China & Azerbaijan’s middle corridor: A fair assessment | By Dr Mehmood-ul-Hassan Khan

China & Azerbaijan’s middle corridor: A fair assessment | By Dr Mehmood-ul-Hassan Khan

The Middle Corridor of China and Azerbaijan: A Fair Appraisal

NOW China-Azerbaijan bilateral ties are gaining momentum, which has also further strengthened the scope and reach of the One Belt One Road Initiative (BRI).

In addition, the rapidly changing socio-economic, geopolitical and geostrategic conflicting realities emerging have further consolidated the economic, trade, business and infrastructure cooperation between the two countries.

Hence, the geographic leverage of China’s BRI and Azerbaijan’s Middle Corridor (MC) has been clubbed.

Azerbaijan’s true potential as an MC has further enhanced the strategic reach of the BRI, connecting economies from Central Asia to the South Caucasus and further into Eastern Europe.

Most of the trade between China and Europe was conducted through the Northern Corridor, which runs through Russia.

With the war in Ukraine and socio-economic sanctions against Russia, a significant part of this trade has shifted to the MC, which in turn runs through Central Asia and the Caucasus, connecting China to Europe.

Geographical location on the east-west trade route connecting Europe and China expands many opportunities for Azerbaijan.

The strategic location at the MC also enables Azerbaijan to become more attractive for global value chains and to be better able to integrate into global value chains.

The conflict between Russia and Ukraine has reinvigorated the MC, both as a regional economic zone encompassing Central Asia, the Caucasus and Türkiye, and as an increasingly attractive alternative route between Europe and China.

Interestingly, bilateral relations between China and Azerbaijan have been stable for a long time.

Both countries base their respective national policies on pragmatic models and are linked by common interests and take their obligations very seriously.

Most recently, at the World Economic Forum in Davos, Azerbaijan’s President Ilham Aliyev emphasized that Azerbaijan fully supports the initiatives to further develop MC and has already completed a large part of its feasibility.

Both countries cooperate in various economic sectors, including agriculture, modern technology, healthcare and culture.

Chinese companies are also involved in numerous projects in the liberated areas. For their part, Azerbaijani private companies are entering the Chinese market and establishing business contacts in China.

Mutual trade has increased to 20 percent. The Chinese government has already announced plans to increase the volume of bilateral trade and simplify trade and investment procedures.

It is planned to involve other major Chinese companies in cooperation with Azerbaijan in areas such as infrastructure, digital economy, green energy, finance, etc.

In this regard, the Chinese government will also facilitate Azerbaijani companies’ entry into the Chinese market through participation in exhibitions and cross-border e-commerce, so that companies and people of both countries can benefit from this cooperation.

Obviously, the transport and logistics segment of bilateral relations between China and Azerbaijan is of great importance.

It has multiplier effects for other regional countries and the entire Eurasian region will benefit.

The MC almost coincides with the central route of the BRI. Azerbaijan was actively involved in this mega-project almost from the beginning.

Interestingly, Azerbaijan plays an important role as a connecting hub where all routes and communication channels converge, which strengthens its regional and supra-regional role in terms of logistics and transportation system.

President Aliyev has repeatedly emphasized that his country is the only country where the North-South and East-West corridors converge/are connected.

As a result, without access to the world’s oceans, it has become an international logistics and transport hub.

Now in its tenth year, the BRI has been detained and Azerbaijan has done much to support the implementation of the BRI over the years.

Azerbaijan’s modern railway network has continued to be modernized and continues to expand, while the largest commercial port in the Caspian Sea has been built with a capacity of 15 million tons and with the prospect of expansion to 25 million tons of cargo.

It is currently building a shipyard to be able to produce ships for transporting goods across the Caspian Sea.

Hopefully, once fully operationalized and channelized, the MC can become more competitive and connected compared to the North Corridor.

The MC is around 2,500 kilometers shorter and delivery by rail takes a week less than on the northern route.

In addition, it allows the delivery of goods from China to Turkey in 10-12 days and from China to the EU in 14 days.

It is also the safest and most stable route for the delivery of Chinese goods to Europe. In summary, the Middle Corridor will remain important to achieve the aspired goals of immense socio-economic prosperity, greater regional connectivity, trade and trade integration, and inflows of foreign direct investment into Azerbaijan, where the bilateral relationship between both countries and the BRI would play an important role.

A comparative study shows that a record number of trains were sent along the Middle Corridor from China to Europe and 75 percent more freight passed through Azerbaijan in 2022.

China’s BRI has facilitated cargo transportation along the north-south and north-west routes.

It is indeed a global project showing its benefits for all countries along this route. The China-Kyrgyzstan-Uzbekistan railway project initiated by China will increase the importance of the Middle Corridor as this route leads to the Caspian Sea.

Baku always promotes the idea of ​​mutual benefit, cooperation and peace at the regional level.

China follows the holistic concept of shared prosperity and Azerbaijan replicates it at the regional level, but both share the same philosophy.

The ongoing war between Russia and Ukraine, the imposition of unilateral socio-economic sanctions on Russia and Belarus in the midst of the war, the MC, a joint venture of Azerbaijan, Georgia, Kazakhstan and Türkiye, has gained new impetus and importance.

Known internationally as the Trans-Caspian International Transport Route (TITR), the route stretches from China to Europe through Central Asia and the South Caucasus and is divided into two main lines.

The first route is China-Kazakhstan-Caspian Sea-Azerbaijan (North Line) and the second route is China-Kyrgyzstan-Uzbekistan-Turkmenistan-Caspian Sea-Azerbaijan (South Line) with an additional extension via the Lapis Lazuli Corridor.

Azerbaijan thus has the magical connection for more regional ties. The MC offers China safe access to western countries as it is not subject to international restrictions compared to other transit routes.

In addition, China has strategic partnerships with Azerbaijan, Kazakhstan, Uzbekistan and Turkmenistan, making the relevance of the corridor more evident.

According to the latest figures (December 2022), the transport volume through the MC has increased significantly.

The transport volume from January to March 2022 increased to 266,300 tons of cargo, and in September 2022 the transport volume reached 845,000 tons of cargo.

In order to further strengthen the strategic capacity of the MC, it is proposed to complete the Georgian Black Sea deep-water port as soon as possible.

The east-west highway should also be completed. The Baku-Tbilisi pot/Batumi rail should be further diversified and connected.

For its part, Azerbaijan has successfully developed the Baku seaport in Alat with a first-phase capacity of 10-11.

5 million tons of general cargo and 40,000-50,000 TEU containers, with plans for further expansion.

—The author is Executive Director, Center for South Asia & International Studies, Islamabad, Regional Expert China, BRI & CPEC & Senior Analyst, World Affairs, Pakistan Observer.

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