China’s Shifting Calculus in the South Caucasus: Cases of Armenia and Azerbaijan

China’s engagement with the South Caucasus is undergoing a major transformation. Once a peripheral region in Beijing’s wider engagement across the Eurasian continent the South Caucasus has now turned into a focal point for Beijing’s expanded trade, deeper political cooperation, and a more active economic footprint across the region. Indicative of Beijing’s shifting priorities are the relations with Armenia and Azerbaijan which throughout 2025 have assumed strategic importance.

This shift in Beijing’s approach reflects broader changes in Eurasian connectivity and the intensifying competition among major powers in the South Caucasus to shape emerging transport and energy corridors.

Boosted by the Middle Corridor

A central factor behind this recalibration is the rising prominence of the Middle Corridor – the transcontinental route linking the Black Sea to Central Asia. Although the Belt and Road Initiative (BRI) initially prioritized the more established northern route through Russia, the geopolitical landscape altered dramatically after Russia’s full-scale invasion of Ukraine in February 2022. Sanctions, disrupted logistics, and heightened security risks weakened the reliability of the Russian pathway, prompting Beijing to reassess and diversify its transit options. The South Caucasus, geographically located along the shortest land bridge between China and Europe, naturally emerged as an attractive alternative.

This shift was reinforced by institutional developments. In August, railway authorities from Georgia, Azerbaijan, and Kazakhstan agreed to integrate China Railway Container Transport Corp. Ltd. into the Middle Corridor consortium, which had been formed nearly two years ago. For China, this was another signal that the region is becoming indispensable for continental transport planning, especially since the Corridor goes in between Russia and Iran, both heavily sanctioned.

Tapping into the Caucasian Bridgehead

The infrastructure spanning across the South Caucasus has facilitated Beijing’s pivot. For instance, the Baku-Tbilisi–Kars railway, upgraded regional highways, and modern ports on the Caspian and Black Sea shores have all laid the groundwork for alternative transit routes. As a result, Georgia and Azerbaijan have repositioned themselves as essential partners in the evolving Eurasian logistics network, while also strengthening their own ties with Central Asia. China’s interests may expand further following the August 8 signing of the “Trump Road for Peace and Prosperity” (TRIPP) deal between Armenia and Azerbaijan in Washington, which envisions building a link through Armenia’s Syunik region.

Just as importantly, the TRIPP would open a new gateway to Armenia. Owing to decades of conflict around Nagorno-Karabakh, Armenia has long been excluded from major regional transport systems. With the recent thaw in relations between Yerevan, Baku, and Ankara, this isolation may soon diminish. Armenia itself appears increasingly open to engagement with China, exemplified by its application for membership in the Shanghai Cooperation Organization (SCO) following Foreign Minister Ararat Mirzoyan’s first official visit to Beijing in June. This all was followed by Armenia becoming China’s strategic-level partner in August when a strategic partnership agreement was signed. The arrangement is grounded not in ideology but in potential mutual economic benefit, respect of sovereignty, etc.

Wider Context

China’s expanding engagement across the South Caucasus is also part of a wider strategic calculation on Beijing’s part. The region offers Beijing a vantage point over the Black Sea, a zone where Russian and Western interests collide and where major commercial routes pass. Moreover, the South Caucasus serves as a natural continuation of Central Asia, where China has invested heavily in logistics, ports, and rail networks. The very fact that in November Azerbaijan has officially become a full member of consultative meetings of heads of Central Asian states highlights the growing linkage between the South Caucasus and Central Asia.

China’s approach toward the South Caucasus centers on the vision of a continuous overland transit from Xinjiang to the Black Sea where Chinese, Russian, Turkish, and Western interests increasingly intersect. Indeed, the ongoing China–Kyrgyzstan–Uzbekistan railway project, for example, aligns with Beijing’s interest in new port infrastructure along the Caspian and Black Sea, including Georgia’s long-delayed Anaklia deep-sea port.

“Malacca Strait” Dilemma

Beijing’s interest in the Middle Corridor also reflects its desire to reduce reliance on maritime routes, which over the past years have become increasingly unstable. Disruptions as a result of Houthi attacks in the Red Sea and the war in Ukraine highlight the vulnerability of Chinese trade flows. The growing strategic competition with the United States further incentivizes China to develop overland corridors where American leverage is more limited.

China’s greater activity in the South Caucasus also coincides with a period of uncertainty for traditional regional powers. Russia remains distracted by its war efforts in Ukraine, the United States has redirected its strategic focus toward the Indo-Pacific and the Middle East, and the EU has not yet articulated a comprehensive regional policy. Meanwhile, Armenia, Azerbaijan are pursuing increasingly multi-vector foreign policies, seeking to avoid excessive dependence on any single external actor. And China fits neatly into their diversification strategy.

Beyond transit and diplomacy, Beijing’s interests in the South Caucasus have begun to extend into sectors like green energy and electric vehicles. Azerbaijan has become a major importer of Chinese hybrid and electric cars, bringing in nearly 15,500 units in 2024 alone – significantly more than in previous years. Close economic ties are also based on shared strategic partnership model. Azerbaijan and China signed and then upgraded their strategic partnership relationship in 2024 and 2025 respectively.

What Lies Ahead

Future of Chinese engagement in the South Caucasus will depend in part on the outcome of the war in Ukraine. A Russian victory could restore the appeal of the northern Eurasian transit route, potentially reducing the feasibility of the Middle Corridor. The latter still remains hampered by its very multimodal nature and potential normalization of ties between Russia and the Western countries would only limit the interest the Middle Corridor receives.

Yet it does not mean that China will entirely pull out of the South Caucasus. It has already spent enough political and economic capital in the region and the Middle Corridor is unlikely to disappear altogether. After all, the route existed before 2022 and its appeal, though limited in comparison with the Russian route, has nevertheless increased. This suggests that Beijing’s engagement with the South Caucasus will endure and in an increasingly multipolar world China will compete with more established powers such as Russia, the United States, Iran, and the EU.