China’s Growing Presence in Georgia

There is perhaps no less comfortable place for a struggling democracy than the blurry space between the hardening frontiers of the liberal democratic West and an increasingly expansionist, militant Russia. For states like Georgia, well beyond NATO’s fortified border in a region where even neutrality is considered a lot cast for Moscow, taking a side is not so much a choice as it is a necessity for state survival. But the rapidly growing presence of China, for the first time, opens up the possibility of a Sino-Georgian third way just as local confidence in Western alignment hits new lows.

China’s interest in Georgia and the South Caucasus is neither new nor particularly unexpected. Though flying under the radar, Chinese investment has been rising in the region for at least several years, in search of investment opportunities and low-cost diplomatic dividends. But Beijing’s appreciation for the South Caucasus as a strategic region worthy of genuine attention is a more recent phenomenon, driven in large part by Beijing’s ambitious multi-billion dollar bet on the New Silk Road (NSR), for which Georgia and the South Caucasus are set to play a critical role. Though its location may be geopolitically unenviable, Georgia’s position as a connector state between the Eurasian interior and Europe has caught Chinese interest.

In large part, Georgia-China cooperation has been restricted to the economic domain. But growth in this area has been very significant; a few years ago, the Chinese portfolio in Georgia consisted primarily of various one-off projects and credit lines, but has since expanded considerably to make China a major player. According to GeoStat, the Georgian National Statistics Office, Georgia-China trade and investment has skyrocketed in the last several years, and China is now Georgia’s third largest trade partner by volume – just behind Turkey and Azerbaijan and slightly ahead of Russia. With little interruption, bilateral trade volume has exploded from just under $115 million in 2006 to more than $820 million in 2014. However, the trade deficit is understandably lopsided; Georgia only exported some $90 million worth of goods to China in 2014, although this figure is a near 1,800 percent increase over exports as recently as 2009.

Foreign direct investment (FDI) numbers from China are equally positive for Georgia. After years of mediocrity, Chinese FDI began to show signs of life in late 2012, soaring from a paltry $9.6 million in 2011 to nearly $200 million in 2014 – almost a fifth of reported total FDI for Georgia for that year. And if recent news is correct, Chinese interest in Georgia has only just begun, with Beijing reportedly keen to put more money into energy, transportation. healthcare, and infrastructure.

The Georgian government has been understandably receptive to…

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