Logistics and Trade: China and Azerbaijan changing the game

At the beginning of July, a significant conference titled "Shanghai Cooperation Organization (SCO) Exhibition Zone - Development of Logistics and Trade in Azerbaijan" was held in Baku. The event served as a platform for discussing and presenting new projects aimed at strengthening economic ties between Azerbaijan and China.

Yusif Abdullayev, Executive Director of the Azerbaijan Export and Investment Promotion Agency (AZPROMO), highlighted a significant increase in transit freight between the two countries. From January to May 2024, the volume of transit freight increased by 31.6%, reaching 178 thousand tons. The volume of railway transport during the same period grew by 93%, emphasizing the growing importance of rail transport for trade between the countries.

Special attention is being paid to the development of the Middle Corridor , an important transport artery connecting Asia and Europe through China, Kazakhstan, the Caspian Sea, Azerbaijan, and Georgia. Last year, freight volume along this route increased by 65%, reaching 3 million tons, and it is expected to reach 4 million tons by 2024. An important document was signed at the conference, confirming the commitment to deepen cooperation in logistics and transport between Azerbaijani and Chinese companies.

It was also reported that in the first five months of this year, trade turnover between China and Azerbaijan increased by 26%, reaching $1.3 billion. Projects involving Chinese companies are actively developing in sectors such as industry, agriculture, transport, construction, and trade. Currently, 245 Chinese companies operate in various industries in Azerbaijan.

The conference discussed the Alat Free Economic Zone (FEZ) . Valeh Aleskerov, Chairman of the Board of the Alat FEZ Authority, emphasized that the development of this zone helps China reduce transport costs and creates favorable conditions for utilizing the benefits and opportunities of the free economic zone. The conference was also attended by Ding Tao, the Acting Charge d'Affaires of China in Azerbaijan, who expressed satisfaction with the relations between the two countries and emphasized the importance of these ties within the framework of the Belt and Road Initiative. He noted that trade turnover between China and Azerbaijan continues to grow and has reached a record level.

"In 2023, trade turnover between the two countries increased by 43.5%, reaching $3.1 billion. Relations are developing at a high level," said Ding Tao.



Economic expert Khalid Kerimli , in an interview with News.Az, stated that transit freight between Azerbaijan and China has not yet reached the desired volume. According to him, the volume of freight along the Middle Corridor within the framework of the Belt and Road Initiative is only 1% of the planned amount, but the increase in freight volume is due to political and strategic factors.

"One such factor is the European sanctions imposed on Russia, making it difficult to send goods from China through Russia. The second factor is events in the Red Sea, complicating the transport of goods from China to Europe. Alternative routes are important for China, and Azerbaijan seeks to take advantage of this situation. China already trades with Central Asia via land routes and is building an additional railway line to transport goods through Azerbaijan to Europe. However, the Baku-Tbilisi-Kars railway, launched in 2017, is virtually unused. In May 2024, it was re-launched. The capacity of the Baku port has been increased from 15 million tons to 25 million tons. There are also problems with the Zangezur Corridor for the full operation of the Middle Corridor," emphasized the expert.

The expert noted that, in addition to strategic issues, work is actively being done to simplify intensive trade between the Turkic Council, Azerbaijan, and relevant institutions in China and Central Asia, identifying and eliminating bottlenecks in logistics, and setting a unified date for shipments.

"Previously, goods sent from China reached Europe by ocean. But now goods from China must pass through several multimodal routes involving various government institutions and countries. However, ocean freight volume is also large," added Kerimli.

He also noted that 25% of global production is formed in China and that China surpasses the USA in real GDP volume, adjusted for purchasing power. "Some Chinese companies can establish production in the Alat FEZ and export it to Turkey and Georgia. All necessary infrastructure has been created in the Alat FEZ to attract investments - international trade legislation, tax exemptions, and so on. This economic zone combines the advantages of economic zones existing in global practice," added the expert.



Economic expert Asif Ibrahimov, in an interview with News.Az, stated that China is one of the countries that have invested in Azerbaijan after it gained independence and signed the contract of the century.

"China has invested about $1 billion in Azerbaijan by 2024. These investments concern not only the oil sector but also the non-oil sector. Azerbaijan is one of the most important members of the Shanghai Cooperation Organization. In 2024, transit shipments between Azerbaijan and China increased. I believe that this growth dynamic will continue in 2025-2026," noted the expert.

Ibrahimov emphasized that the volume of freight is about 200 thousand tons and that the Middle Corridor, which the SCO is betting on and which improves the Zangezur Corridor, is an important route.

"China is the world's largest raw material market, and delivering Chinese products to Europe via Azerbaijan is considered a key point. Azerbaijan is creating economic zones for these purposes. For example, many advantages of the Alat Free Economic Zone have already been explained to Chinese companies.

Azerbaijan is going through an economic development stage and holds high positions in various ratings, making the investment climate in the country very favorable for investors. All this attracts the interest of Chinese investors to Azerbaijan," stated Ibrahimov.

News.Az