ALL ROADS LEAD TO CHINA

The year 2015 is nearing its close. Looking at important events in the current year, we feel the growing significance of China in the economic life of the world. After many centuries, China is again ready to become the world's leading force. In the 21st century, the country's achievements are certainly measured not in the battlefield but by the country's political and economic weight. 

In the years of crisis so hard for the global economy, the Chinese leadership has carried out huge preparatory work in the outgoing year 2015 in order to give a new impetus not only to its own economy but also to those of its partner states. We are speaking about the "three pillars" being lobbied for by China, which can change the entire economic order on the Eurasian continent. They include the development of economic and political relations within the Shanghai Coope-ration Organization (SCO), the establishment of the Asian Infrastructure Investment Bank (AIIB) and the implementation of the Silk Road Economic Belt initiative. It should be said that Azerbaijan has taken an active part in all the three initiatives this year. 

Shanghai Cooperation Organization

The SCO was established in June 2011. It was founded by Russia, Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan and China. Over its almost 15 years' existence, the SCO has turned into one of the leading organizations not only on the Eura-sian continent but also throughout the world. By the end of the SCO summit held in the Russian city of Ufa on 8-9 July 2015, the number of its member states increased to eight. Both its new members India and Pakistan belong to the nuclear club and have significant weight in the region. The significance of the SCO would have increased even more if Iran had become its new member at the summit in Ufa. Yet the SCO leaders, China and Russia, decided "not to tease" the USA once again pending the full lifting of sanctions against Tehran imposed in the context of Iran's nuclear programme. 

The list of countries having status as SCO observers and dialogue partners has essentially changed. Iran, Mongolia, Belarus and Afghanistan have joined the SCO's observers while Azerbaijan, Armenia, Cambo-dia and Nepal have become its new dialogue partners joining Turkey and Sri-Lanka that already have this status. So the SCO is getting chances to become a real organization providing a platform for discussing the most urgent problems of the Eurasian continent. Only a few organizations have brought together, under one "roof", 60 per cent of all lands on the planet, 40 per cent of the global population and 25 per cent of the world's GDP. By the way, as we can see, the GDP level is the lowest among the SCO indicators, so the leaders of the organization's member states will have to find ways to speed up the development of their national economies. 

Being the second largest economy in the world, China should certainly become a driving force for other developing countries. The SCO's member states are still far from ranking among developed countries. Financial resources are needed to step up their development. In this context, the Asian Infrastructure Investment Bank founded at the initiative of the Chinese leadership must play an important role in boosting the development of the region's countries. 

Asian Infrastructure Investment Bank

At the initial stage, the authorized capital of the AIIB will total 50bn dollars to be further increased to 100bn dollars. The ceremony of signing the Articles of Agreement on establishing the Asian Infrastructure Investment Bank was held in the Chinese capital on 29 June 2015. 

Azerbaijan has bought a 0.25 per cent interest in this bank and it will spend 245.1m dollars to pay for it. Let it be recalled that, on 31 March 2015, the government of Azerbaijan officially expressed its interest in becoming one of the AIIB founding members. In April, Azerbaijan was approved as one of the countries that have joined the bank. 

China will become the biggest stockholder in the bank with a 26.06 per cent interest and voting authority. All the countries involved in setting up the bank may become its fully-fledged founding members after their parliaments have ratified the agreement before 31 December 2016. 

Now that the AIIB is in place, China will for the first time play first fiddle in decision making on who will receive loans (like the USA and Japan do at the WB, IMF and ADB). It is no wonder that the AIIB director is Jin Liqun. He took this post at official Beijing's recommendation after holding leading positions at government agencies, international organizations and private structures. He had also run the Multilateral Interim Secre-tariat for establishing the AIIB. 

Silk Road Economic Belt

Transport projects will certainly become the main sector for AIIB funding. This direction is quite consonant with the initiative announced by the Chinese leadership in 2013 to create the Silk Road Economic Belt together with countries located on ancient transportation routes. 

It should be said that Kazakhstan quite actively supported this initiative of official Beijing. Kazakhstan is to play a key role as a bridge in creating the single economic space. "To tap the economic potential of the participants in the Shanghai process, it is essential to speed up the integration of the SCO space into the international transport and logistics system. To launch the SCO economic track, we need to continue to search for compromises. The Asian Infrastructure Investment Bank has great potential as a common platform for the implementation of economic projects. The SCO must strictly comply with the principle of openness and maintain its attractiveness. Azerbaijan, Armenia, Belarus, Iran and Turkey have expressed a desire to be a part of the organisation," said President Nursul-tan Nazarbayev of Kazakhstan. 

Meanwhile fundamental changes have taken place in the region since the SCO summit was held in July. On the one hand, the changes have divided, while on the other hand, they have integrated countries on the Eurasian continent focusing their interests in China. Now it depends on the Chinese leadership which projects under the Silk Road Economic Belt initiative will receive credits in the first place. 

The worsened relations between Russia and Turkey, as well as Turkey sending its troops into Iraqi territory will certainly have a significant impact on the development of the Silk Road Economic Belt in 2016. 

Speaking about the revival of the Silk Road, it is hard to name specific countries because, in its classic view, there were multiple caravans trying like a cobweb to cover as many towns and states en route from China to Europe as possible. At present, in terms of political priorities, three leading transport arteries can be singled out within the Silk Road Economic Belt. 

Three routes

Number one is the northern (Russian) route called to send a flow of cargoes from China via Kazak-hstan and Russia to the Scandinavian countries. It is clear that the role of leading players in the northern direction will be assigned to China and Russia. At issue is the funding of motor roads and a high-speed railway, in particular, building a high-speed transport corridor from Moscow to Beijing. It is easy to guess that the technologies to be used in building the high-speed railways will be from China. 

Number two is the western (Turkish, European) route which will start in China and run across Kazakh-stan, Azerbaijan, Georgia and Turkey to European countries. A western route towards China has become vital for Turkey since Russia actually blocked its roads for Turkish motor carriers on 24 November. As a result, more than 400 Turkish trucks were ferried from Baku to the Kazakh port of Aktau in December alone. Meanwhile the figure for the first 10 months of the year did not exceed 350. According to information from the Kazakh side, Aktau port is currently working at its full capacity harnessing all of its technical and logistic potential. "Proceeding from the current situation, Aktau port intends to transfer up to 1,000 trucks per month," the report says. 

The China-Turkey railway service is getting increasingly important. In August this year, the first container train Nomad Express departed from the Chinese port of Lianyungang, crossed the territory of Kazakhstan and Azerbaijan and reached Georgia. The launch of the Baku-Tbilisi-Kars railway will extend the route of the train to Turkey. Further, the use of the Marmaray tunnel will make it possible to deliver cargoes to Bulgaria and European countries. 

Number three is the southern (Iranian) route via India, Afghanistan, Pakistan, Iran, Iraq and Syria. This route is of special importance for Iran, Iraq and Syria which make up the so-called Shia belt of countries. This route can be viewed as the most classic one from the point of view of reviving the Great Silk Road. Back in ancient times, caravans went along this road as far as Syria; then they crossed the Mediterranean to reach Venice and then the European countries. 

By the way, under the Silk Road Economic Belt project, official Beijing would not mind resuming the delivery of its goods to Venice. Yet this particular route may prove to be the most difficult task to accomplish for the Chinese leadership, given the ongoing hostilities in Afghanistan, Iraq and Syria. 

One way or another, the implementation of large transportation projects may significantly increase the development potential for the national economies of the states in-volved. By all appearances, in 2016, official Beijing will seek to maximize its support to the implementation of large international transport projects by its partner states. In particular, the Chinese government's programme for the period until 2020 envisages investing up to 500bn dollars in foreign countries. 

Azerbaijan is also one of the countries interested in developing mutually beneficial cooperation with China, above all in intensifying the transit of Chinese commodities towards Turkey and EU countries. The recent visit by President Ilham Aliyev to China was a vivid expression of that interest.