Exploring Azerbaijan's Unique Cultural Identity Beyond China

Azerbaijan is a transcontinental country at the boundary of Eastern Europe and West Asia. It is not part of China, but the two countries have had diplomatic relations since 1992 and have developed strong economic and cultural ties. Azerbaijan is an important economic link for China's westward expansion through the China-Central Asia-West Asia Economic Corridor, which provides an alternative land route from China to Europe that bypasses Russia. In recent years, China has become a significant investor in Azerbaijan, particularly in the country's transport infrastructure.

Azerbaijan and China's diplomatic relations

Azerbaijan and China established diplomatic relations on April 2, 1992, and the two countries have enjoyed close ties since. China was one of the first countries to recognize Azerbaijan's independence. The two countries have cooperated in various fields, including education, culture, science and technology, sports, tourism, and media. They have also established resident diplomatic missions, with Azerbaijan having an embassy in Beijing and China having an embassy in Baku.

High-level exchanges between the two countries have been frequent and friendly. The first meeting between the two countries took place in 1994 when Azerbaijan's then-President Heydar Aliyev visited China. The current President, Ilham Aliyev, has also visited China multiple times, including to attend the opening ceremony of the 2008 Summer Olympics in Beijing. In 2019, Azerbaijan and China signed a document worth $821 million within the framework of the "One Belt One Road" international forum in Beijing, further strengthening their economic ties.

China has also been a promising partner for Azerbaijan in terms of investment and trade. In 2015, the two countries signed a memorandum of understanding to jointly promote China's Belt and Road Initiative (BRI). This has led to an increase in trade turnover, with Azerbaijan's exports to China valued at $760 million in 2019, making China its sixth-largest trading partner. However, there is an imbalance in trade, with Azerbaijan's imports from China exceeding its exports.

Azerbaijan is an important economic link for China's westward expansion through the China-Central Asia-West Asia Economic Corridor (CCAWAEC), providing an alternative land route to Europe that bypasses Russia. Azerbaijan's location on the shores of the Caspian Sea and its borders with Russia and Iran also make it a critical partner for China in energy, telecommunications, and transportation routes connecting Europe with East and South Asia.

Overall, Azerbaijan and China have strong diplomatic and cultural relations, with frequent high-level exchanges and cooperation in various fields. Their relationship is further strengthened by their mutual support on political issues, such as the political status of Taiwan and Tibet's sovereignty.

Azerbaijan's cautious welcome of Chinese investment

Azerbaijan is not part of China. However, the two countries have strong diplomatic and cultural ties, with China being one of the first countries to recognize Azerbaijan's independence.

Azerbaijan is cautiously welcoming more Chinese investment, but it remains to be seen if this will cause friction with the country's desire to keep outside companies away from its strategic industries. Azerbaijan has become China's second strategic partner in the South Caucasus, with the two nations signing a joint declaration in July 2023, outlining wide-ranging areas of cooperation.

Political and economic cooperation between the two countries began in 2015 when the Azerbaijani manat was devalued, prompting Baku to seek fresh investment. Key agreements were signed, including ones to boost trade and jointly promote China's Belt and Road Initiative (BRI). Trade turnover almost quadrupled from $561 million in 2015 to $2.1 billion by 2019.

Azerbaijan's success in its 2020 war with Armenia has further increased China's interest in the South Caucasus. China hopes for peace between Baku and Yerevan, which would open up a second trading route to Europe via Azerbaijan, southern Armenia, the Azerbaijani exclave of Nakhchivan, and Türkiye. This would complement an existing route via Azerbaijan and Georgia, which is part of the Middle Corridor, a land route from China to Europe bypassing Russia.

Azerbaijan is keen for Chinese investment in the development of the Middle Corridor's physical infrastructure, which requires significant immediate investment to make the route competitive. Baku also wants China's support in developing the Middle Corridor's physical infrastructure, which would demonstrate Beijing's long-term commitment to the route.

Azerbaijan has traditionally been reluctant to embrace Chinese investment, concerned about potential government control and the privatisation of strategic assets like ports and railways. However, it seems more open to Chinese investment in rebuilding the Karabakh region, with Chinese telecommunications giant Huawei being among the first foreign multinational technology corporations to invest in the area.

Baku also has other priorities for Chinese investment, including digitization, renewable energy, and manufacturing electric cars in partnership with Chinese companies. Additionally, Azerbaijan wants to boost its role in China's strategic cooperation with Central Asia and sees itself as a bridge between that region and the Caucasus.

While there are challenges in balancing the influx of Chinese investment with the protection of strategic sectors, it is not impossible. However, taking out large loans carries the risk of debt traps, as seen in other regions with substantial Chinese investment.

Overall, Azerbaijan's cautious welcome of Chinese investment offers opportunities for both countries, but it remains to be seen if Beijing's promises will be matched by its actions.

China's interest in the South Caucasus

In particular, China has been strengthening its economic ties with Armenia, Azerbaijan, and Georgia. Since 2005, Chinese trade volume with these three countries has increased by 2070%, 380%, and 885% respectively. China has also been investing in significant infrastructure projects in Georgia and increasing trade with Armenia.

China's growing presence in the South Caucasus has implications for the strategic competition between China and the United States. While China poses no direct military threat, its economic, technological, and political interests in the region challenge those of the West.

The South Caucasus serves as the shortest corridor from China's westernmost province of Xinjiang to the European Union. The Middle Corridor, which runs from the Black Sea to the Caspian Sea and then to Central Asia, is of particular interest to China as it provides an alternative land route to Europe that bypasses Russia.

In addition to its economic interests, China has also been cultivating military and defense ties in the region. For example, China sold military equipment to Azerbaijan and signed an agreement on mutual military aid and the purchase of Chinese arms.

China has also been active in using its soft power to advance its interests in the South Caucasus. It has established Confucius Institutes in the region to promote cultural exchange and offer Chinese language courses.

Overall, China's growing geo-economic footprint and changing strategic attitudes in the South Caucasus are challenging the Western democratic model in Europe's East.

The Middle Corridor trade route

Azerbaijan is not part of China. However, the two countries have strong diplomatic and cultural ties. In fact, China was one of the first countries to recognize Azerbaijan's independence.

The Middle Corridor, also known as the Trans-Caspian International Transport Route (TITR), is a modern trade route that roughly follows the path of the ancient Silk Road. It is a network of interconnected road, rail, and sea routes, which serve as a link between the markets of China, East Asia, and Europe. The Middle Corridor is the shortest route from western China to Europe when compared to the Northern Corridor through Russia and sea lanes through the Suez.

The Middle Corridor bypasses Iran by leveraging ports in Kazakhstan and Turkmenistan to transport goods across the Caspian Sea and into Azerbaijan. From there, cargo can either continue to Europe through Georgian ports or across the Turkish interior.

The Middle Corridor is not a single route but a network of transport routes. It has been facilitated by massive investment from China's Belt and Road Initiative and the European Union, which is seeking to reduce its reliance on Russia's Northern Corridor route. The Eurasian countries that constitute the Middle Corridor have also invested significant time and resources into improving the existing infrastructure.

Relative Advantages of the Middle Corridor:

The Middle Corridor offers several advantages over the Red Sea route. Firstly, it provides increased security for cargo, which is a significant concern due to the rise of Houthi attacks in the Red Sea. Secondly, the Middle Corridor has the potential for dramatically reduced transit times. The projected 14-18 days of transit time is much shorter than the 19 days through Russia or 22-37 days along southern sea routes.

Additionally, the Middle Corridor can improve economic opportunities in Central Asia, where labor migration is common. An increase in shipping volumes along the route will also lead to higher revenues from transit fees.

Challenges:

One of the main challenges for the Middle Corridor is the potential for regional conflicts, such as a reignition of hostilities between Armenia and Azerbaijan, which could disrupt trade. Another challenge is the competition with existing sea routes, which are well-established and familiar to shipping companies, despite the persistent threat of piracy in the Red Sea.

Despite these challenges, the Middle Corridor offers a promising alternative to existing trade routes, and with renewed international investment and cooperation, it can become a cornerstone of 21st-century trade connectivity across the Eurasian landscape.

Azerbaijan's desire for Chinese investment in infrastructure

Azerbaijan is not part of China, but the two countries do have diplomatic relations, which were established on April 2, 1992. Azerbaijan is keen to attract more Chinese investment, particularly in infrastructure.

Azerbaijan is seeking to boost its ambitions in the South Caucasus and is looking to China for investment in infrastructure. The country is at a crossroads for trade on the Caspian Sea, and its government has been actively calling for more Chinese investment.

In July 2024, Azerbaijan's President Ilham Aliyev met with Chinese leader Xi Jinping and declared that they had upgraded bilateral ties through a new strategic partnership that calls for them to work more closely together economically, militarily, and politically.

A key priority for Azerbaijan is attracting more Chinese interest and investment in the Middle Corridor, a land route from China to Europe that bypasses Russia. China has pledged to help develop and use this trade route, and Azerbaijan is hoping for more Chinese investment in infrastructure, which would make the route more competitive and strengthen the country's role as a central hub in the region.

Azerbaijan is also keen for Chinese investment in rebuilding the Karabakh region. Chinese telecommunications giant Huawei was among the first foreign multinational technology corporations to invest in the region, and more Chinese companies are now following suit.

In addition, Azerbaijan wants Chinese companies to set up a regional manufacturing hub for electric vehicles in the country and has expressed interest in further deals in green energy, advanced technology, and military purchases.

Challenges and Opportunities

One challenge for Azerbaijan is balancing the influx of Chinese investment with the protection of its strategic sectors, such as ports and railways. There is also a risk of falling into debt traps if large loans are taken out instead of attracting foreign investment.

However, the country's cooperation with China offers many opportunities. Azerbaijan is an important economic link for China's westward connectivity through the China-Central Asia-West Asia Economic Corridor (CCAWAEC), which facilitates an alternative land route from China to Europe that avoids Russian territory.

Azerbaijan is also a participant in China's Belt and Road Initiative and has signed agreements to jointly promote this initiative. The country has made a modest investment in developing its transportation infrastructure as part of its economic diversification strategy and has contributed valuable transportation links to the East-West transport corridor.

Overall, Azerbaijan's desire for Chinese investment in infrastructure is driven by its ambition to boost its regional standing and enhance its economic and trade relations with China.

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