Georgia: The key to Chinas Belt and Road
Georgia has become a major hub for Chinas Silk Road plans, despite being left out entirely in the early stages
Revaz Topuria
Better later than never? For Georgia, the answer is a resounding yes.
Back in 2013 when Chinese President Xi Jinping announced his ambitious Silk Road Economic Belt and Maritime Silk Road projects (also called One Belt, One Road or OBOR), Georgia was not even mentioned. That wasnt surprising; Georgia was not a part of main route on the ancient Silk Road, so neither was it included in Xis new route. But things have changed rapidly.
Right now Sino-Georgian relations are at their peak. The two countries are negotiating a free trade agreement and both sides admit Georgia has a key role to play in the New Silk Road project as a hub between Asia and Europe. There is no country in the region that is more open to Chinese business and investment, Chinese people and culture or Chinese innovation and ideas than Georgia, then prime minister Irakli Garibashvili said in a speech at Peking University in September 2015. In an op-ed for China Daily, he added that Georgia is Europes natural gateway to Asia, as it is Europes eastern most point both by land and sea. Right now, Georgia is attracting China and plans to transform itself into a logistics and transportation hub to connect Asia and Europe.
But there are still many questions to be asked. How, when, and why did the Georgian government attract Chinese interest? What interest do both parties have in the project? And how realistic is it? China always had some interest in the Caucasus region there are some major Chinese investors in Georgia but the Middle Kingdom never considered Georgia as a strategic partner. Even Georgian media was quiet about OBOR at the beginning.
I first heard about Georgias potential involvement in this project last September, when Garibashvili visited China, but it was not from Georgian media. By that time I was studying in Lanzhou (one of the key cities of OBOR) and while riding the bus I happened to hear on the radio that the Georgian prime minister was visiting China to discuss an FTA and OBOR.
We are definitely ready to become the part of the New Silk Road route. Our aim is to use Georgias strategic location as best we can, said Garibashvili while visiting China.
In addition to talking with his counterpart, Chinas Li Keqiang, Garibashvili also met with the president of the Asian Infrastructure Investment Bank, Jin Liqun. At the meeting, it was noted that Georgia will be one of the first countries where the bank will start implementing projects. One month later, Georgia hosted the Tbilisi Silk Road Forum, the first forum about the OBOR project organized outside of China. Clearly, Georgia is getting more involved in OBOR, but how did it all start?
China and Georgia established relations in 1992. China was one of the first countries to recognize Georgias independence, but Beijing didnt have many interests in region at that time. Trade between two countries was only $3.7 million at the end of the 20th century. But in recent years, its become clear that China sees Georgias potential. Driven by Georgias privileged access to the European Union, investment-friendly tax policy, and strategic location on the Black Sea, Chinese investment interests in Georgia now run the gamut, and look set to expand. Trade between countries was worth over $700 million in 2015, FDI from China was more than $200 million by 2014, and exports from Georgia to China have increased by around 2000 percent compared to 2009.
Before Garibashvilis visit to China in September 2015, China and Georgia held numerous exchanges. The Georgian delegations tried their best to get Chinas attention and China tried to understand whether Georgia could be the gateway between Asia and Europe it needed so much to realize OBOR. After numerous visits by Georgian officials, several memorandums were signed and China began to pay more attention to Georgia. On December 13, the first transit train from China arrived to a station in Georgia, thus marking the opening of the Silk Railroad.
Why Georgia? Why now? As I noted earlier, Georgia was not even mentioned when the OBOR plan was first announced. China never considered Georgia as a key player in Europe, but things have changed. Its believed in Georgia that the country has a unique geostrategic location, but it apparently wasnt so attractive for China before. Geography alone cant explain why Georgia gained so much importance for OBOR in the past year. Some assume that China was interested because of the Georgia-EU Deep and Comprehensive Free Trade Area (DCFTA) and the countrys investment-friendly tax policy. Georgia does have a welcoming investment policy (its 24th in the World Banks Doing Business 2016 rankings) but the DCFTA argument falls apart on closer examination. Before Georgia, Hungary and Belarus were believed to be Chinas strategic European partners in OBOR. Hungary is officially a member state of the EU; in comparison, its unlikely that Georgias Free Trade Agreement with the EU attracted China.
Then why? The answer is simple, and its hidden in Chinas economic downturn. Chinas economy has slowed to its lowest level of growth in 25 years. Quarterly growth it at its lowest rate since the depths of the financial crisis six years ago.
The writer is president of the Europe-Georgia Institute
