Transportation, "green" energy as the priorities for Baku, Beijing
Reviewing President Aliyev's interview to CGTN channel

ANALYTICS  23 January 2023 - 14:29

The sharp rise in geopolitical tensions in the Eurasian space last year has tangibly increased the energy crisis, leading to transport and trade disintegration. Despite all this, Baku and Beijing are steadily expanding their economic cooperation. Our country fully supports China’s “One Belt, One Road” initiative while Chinese companies invest in industrial clusters of our republic and are invited to participate in the restoration work in the Karabakh region. On the margins of the Davos Economic Forum, President of Azerbaijan Ilham Aliyev spoke with CGTN about the undertakings and prospects of Azerbaijan-China cooperation.

Dynamically developing trade and economic relations between Azerbaijan and China are based on a solid foundation of friendly inter-state relations. The two countries do not have any contradictions on the foreign policy agenda, they recognize each other’s territorial integrity and categorically reject separatism. This further strengthens mutually beneficial Sino-Azerbaijani economic relations, taking them to a strategic level, allowing Azerbaijan to advance its business interests in the South-East Asia region for many years.

Not surprisingly, in the pre-crisis year of 2019, bilateral trade exceeded $1.3 billion, and despite a perceptible decline a year later during the COVID-2019 pandemic, mutual trade steadily stabilized within the next two years. Thus, in the eight months of 2022, bilateral trade amounted to $939 million, an increase of 14.7% compared to the same period of the previous year. In general, Azerbaijan is the largest trading partner of China in the South Caucasus region: our country accounts for over 43% of the total regional trade, not to mention the absolute advantages in the sphere of transit freight. To expand domestic exports to the large Chinese market in recent years, Azerbaijan has established an extensive system of representations in China to promote its industrial and agricultural products under the “Made in Azerbaijan” brand, as well as organized advertising and promotional campaigns in the leading trading networks of China in order to participate in Chinese exhibitions. Azerbaijani trading houses operate in Luzhou, Liyanuhan, Chindao, Zhangjiajie, with such a structure planned to be opened in Beijing too. At the same time, there are branches of Azerbaijani trading houses in Shanghai, Zhinan and Harbin, as well as wine houses in Urumqi and Shanghai.

It is noteworthy, that over the past decades, Azerbaijan has invested about $1.7 billion in China’s economy, which exceeds Chinese investment in Azerbaijani projects amounting to $800 million. There are 120 companies with Chinese capital working in Azerbaijan and Chinese contractors have participated in various projects in Azerbaijan with a total cost of $600 million.

“We have established a very solid platform for our cooperation. We have had a political relationship for 30 years, which demonstrates that we are excellent partners and trustworthy friends. We have very good cooperation with international institutions. We always supported each other's territorial integrity and sovereignty and established a very strong political platform. So, based on that, we are now constructing a framework for our economic cooperation. And in today's world, it's very important because we have new challenges, problems, and opportunities”, President of Azerbaijan Ilham Aliyev said during an interview with the China Global Television Network (CGTN) on the sidelines of the World Economic Forum (WEF) in Davos.

While appreciating Beijing’s unwavering commitment to economic development, reforms and greater openness to the world, President Ilham Aliyev stressed that China had demonstrated business growth for decades. Wishing the successful implementation of all projects and undertakings conceived in the country, the head of state noted that the state of affairs in China directly depends on progress in the world economy today, saying “I believe that growth in China is critical for all countries, including our own”.

In his interview, the leader of Azerbaijan also expressed full support for the initiatives of Chinese President Xi Jinping regarding the “Middle Corridor”, recalling that Azerbaijan has already fulfilled its part in forming all necessary segments of transport infrastructure. “The ‘Belt and Road’ Initiative, was a timely and very wise initiative that now embraces and covers a large geography. And Azerbaijan actively joined from the very beginning, and we started to invest in the infrastructure, which was not in place. We invested largely in the railroad infrastructure”, said the head of state. Azerbaijan, a country that does not have open access to the ocean, became an international logistical and transportation center. The president clarified that the largest commercial seaport on the Caspian Sea with a capacity of 15 million tons of cargo per year has already been built and its capacity will soon be expanded to 25 million tons; a shipyard has been to be able to manufacture the vessels to transport cargo across the Caspian.

Ilham Aliyev also noted that thanks to the developed infrastructure and competent management in 2022, international transit through Azerbaijan increased by 75% and further expansion of cargo transportation was identified as the main factor of diversification of the Azerbaijani economy, helping to reduce the dependence on oil and gas revenues. Thanks to the initiative "One Belt, One Road", transportation in a number of other directions, in particular on the "North-South" route has been intensified. “I am aware that China has already initiated and begun a new project: a railroad connecting China, Kyrgyzstan, and Uzbekistan. This also relates to our destination, the Caspian Sea. This is a very important additional supply route. And the ‘Middle Corridor’ has a great future”, said the head of state.

In addition to transport and logistics, Azerbaijan looks forward to cooperation with China in the fields of energy, agriculture and high technology. For many years Chinese IT vendors have been working in our country, and President Ilham Aliyev expressed hope that more companies from China will appear in the republic, including in the field of “green” energy, as Azerbaijan has huge potential in this sphere. “During the recent several months, we signed documents that will provide investments to create 22 gigawatts of renewable sources of energy, both onshore and offshore. we also need to invest in the transmission lines to be able to export because we do not need so much energy for ourselves”, said Ilham Aliyev, adding that China has achieved major achievements in the technological sphere, and our countries need to join efforts to implement joint initiatives in the field of renewable energy sources.

The leader of Azerbaijan also recalled, that the process of creation of the Free Economic Zone (FEZ) in the area of the Alata Port near Baku is nearing completion in the republic: it has created a positive climate for foreign investors. In general, the geographical location of the country between the East and the West, directly on the traditional “Silk Road” route creates a lot of opportunities for international companies, said the head of state. He also expressed hope that Chinese companies will pay attention to the possibilities of the localization of production and transit potential of the new FEZ.

It is worth recalling here that during several international summits on the development of the “One Belt, One Road” project, the prospect of attracting Chinese investments in industrial clusters of our country was discussed. A total of 10 investment agreements worth $821 million were concluded between Baku and Beijing in the preceding pandemic period. We are in particular talking about the creation of modern greenhouse farms and agro-processing and logistics enterprises in the Kurdamir, Goychay and Khachmaz districts of the country, and Chinese investments in these projects alone are estimated at $300 million. Companies from China are also ready for partnering in the construction of a steel plant and a tire factory in the Sumgayit Technopark. Chinese investors planned to invest $450-500 million in the republic with some projects having already reached the stage of implementation: in July last year, the foundation of a new plant with a design capacity of about 18.5 million sq. meters of ceramic tiles a year. “Azerbaycan Vanhong Ceramics Co”, a company with 100% Chinese capital, will invest 70 million manats in this undertaking.

Of course, the negative impact of the COVID-2019 pandemic on the global economy has delayed some of the earlier planned initiatives. However, one can be sure that mutual interest in the expansion of business ties will contribute to the multiple growth of Azerbaijan-China trade in the coming years and increase in the number of joint investment projects.

Caliber.Az