Baku and Beijing strengthen business ties Investments as a priority

Azerbaijan, together with its partners in Central and South Asia and China, is moving to accelerate integration and investment initiatives in transport, energy, green technologies, and digital innovation. This mutual interest reflects the growing trade and transit flows facilitated by China’s Belt and Road Initiative, the Trans-Caspian route, and other key projects. In recent years, business cooperation within the framework of the Shanghai Cooperation Organization (SCO) has also gained momentum, becoming a priority in Baku’s foreign and economic policy. The latest developments in this regard were highlighted at the annual SCO summit, which began on August 31 in Tianjin, China, with the participation of Azerbaijani President Ilham Aliyev.

The Shanghai Cooperation Organization (SCO) is a permanent intergovernmental international organisation, established in 2001 by the leaders of six countries: China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan. Over time, India, Pakistan, Belarus, and Iran joined the SCO, while Afghanistan and Mongolia currently hold observer status. Today, 14 additional countries, including Azerbaijan, are SCO dialogue partners. Notably, in 2015, the Council of Heads of SCO Member States decided to grant Azerbaijan the status of dialogue partner, formalised the following year with the signing of a memorandum in Beijing.

“Today, the Shanghai Cooperation Organization has become the world’s largest regional organisation, bringing together 26 participants cooperating in more than 50 areas, with a combined economic potential approaching $30 trillion,” said Chinese President Xi Jinping on September 1 at the 25th meeting of the Council of SCO Heads of State. “To date, China’s investments in SCO member states exceed $34 billion, while the annual volume of bilateral trade with other member countries has surpassed $500 billion.”

The figures cited speak volumes about the SCO’s potential and China’s role in shaping the economic foundation of this international organisation. Today, it is China, as the leading economy of the SCO, that exerts the greatest efforts to promote various business projects and initiatives aimed at fostering effective cooperation within this framework.

Notably, in recent years, cooperation between Azerbaijan and China in various formats—including within the SCO—has taken on the character of a strategic partnership focused on expanding trade and economic ties. The two friendly countries are accelerating joint initiatives in industry, transport, IT, and green energy, while further developing the investment component. Encouragingly, these efforts are supported by meetings and talks between Azerbaijani President Ilham Aliyev and Chinese President Xi Jinping, which have played a significant role in elevating bilateral relations to the level of a strategic partnership.

“Azerbaijan and China enjoy warm and friendly relations and a comprehensive strategic partnership. Deepening these relations is one of the important directions of Azerbaijan's foreign policy,” said President Ilham Aliyev during his address at the SCO Plus meeting in Tianjin, China.

During his meeting with President Ilham Aliyev in Tianjin, Chinese President Xi Jinping highlighted the growth of Azerbaijan–China trade turnover, the expansion of cooperation in the energy sector—including renewable energy projects—and joint work in digitalisation. Stressing that Azerbaijan–China cooperation is also strengthening within the framework of the Belt and Road Initiative, the Chinese leader underlined the importance of transporting Chinese goods through Azerbaijan’s territory and, in this context, pointed to the significance of the Trans-Caspian route.

Azerbaijan has for many years been China’s largest trading partner in the South Caucasus region, accounting for more than 40% of all regional trade with China. Last year, bilateral trade between the two countries increased by 21%, reaching $3.7 billion. This positive momentum continued in January–July 2025, with trade turnover reaching $2.5 billion—26.7% more than in the first half of the previous year. During the same period, Azerbaijan’s exports to China grew 4.5 times.

The growing trade dynamic is closely linked to the two countries’ transport and logistics efforts, given Azerbaijan’s role as a key link in the Belt and Road Initiative, particularly through the Middle Corridor routes, which provide Beijing with a direct overland connection to European markets.

“The Middle Corridor represents a reliable and safe route connecting China, Central Asia with Europe through Azerbaijan. Since 2022, the volume of cargo traffic along the Middle Corridor through Azerbaijan has grown by almost 90 percent,” said President Ilham Aliyev during the SCO Plus meeting. “The Zangezur Corridor will soon become another important segment of the Middle Corridor, as well as the North-South Corridor, which will contribute to enhancing peace, multilateral partnership and benefit all of Azerbaijan's close and distant neighbors to the east, west, north and south of our borders.”

It is worth noting that container block trains assembled in China and transported via the Trans-Caspian International Transport Route (TITR) take approximately 20–25 days, which is about half the time required for shipping goods from China by sea through the Suez Canal, which typically takes 40–50 days. This advantage is driving the growth of transit shipments from China through Azerbaijan and in the reverse direction via multimodal container block trains. It is expected that by 2026, cargo turnover could triple, reaching nearly a thousand trains.

Recently, alongside the expansion of trade and transport initiatives, Baku and Beijing have been placing greater emphasis on investment and the creation of joint ventures. Notably, around 275 companies with Chinese capital are currently registered in Azerbaijan, with Chinese investments in the country reaching $942 million. At the same time, Azerbaijani investments in China, including funds from the State Oil Fund, total approximately $2.1 billion.

This potential is expected to grow further, with Chinese companies showing particular interest in Azerbaijani projects in the field of green energy. Projects are planned with a total capacity of 2 GW in renewable energy, including the construction of a 160 MW solar power plant in Fuzuli, in which Chinese companies are already participating.

As part of efforts to improve energy efficiency in the transport sector, an agreement has been reached with the Chinese company BYD Company Limited to purchase electric buses and localise their assembly in Azerbaijan. An important aspect of the cooperation is the attraction of Chinese know-how and capital to Azerbaijan’s non-oil sector, high-tech and innovation areas, as well as collaboration in industrial and agricultural digitalisation and the development of artificial intelligence.

To further expand cooperation in these areas, President Ilham Aliyev held meetings in Tianjin with representatives of several leading Chinese companies and financial institutions. During talks with the management of China Communications Construction Company (CCCC), the prospects for CCCC’s participation in the second phase of the Baku International Sea Trade Port construction were discussed. The Chinese partner also presented conceptual proposals for the cleaning and restoration of lakes on the Absheron Peninsula, and there was an exchange of views on metro construction, comprehensive urban transport development, and related projects.

Separately, discussions with representatives of China Electronics Technology Group Corporation (CETC) focused on opportunities for cooperation in modernising the national management system through digital technologies, developing the digital economy, ensuring national network and cybersecurity, and utilising data applications.

The prospects for joint projects in the field of green energy were discussed with Sichuan Sunsync Photovoltaic Technology, which plans to soon establish a solar panel manufacturing facility in the Alat Special Economic Zone, with the possibility of exporting part of the production. Cooperation in renewable energy also forms the basis of the partnership between China Energy Engineering Corporation Limited (Energy China) and the State Oil Company of Azerbaijan (SOCAR). During talks with the Head of State, Energy China outlined several priorities, including the construction of offshore wind farms, the installation of photovoltaic panels in water basins in Azerbaijan, the treatment, recycling, and reuse of wastewater, and the optimisation of water resource management operations.

A crucial aspect of Azerbaijan–China investment cooperation is the attraction of sustainable sources of capital. In this regard, President Ilham Aliyev met with the President of the Asian Infrastructure Investment Bank (AIIB). During the discussions, satisfaction was expressed over AIIB’s support for financing infrastructure initiatives, including green energy projects, as well as future collaboration on Middle Corridor projects, metro construction, water resource management, and other areas. The meeting concluded with the signing of a joint declaration on strategic cooperation in the presence of the President of Azerbaijan and the President of AIIB.