Azerbaijan-China’s Developing Trade & Investment Ties

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Nations celebrate 30 years of diplomatic relations as Baku requests Karabakh investments from Beijing 

Azerbaijan and China have been celebrating 30 years of diplomatic relations, with congratulatory messages between the two Presidents in addition to developing trade and supply chain initiatives.

In terms of hi-tech trade, the first blockchain train arrived in Azerbaijan from Xi’an, although bad weather over the Caspian Sea had delayed its arrival via Kazakhstan’s Aqtau Port.

The train consisted of fifty 40-foot containers. Containers were delivered to Baku by the ‘Garadakh’ feeder ship, owned by the Caspian Shipping Company. This will now become a regular service with onward transit also going to Turkey, in accordance with agreement between the Ministry of Economics of Azerbaijan and Chinese Xian Free Trade Port. Azerbaijan’s cooperation with Chinese companies gained a broader scope after agreement on strategic cooperation in transport-transit sphere, reached in Beijing with the Azerbaijan Railways CJSC under the Belt and Road initiative programme.

Azerbaijan’s President Ilham Aiyev also stated in an address that “We support the involvement of more Chinese companies in restoration and development works across the East Zangazur and Karabakh economic regions. “The people of Azerbaijan and China, which enjoyed ancient and rich traditions of friendship, were connected through the historic Silk Road as far back as two thousand years ago. Today, we interact closely within that traditional route restored in a new format.” These regions were reclaimed by Azerbaijan in the 2020, 44 day war with Armenia, and are now in need of significant infrastructure rebuild.

The Karabakh region is a strategic corridor between Azerbaijan and Iran (and Armenia) and could develop into a useful BRI trade route should investment be made available. Several Chinese companies have already expressed their interest in participating, in particular in the creation of industries in industrial parks and reconstruction work. Huawei is taking part in projects to create “smart cities” in Karabakh.

Azerbaijan-China bilateral trade reached US$2 billion in 2021, with China exporting Carbon-based Electronics, Broadcasting Equipment and Computers, and Azerbaijan exporting Crude Petroleum, Ethylene Polymers, and Propylene Polymers.

Bilateral and transit trade between the two countries can be expected to increase as Baku is a strategic Caspian Port link for the Southern Belt and Road between China and the EU, with onward rail connectivity to Black Sea Ports in Georgia and Turkey, and ultimately to the southern EU ports in Bulgaria and Romania.

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About Us

Chris Devonshire-Ellis is the Chairman of Dezan Shira & Associates. The firm assists British and Foreign Investment into Asia and has 28 offices throughout China, India, the ASEAN nations and Russia. For strategic and business intelligence concerning China’s Belt & Road Initiative please email or visit us at