Georgia in a Reconnecting Eurasia by Kuchins Andrew C.;Mankoff Jeffrey;Backes Oliver; & Jeffrey Mankoff & Oliver Backes

Author:Kuchins, Andrew C.;Mankoff, Jeffrey;Backes, Oliver; & Jeffrey Mankoff & Oliver Backes
Language: eng
Format: epub
ISBN: 9781442259355
Publisher: Center for Strategic & International Studies

CHINA

Georgia 2020, Tbilisi’s principal economy strategy document, places a heavy emphasis on the benefits that Georgia’s geographic position affords it as a potential hub for international trade and transit—and makes clear that Georgia seeks to realize its full potential in this regard.64 Tbilisi views China, in particular, as a partner that can finance these ambitions. With Georgia’s entrance into a Deep and Comprehensive Free Trade Agreement with the European Union, the former Georgian minister of economy and sustainable development Giorgi Kvirikashvili has said he wants to allow Chinese companies to use Georgia as a “springboard” to access the European market.65 “If Georgia brings at least one percent of China’s international transit [of goods] through its transport corridor, our trade turnover will double,” he said.66 Georgia also sees China as a market to be exploited. In 2011 alone, China imported $1.8 million in Georgian wine, a 260 percent increase from the previous year.67

Chinese investments in Georgia in recent years appear to indicate some degree of reciprocity in China’s thinking about Georgia’s place in Eurasia, including its potential as a hub for transit and trade and as a partner in wider ambitions (under the One Belt, One Road rubric) for promoting connectivity across the Eurasian continent. In December 2013, the Chinese ambassador to Georgia, Yue Bin, and Georgian finance minister Nodar Khaduri signed an Agreement on Economic and Technical Cooperation68 to facilitate mutual economic support between the two countries. In March 2015, China proposed a $5 billion investment in the port town of Anaklia, which Tbilisi plans to turn into a major port handling 100 million tons of cargo annually.69

Since Georgia’s independence, Chinese economic penetration has increased steadily. Chinese FDI into Georgia was nearly $218 million in 2014, a more than twofold increase over the previous year.70 Chinese involvement in large construction projects have led to a dramatic increase in the presence of Chinese companies in Georgia. Since 2010, Chinese construction companies have been actively working in Tbilisi after obtaining four large multimillion-dollar construction contracts: the Adjara Bypass Road project (48 million EUR);71 the Rikoti Tunnel in western Georgia, which is the first public infrastructural project given to a Chinese company through bidding practices (19.8 million EUR);72 the Tbilisi Bypass Railway (277.3 million EUR);73 and the Khadori Hydroelectric power plant ($34 million).74

While China’s economic footprint in Georgia has grown in recent years, the impact has been considerably less than in much of the rest of the former Soviet Union, particularly Central Asia (which has seen China emerge as the principal trade and investment partner). In 2014, China-Georgia trade was only $823 million, well behind other critical partners such as Turkey, many European states, and Azerbaijan, though the overall trade relationship has grown since 2005 at an annualized rate (32 percent) that is the highest among the three states of the South Caucasus.

Ordinary Georgians nonetheless remain wary of growing Chinese investment and the demographic changes that it might bring. According to a representative survey conducted by the Caucasus Research Resource Center, while 57

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