China regards Georgia as forming part of the 'One Belt, One Road' initiative

The bilateral economic relationship between Georgia and the People's Republic of China (PRC) has been developing gradually since the establishment of diplomatic relations in 1992. This process was significantly accelerated following 2010, when the Georgian economy began to recover from the 2008 conflict. During this period, China has emerged as a pivotal economic partner for Georgia, playing a pivotal role in supporting the country's economic growth and modernisation.

The date of 13 May 2017 represents a significant milestone in the history of China-Georgia relations, marking the signing of a Free Trade Agreement between the two countries. This agreement constituted the inaugural instance of China entering into a bilateral agreement with a South Caucasus country, thereby underscoring the strategic importance of Georgia within the One Belt, One Road initiative. The agreement facilitated access for Georgian goods to the Chinese market, eliminating tariff barriers and markedly increasing export opportunities for Georgian producers.
China's One Belt, One Road (OBOR) initiative, which was launched in 2013, has the objective of reducing the distance between China and Europe by improving infrastructure connections and creating new trade routes. Georgia occupies a pivotal position in this project, given its strategic location at the nexus of Europe and Asia. The route from China to Europe via Georgia circumvents the geopolitical and logistical challenges inherent to alternative routes.

This paper will examine the role of foreign direct investment and large Chinese projects in Georgia.

By 2014, China had accounted for $217.94 million in foreign direct investment in Georgia, ranking fourth after Azerbaijan, the Netherlands, and the United States. Chinese companies are actively investing in the Georgian economy, perceiving not only commercial advantages but also strategic interests.
One of the most notable investors has been the Chinese company Hualing Group, which was the largest foreign investor in Georgia in 2017. The company's primary areas of focus are the construction and management of hotels and shopping malls, in addition to the development of free economic zones. To illustrate, the Hualing Group has initiated the construction of a free trade zone in Kutaisi, the second-largest city in Georgia, as well as a substantial residential and commercial complex in the suburbs of Tbilisi.

Furthermore, in January 2017, CEFC China Energy reached an agreement to purchase a 75% stake in the Poti Free Industrial Zone on the Black Sea coast, marking another significant advancement in China's efforts to consolidate its influence in the region.

The implementation of a visa-free regime and the expansion of bilateral cooperation represent a significant step forward in the development of mutually beneficial relations between the two countries.

On 28 May 2024, the visa-free agreement between Georgia and the People's Republic of China came into force, enabling Georgian citizens to travel to China without a visa and remain there for up to 30 days on each visit. This agreement serves to reinforce not only economic but also cultural ties between the two countries, thereby stimulating the development of tourism, educational exchanges and interpersonal contacts.

Since 2010, there has been a notable increase in the volume of trade between Georgia and China. In 2023, the value of trade between Georgia and China exceeded $2 billion for the first time, representing a significant achievement in the context of bilateral relations. It is important to note that the trade turnover is characterised by a clear bias towards imports. This can be attributed to the size of the Chinese economy, which is the second largest in the world with a GDP of $17.7 trillion.

The principal imports from China to Georgia are computer equipment and domestic appliances, which serve to illustrate China's significance as a source of high-tech products. Conversely, Georgia exports copper ores and metals to China, which are indispensable to the Chinese industrial sector. These materials are employed in the manufacture of a diverse array of products, which are subsequently exported globally.

Additionally, China has emerged as a significant market for Georgian wines. In 2023, exports of Georgian wine to China reached a value of $11.7 million, which serves to illustrate the growing interest of Chinese consumers in Georgian products and contributes to the development of the Georgian wine industry.
The latest data indicates that China has made investments amounting to nearly $20 million in Georgia over the recent period, which has elevated China to the fifth position among the countries that have made investments in Georgia. In 2023, a joint statement on strategic partnership was signed between Georgia and China. This statement encompasses four main dimensions: political, economic, people-to-people and international.

In the political sphere, Georgia has consistently demonstrated its unwavering support for the One China principle and reaffirmed its commitment to respecting the sovereignty and territorial integrity of all nations. In the economic dimension, the countries view each other as crucial strategic partners and aim to further enhance collaboration within the framework of the OBOR initiative.

The pace of development in relations between Georgia and China demonstrates notable advancement in recent times. The Belt and Road Initiative plays an instrumental role in fortifying these ties, facilitating new avenues for economic expansion and regional collaboration. The strategic partnership between Georgia and China is a key factor in ensuring long-term stability and prosperity in the region, with both countries continuing to work towards its deepening.

Gulnara Safarli
Azerbaijan-Georgia-Turkey Strategic Partnership Information Support Centre

SR-CENTER.INFO