Chinese cities, including the capital Beijing. In continuation of cooperation in the humanitarian field, the playground of a school in Malipo County in Yunnan Province of China was reconstructed with donations from the Heydar Aliyev Foundation and support from the Azerbaijani Embassy in Beijing.
Consequently, we can expect that Azerbaijan will increase its activity in the Belt and Road Initiative in the long term to expand its role in transcontinental transit. At the same time, China, who is interested in diversifying international transit routes to reach European markets, will further focus on the construction of transport and logistics infrastructure in Azerbaijan. However, the development of alternative transport corridors is a priority for Beijing, as it seeks to reduce its dependence on Russian transcontinental railroads and the US-dominated world ocean by all means possible.
Thus, since the Belt and Road initiative is aimed at establishing mutual cooperation not only in commercially oriented areas such as trade and economy and transit and logistics, but also in cultural and humanitarian areas, science and technology, we can conclude that in the medium and long term, the work on improving the efficiency of activities playing the role of a bridge in regulating both intergovernmental and state-to-state relations will intensify.
Aze.Media
