G

EO
H
E

R
N

G
E

IA
IG
H
BO
R
GEORGIA AND CHINA

S
“Carry away small stones to move
A big mountain”

“CAR
RY
TO M AWAY SM
OVE A AL
BIG M L STONES
OUN
TAIN
”

Tbilisi, Georgia Issue #6, January 2017

 GLOBAL COMPETITIVENESS INDEX 2015-2016 GLOBAL INNOVATION INDEX 2016

Rank Country Value Rank Country Score

1 Switzerland 5.75 1 Switzerland 66.28
2 Singapore 5.67 2 Sweden 63.57
3 United States 5.61 ...
4 Germany 5.52 25 China 50.57
... 26 Malta 50.44
28 China 4.89 27 Czech Republic 49.40
29 Iceland 4.83 28 Spain 49.19
30 Estonia 4.74 29 Italy 47.17
31 Czech Republic 4.69 30 Portugal 46.45
32 Thailand 4.64 31 Cyprus 46.34
33 Spain 4.59 32 Slovenia 45.97
34 Kuwait 4.59 33 Hungary 44.71
35 Chile 4.58 34 Latvia 44.33
….. 35 Malaysia 43.36
58 Rwanda 4.29 36 Lithuania 41.76
59 Slovenia 4.28 ... 34.9
60 Macedonia, FYR 4.28 60 Armenia 35.14
61 Colombia 4.27 61 Mexico 34.56
62 Oman 4.24 62 Uruguay 34.28
63 Hungary 4.24 63 Columbia 34.16
64 Jordan 4.23 64 Georgia 33.86
65 Cyprus 4.22 65 Serbia 33.75
66 Georgia 4.22 66 India 33.61
... ...
139 Chad 2.96 127 Guinea 17.24
140 Guinea 2.84 128 Yemen 14.55
 GEORGIA AND CHINA
“CARRY AWAY SMALL STONES TO MOVE
A BIG MOUNTAIN”

Authors: Mariam Zabakhidze, Giorgi Bakradze, Batu Kutelia

Issue #6, January 2017

Tbilisi, Georgia
© Economic Policy Research Center (EPRC)
CONTENTS

Introduction.................................................................................................................................8
Rise of China in the Regional and Global Context......................................................... 10
China Today............................................................................................................................... 11
China-Georgia.......................................................................................................................... 13
Trade...................................................................................................................................... 13
Foreign Direct Investments (FDI)......................................................................................14
OBOR as China’s Push to Set a New Global Order......................................................... 16
OBOR - what’s in it for Georgia?.................................................................................... 21
Connectivity Facilitation...............................................................................................24
Trade Facilitation...........................................................................................................25
Main Challenges.............................................................................................................26
Recommendations and Conclusions....................................................................................27
Sectoral Approach.............................................................................................................. 28
ICT and Digital Technologies.................................................................................... 28
Energy Sector................................................................................................................. 28
Tourism............................................................................................................................ 29
Near Neighbourhood Policy............................................................................................. 30
Regional and Global Policy............................................................................................. 30
INTRODUCTION challenges, but also proving an opportu-
nity for stakeholders involved.
One of the main characteristics of the
changing new geopolitical landscape is There are vital US strategic and eco-
new integration/disintegration processes nomic interests in Europe and Asia, ac-
or concepts developing globally. These cordingly US – Europe relations and its
processes are competitive, sometimes strategic focuses will largely determine if
contradictory and even conflicting and existing liberal order will be maintained
very rarely accommodating. Europe or there will be some new adjustments
and Asia are the world’s most import- to it. In this regard major strategic chal-
ant regions, directly or indirectly affect- lenge for the Western world today is to
ing global economy and security. While manage declining but aggressive revi-
being the theatre of the two world wars, sionist Russian power. In this context
these regions are also a vital component ultimate importance has long term and
of the current liberal international order well-streamlined policy towards China -
established after the World War II. raising power with Global ambitions.

Some of the above mentioned global in- Chinese Global ambitions are well re-
tegration/disintegration processes to be flected in geopolitics of the New Silk
considered are: dissolution of the Soviet Road. It encompasses economic, political
Union – perceived as the Greatest Geo- as well as security dimensions of Europe
political tragedy of the twentieth centu- and Asia due to vast geographical stretch
ry by Russia; post Cold War process of of this concept, diversity of political sys-
architecting Europe whole, free and at tems and their specifies as well as polit-
peace through the EU and NATO expan- ical goals of all the stakeholders along
sion led by the US; attempt of Russia to it. In various degrees it accommodates
recreate the common political and eco- economic interests of China, US and EU
nomic space on the post Soviet Union and almost all the states along the New
territory – The Eurasian Economic Silk Road, except Russia.
Union; Economic integration along the
New Silk Road led by China, as well as Russia’s Eurasian Economic Union is at
well demonstrated political interests by large extent competing vision with the
the US. All of these processes have sev- China’s New Silk Road Economic Belt
eral key dimensions - economic, politi- (SREB). Besides economic competitive-
cal social and security, creating complex ness, political motives behind those vi-

8
sions are creating major conflict between tunities in building up strong and truly
those two – Russia’s political goal is to strategic partnership with China:
use its economic dominance in the for-
mer Soviet space for resurrecting its  US factor. US the major strate-
political dominance. For China having gic partner for Georgia and accordingly
reliable and secure economic connec- US-China relations under the new US
tion with the EU market is the priority administration would significantly affect
and therefore Russia’s restored influence Georgia-China relations. There are some
over Central Asia and South Caucasus shifts anticipated in US-China relations
represents a significant challenge. Simi- based on some preliminary statements of
larly, Western political interests are lim- the US President-elect Trump, but how
iting Russia’s ability to exercise its po- they will materialize in particular policies
litical influence over former soviet space needs to be seen.
through Eurasian Economic Union. This
coincidence could be transformed into  EU factor. Georgia enjoys asso-
the good opportunity for the West and ciated status and signed the Deep and
China strategic cooperation. Comprehensive Free Trade Agreement
with the EU, therefore if notwithstand-
Georgia’s advanced political position in ing the outstanding issues (particularly
the region as the most westernized coun- related to human rights issues), the EU
try politically and economically as well will be able to develop well-consolidated
as its strategic geographical position, strategic economic relations with China,
carries the potential to be transformed in Georgian economy could benefit tremen-
tangible economic opportunities for both dously.
Georgia and China, but more important-
ly on the larger political scale. Namely, The EU and US are more important eco-
Georgia has an opportunity to prove that nomic partners for China than Russia,
its European and Euro-Atlantic integra- therefore if Western-Chinese disagree-
tion process can be successfully accom- ments could be overcome by economic
modated with its quest for the increased cooperation, political engagement and
role in economic integration under the dialogue, Russia would be left with the
New Silk Road concept. limited space for excursing its influence
in the neighbourhood along the New Silk
There are some significant factors that Road.
can positively affect Georgia’s oppor-

9
In case of successful materialization, China is an emerging economy; (2) China
both of the above mentioned factors holds position in the UN Security Council
would enable Georgia to fully materialize and shares responsibility towards global
the benefits of being the EU associated issues with other established powers and
country, become more prosperous and (3) China is seen, mainly by the West as a
acquire significant economic functions in quasi-superpower due to the authoritarian
order to be a net contributor to Euro- regime2.
pean economic prosperity and security,
rather than only a consumer. Due to the identities mentioned above,
China is considered to be a ‘threat’ to
There is the highest degree of under- western-style good governance, protec-
standing in Georgia of the strategic tion of human rights and promotion of
importance of close cooperation with liberal democracy approach towards aid
China. The biggest challenge for the programmes. This consideration stems
Georgian government is how to trans- from the fact that foreign aid is connect-
form this political will into particular ed to foreign policy, thus serving do-
competitive policies supported by the nors’ interests. Unlike the pre-requisites
bilateral institutionalized mechanisms of of western aid, such as market-oriented
implementation, legal and financial in- economic transformation, good gover-
frastructure and human capital. nance, liberal democracy and human
rights, Chinese development initiatives
RISE OF CHINA IN THE do not have the same conditionality.
REGIONAL AND GLOBAL In particular, China’s development aid
CONTEXT differs from traditional donor-recipient
concept and consists of grants, low-inter-
China is not a new player in development est and interest-free loans, rather in kind
cooperation. Moreover, it represents the than cash contribution combined with
largest emerging economy and current- financial and technical assistance.
ly is attributed to the group of so-called
‘emerging powers’.1 Interestingly China The intention of China to change its role
possesses three simultaneous identities: (1) in global politics is clear, however what

1 de Renzio, P., Seifert, J., 2014. South–South cooperation and the future of development assistance: mapping
actors and options. Third World Quarterly 35, 1860–1875. doi:10.1080/01436597.2014.971603
2 Breslin, S., 2007. China and the Global Political Economy, 1st ed, International Political Economy Series. Pal-
grave Macmillan UK.

10
is unclear, is how this intention will be of the ‘West’ has pushed China from its
expressed. The outstanding economic leading position. Nevertheless, as of to-
growth China has undergone made it a day China is the second largest economy
political, economic and cultural pace- in the world (and the largest if measured
maker in the international arena. There- in PPP terms)3. China launched its catch-
fore, China has become an important up path in 1978 and had an average an-
potential partner for Georgia in the re- nual GDP growth of 10% until 20144.
gional as well as the global context.
As a result, China has lifted more people
CHINA TODAY out of poverty than any other country
through labour-intensive, export-led pro-
The tremendous economic growth laid a duction of cheap products, while acquir-
foundation for China to receive an im- ing skills and gradually shifting towards
mense attention from the global com- production of more complex products
munity. It could be argued that the in- and services5. Furthermore, China has
ternational significance is not a new increased the share of services and in-
phenomenon for China. In 1820 it was dustry in the GDP, pointing at the shift
the world’s largest economy. However from production-based economy towards
industrial revolution and development a consumption-based one.

Source: (Data.worldbank.org, 2016)

3 Eckart, J. (2016). 8 things you need to know about China’s economy. [online] World Economic Forum. Available
at: https://www.weforum.org/agenda/2016/06/8-facts-about-chinas-economy; [Accessed 27 Dec. 2016].
4 Data.worldbank.org. (2016). China | Data. [online] Available at: http://data.worldbank.org/country/china [Ac-
cessed 27 Dec. 2016].
5 Ibid.

11
 Source: (Data.worldbank.org, 2016)

In 2001, a new chapter in the story of the scale. The eight principles of foreign aid
rise of China was opened with the grouping first came into force in the beginning of
of five large developing countries: Brazil, 1960s. These principles were mainly un-
Russia, India, China and South Africa. It derpinned by the equality and mutual
was argued that the so-called BRICS econ- benefits as China perceives it as a mutual
omies, led by China as the largest economy aid rather than unilateral philanthropy;
among this group, would overtake the G6 as well as notion of non-interference in
economies (France, Germany, Italy, Japan, internal affairs of the recipient country8.
the UK and the USA)6. As suggested by the However, despite the narrative of non-in-
evidence, trade between developing coun- terference and surge for win-win scenar-
tries and BRICS was rising twice as fast as ios, some scholars argue that the rise
the global trade7. of China and its increasing presence in
development practices can work against
Having gained economic significance, liberal democracy. This is due to the fact
China found itself involved in interna- that market-oriented economic transfor-
tional development activities at a larger mation, good governance and human

6 Mawdsley, E., 2012. From recipients to donors: emerging powers and the changing development landscape. Zed
Books, London;
7 The Economist 2010: 69 (http://www.economist.com/node/16329442), citied Sidaway, J.D., 2012. Geographies of
development: new maps, new visions? The Professional Geographer 64, 49–62.
8 Zhou, H., 2012. China’s Evolving Aid Landscape: Crossing the River by Feeling the Stones, in: Chaturvedi, S.,
Fues, T., Sidiropoulos, E. (Eds.), Development Cooperation and Emerging Powers: New Partners or Old Patterns?
Zed Books, London, p. 276;

12
rights, all pre-requisites of western aid, In 2000-2016 main exports from Geor-
are not mainstreamed in China-led de- gia to China were copper ores and con-
velopment approaches. Therefore, its centrates (54.7%), copper waste and scrap
increasing role and significance in the (28.5%) and wine12 (6.3%) with the remain-
international development landscape is ing products not exceeding 2% of total
regarded as a threat to these values.9. exports to China. Given the fact that over
this time Georgia has exported around
CHINA-GEORGIA 240 different categories of goods to Chi-
na, export diversification is not very
Trade large. On the other hand, imports from
China to Georgia have not been domi-
The Georgian-Chinese relationship is not nated by a single product or product
a particularly recent phenomenon. Even group – out of almost 1000 various prod-
long before the present day, a tea-spe- uct categories imported from China, the
cialist Liu Junzhou came from China’s largest share belongs to automatic data
Guangdong province to Chakvi in Adja- processing machines with 4.6% of all im-
ra region to cultivate tea and can be at- ports, followed by telephone sets (3.9%)
tributed to creating the first tea culture in and furniture (2.7%). Despite the fact that
Georgia.10 After the collapse of the Soviet China has not been the major trading
Union, Chinese immigrants to Georgia partner of Georgia (2.1% of exports and
were driven by the Chinese state-owned 5.9% of imports over 2000-2016), import
investment activities in the region. In the from China is probably the most diver-
early 2000s, the majority if the migrants sified. It should also be mentioned that
were involved in corner shop and market trade turnover has been more or less on
vendors’ businesses, as well as restaurant rise since 2007. Table 1 below summariz-
businesses,11 whereas after 2010, con- es Georgia total exports and imports for
struction workers became the dominant 2007-2015 period focusing on China13.
portion of the Chinese migrants.

9 Diamond, L.J., Plattner, M.F., Walker, C. (Eds.), 2016. Authoritarianism goes global: the challenge to democracy, A
journal of democracy book. Johns Hopkins University Press, Baltimore.
10 Jiyai Zhou, Chinese in Georgia, ECMI Working Paper #54, 2012 (https://www.files.ethz.ch/isn/140734/Working_Pa-
per_54_en_corrected.pdf)
11 Ibid.
12 The first half of 2016 indicated an increase of 148% of wine exports to China, which has put China in third place of
wine export destinations (http://www.radiotavisupleba.ge/a/ekonomika/27851306.html)
13 Geostat.ge. (2016). External Trade. [online] Available at: http://geostat.ge/?action=page&p_id=133&lang=geo [Ac-
cessed 27 Dec. 2016].

13
Table 1: Georgia total exports and imports for 2007-2015, focusing on China.

Exports to Share in Imports Share in

Year Total Export Total Import
China Exports from China Imports

2007 $1,232,110.47 $8,272.50 0.67% $5212150.246 $206,709.43 4.0%

2008 $1,495,345.24 $8,992.75 0.60% $6301540.343 $298,331.13 4.7%
2009 $1,133,630.23 $5,965.55 0.53% $4475724.509 $174,571.29 3.9%
2010 $1,677,306.90 $27,050.41 1.61% $5235964.559 $335,160.02 6.4%
2011 $2,186,421.21 $28,970.02 1.32% $7072259.779 $527,701.10 7.5%
2012 $2,376,635.37 $25,674.70 1.08% $8056379.016 $614,416.70 7.6%
2013 $2,910,637.17 $33,955.97 1.17% $8022739.033 $612,250.18 7.6%
2014 $2,861,045.18 $90,393.33 3.16% $8601814.355 $733,467.55 8.5%
2015 $2,204,684.21 $125,800.20 5.71% $7730103.038 $587,378.80 7.6%
2016 (10 months) $1,701,045.9 $145,218.9 8.54% $5,426,239.9 $303,895.4 5.6%
Source: (Geostat.ge, 2016)

In addition, the fact that as of 2016 Chi- to construct the Khadori Hydro plant. At
na is the third largest trading partner that given moment it was the single larg-
to Georgia and has signed a Free Trade est investment since the independence of
Agreement (the first FTA China has Georgia.14 First investments from China
signed in the South Caucasus region), to Georgia started flowing in 2002 (e.g.
opens the new avenue for the future co- in 2005, Georgian Timber Processing
operation with the potentially significant Corporation and Georgian Wood & In-
implications for Georgia both on region- dustrial Group, subsidiaries of Xinjiang
al and global scale. Hualing Industry and Trade Group has
set up a factory in the village Lia, in Zug-
Foreign Direct Investments (FDI) didi, Georgia15), however, after peaking at
5.61% of total in 2003, investments start-
In 2001 Sichuan Electric Power Import & ed to drop and for number of years in
Export Corporation invested $34 million 2008-2010 net FDI has been negative.

14 Georgian Business Consulting Group, (2010). Chinese Business in Georgia 2010. [online] Georgian Business
Consulting Group Ltd. Available at: http://yalejournal.org/article_post/new-silk-roads-in-the-southern-caucasus-
chinese-geopolitics-in-a-strategic-region/ [Accessed 27 Dec. 2016].
15 Zhou, J., 2012. Chinese in Georgia. ECMI, Working Paper.

14
FDI from China

Source: (Geostat.ge, 2016)

FDI from China started picking up in Chinese company investing in Georgia,

2012, with Hualing Group making ap- Hualing has invested in seven major proj-
proximately USD 500 million invest- ects. Table 2 summarizes the Hualing’s
ment in Georgia. As one of the pioneer current investment portfolio16.

Table 2: Hualing Investment Portfolio

Sector / Project Investment (in million)
Banking Sector USD 70.00
Mineral resource USD 6.00
Timber processing USD 52.00
Construction USD 10.00
International Free Economic Zone USD 310.00
Kutaisi Free Industrial Zone USD 43.00
Marble mine and quarry USD 7.00
Total Portfolio USD 498.00

16 Tskhovrebova, A., 2016. Silk Road of Chinese Investment. Forbes Georgia, p. 60-65

15
Apart from Hualing Group, a telecom- negligible (the largest share for visitors
munication company ZTE Corporation has been 0.23% in 2011-2012, whereas
and Huawei Technology Company Ltd according to statistics from the first 10
has been present on the Georgian mar- months of 2016, remittances from China
ket. In 2010 three significant infrastruc- accounts only 0.33% of the total money
ture construction projects have been transferred)18.
given to Chinese companies Sinohydro
Corporation and China Railway 23rd Despite the increasing cooperation be-
Bureau Group Co., Ltd. The first one was tween China and Georgia, some chal-
the rehabilitation of Rikoti Tunnel, fund- lenges were observed; in particular,
ed by European Bank for Reconstruc- the lack of clear regulations regarding
tion and Development (EBRD) with the the environment, local workforce em-
budget of EUR 19.8 million. The second ployment and funding mechanism pro-
- construction project of Adjara Bypass cesses. For instance, the Tbilisi Bypass
road was also given to Sinohydro Cor- Railway project led by China Railway
poration funded by Asia Development 23rd Bureau Group was operating un-
Bank (ADB) with total value of EUR 48 der the 1999 FIDIC Yellow Book con-
million, whereas the third project - Tbilisi ditions, which gives the contractor the
Bypass Railway, the largest in the finan- right to hire labour by its own consid-
cial terms, was given to the consortium eration. Therefore, the company had
of Chinese China Railway 23rd Bureau no obligation to employ local work-
Group together with Georgian company force. Furthermore, some officials from
Khidmsheni. The value of the contract the Georgian Railway stated that the
was EUR 350 million co-funded by the style of Chinese management is differ-
Georgian Railways and EBRD and EIB17. ent from that of Western companies.
While the latter concentrate on pro-
Other than FDI and trade in goods, Chi- cedures, careful planning and safety
na’s importance for Georgian economy is matters, Chinese companies are more
quite low, both in remittances and num- concerned with hard results19.
ber of visitors, China’s share in total is

17 Green Alternative, 2012. Do Tbilisi Bypass Railway is beneficial for Georgia? (Publication).
18 Nbg.gov.ge. (2016). Statistical Data. [online] Available at: https://www.nbg.gov.ge/index.php?m=304&lng=eng
[Accessed 27 Dec. 2016].
19 Zhou, J., 2012. Chinese in Georgia. ECMI, Working Paper.

16
OBOR AS CHINA’S PUSH TO provinces of the country compared to the
SET A NEW GLOBAL ORDER eastern coast, economic slowdown, overca-
pacity in production and the high volume
This new global position of China could be of national currency reserves. Furthermore,
summarized by the grand strategy called some argue that OBOR will enable China
the New Silk Road or One Belt One Road to improve its energy security through di-
(OBOR) initiative, which encompasses the versified energy supply chains23. In regards
revitalization of the ancient Silk Road, fos- to cultural lenses, some argue that the
tering cooperation between the countries initiative is a tool to diffuse China’s ideas
over the greater Eurasia continent. about world order24.

Some critics compare this initiative with In effect, the OBOR is aimed to affect
the Marshall Plan that aided the post WW2 more than 4 billion people in over 60
European restoration efforts20. It is also ar- countries in Asia, Africa and Europe.
gued that the OBOR aims to ‘rebalance’ The initiative consists of two parts. (see
global power from the USA to China21. Map 1). The concept of the ‘Silk Road
From the global perspective, the initiative Economic Belt’ (SREB) focuses on im-
can be seen through political, economic or proving and building railway and road
cultural lenses. The competing interest in infrastructure linking China to Europe
Eurasia could be traced to the announce- though Central Asia, Russia and the
ment made by Hillary Clinton regarding South Caucasus, whereas the ‘Maritime
establishing a ‘New Silk Road’ to integrate Silk Road of the 21st century’ concen-
Afghanistan into a north–south trade cor- trates on connecting China to Africa and
ridor and improve its economy22. In terms ultimately to Europe through Southeast
of economic consideration, some scholars Asia, the Indian Ocean, the Persian Gulf
frame it predominantly as a tool to address and the Mediterranean. This serves as
China’s domestic economic challenges, the ‘one road’ part of the OBOR Initia-
such as the underdevelopment of western tive.

20 Summers, T., 2016. China’s “New Silk Roads”: sub-national regions and networks of global political economy.
Third World Quarterly 37, 1628–1643. doi:10.1080/01436597.2016.1153415
21 Clarke, M., 2016. Beijing’s March West: Opportunities and Challenges for China’s Eurasian Pivot. Orbis 60,
296–313. doi:10.1016/j.orbis.2016.01.001
22 Fallon, T., 2015. The New Silk Road: Xi Jinping’s Grand Strategy for Eurasia. American Foreign Policy Interests
37, 140–147. doi:10.1080/10803920.2015.1056682
23 Wang, Y., 2016. Offensive for defensive: the belt and road initiative and China’s new grand strategy. The Pacific
Review 29, 455–463. doi:10.1080/09512748.2016.1154690
24 Callahan, W.A., 2016. Chinas “Asia Dream”: The Belt Road Initiative and the new regional order. sian Journal
of Comparative Politics. doi:10.1177/2057891116647806

17
Map 1: OBOR initiative

Source: (Mercator Institute for China Studies, 2015).

The OBOR initiative encompasses six 4. Build China – Indochina Peninsu-

trade corridors. The following routes are la Corridor and link China with the
anticipated under the Economic Belt: South Pacific Ocean through the South
China Sea;
1. China to Europe through New Eur-
asian Land Bridge; 5. Establish China – Pakistan trade cor-
ridor;
2. Building China - Mongolia – Russian
Corridor; 6. Set up Bangladesh – China – India –
Myanmar trade route.
3. Bridging China to Europe via Central
and West Asian countries. Table 3 presents details of these corri-
dors and Map 2 illustrates the spatial
The 21st Century Maritime Silk Road, coverage of the corridors.
mainly relies on Chinese coastal ports in
order to:

18
Table 3: OBOR trade corridors
Trade Corridor Countries involved
1 New Eurasian Land Bridge ( Jiangsu Central and Eastern Europe: Albania, Bosnia, Bulgar-
province to Rotterdam, Netherlands) ia, Croatia, Czech Republic, Estonia, Hungary, Latvia,
Lithuania, Macedonia, Poland, Romania, Serbia West-
ern;

Europe: Netherlands, Germany

2 China – Mongolia – Russian Corridor Belarus, Moldova, Mongolia, Russia;
(Beijing/Tianjin/ Hebei/Dalian to Russia)
3 China – Central Asia – West Asia Cor- Central Asia: Kazakhstan, Kyrgyzstan, Tajikistan, Turk-
ridor menistan, Uzbekistan;

West Asia: Afghanistan, Armenia, Azerbaijan, Bah-

rain, Georgia, Iran, Iraq, Israel, Jordan, Kuwait, Qatar,
Oman, Saudi Arabia, Syria, Turkey, Yemen;
4 China – Indochina Peninsula Corri- Brunei, Cambodia, Indonesia, Laos, Malaysia, Myan-
dor (Pearl River Delta Economic Circle mar, Philippines, Singapore, Thailand, Timor-Leste,
(Guangzhou, Hong Kong and Shenzhen) Vietnam;
to Indochina)
5 China – Pakistan Corridor (Xinjiang Bangladesh, Bhutan, Maldives, India, Nepal, Pakistan,
province to Gwadar, Pakistan) Sri Lanka
6 Bangladesh – China – India – Myanmar Bangladesh, India, Myanmar
Corridor
Source: (Luckock et al., 2016).

Map 2. Six trade corridors connecting Asia, Europe and Africa

Source: (Hong Kong Trade Development Council, 2016).

19
Three newly establish financial institu- itime Silk Road. Five areas of cooperation
tions are associated with the initiative. In have been identified within the OBOR:
particular:
1. Coordinating development policies;
• Silk Road Infrastructure Fund, estab- 2. Forging infrastructure and facilities
lished in February 2014 with USD 40 networks;
billion in capital;25 3. Strengthening investment and trade
relations;
• Multilateral Asian Infrastructure In- 4. Enhancing financial cooperation and;
vestment Bank (AIIB), established in 5. Deepening social and cultural ex-
October 2014 with USD 100 billion in changes.27
capital;
China plans to deepen regional coopera-
• New Development Bank (also known tion by building on existing bilateral and
as the BRICS Bank), established in multilateral cooperation using them to
July 2014 with USD 100 in capital. navigate OBOR. Beijing has signed a range
of Memorandum of Understandings (MoU)
Georgia joined the initiative and became with the countries along the SREB. Most
the 45th member of the AIIB. Further- notably, the ‘EU-China Connectivity Plat-
more, in late August, 2015, Tbilisi hosted form’ is intended to enhance synergies be-
AIIB’s 6th Meeting of Chief Negotiators tween OBOR and 315 billion EUR of funds
and positioned itself as a valuable mem- allocated by the European Commission
ber of the group26. (EC) for Investment Plan for Europe28. Fur-
thermore, the EU-China Strategic Partner-
The overall trajectory of the initiative is ship envisages cooperation beyond the Eu-
set out in the blueprint document - Vi- ropean mainland, in particular to stimulate
sion and Actions on Jointly Building Silk platforms like the European Neighbour-
Road Economic Belt and 21st-Century Mar- hood Policy (ENP). This opens a window

25 Chinese banks possess more than USD 15 trillion in deposits and the foreign exchange reserves are over USD 3
trillion. For instance, Chinese state banks have already invested $ 250 billion in the project under OBOR umbrella
(Djankov and Miner, 2016).
26 Jin Liqun Selected President-designate of the Asian Infrastructure Investment Bank [WWW Document], 2015.
www.aiib.org. URL http://www.aiib.org/html/2015/NEWS_0824/15.html
27 Aph.gov.au. (2016). China’s ‘One Belt, One Road’ initiative – Parliament of Australia. [online] Available at:
http://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pubs/Briefing-
Book45p/ChinasRoad [Accessed 27 Dec. 2016].
28 China’s ambitious Silk Road vision, 2015. . Strategic Comments 21, iv–v. oi:10.1080/13567888.2015.1114212

20
of opportunity for the ENP countries in- volume has experienced tremendous
cluding Georgia. Therefore, Georgia-Chi- growth. In 2002, bilateral trade was just
na cooperation goes well beyond economic about 10 million USD, whereas in 2014 it
context. The anticipated economic benefits reached 823 million USD29. However, the
derived from the Georgia-China cooper- geopolitical significance and favourable
ation could be one side of the medal, as geographical location of Georgia in the
political implications and possible risks of light of OBOR initiative puts the Geor-
such cooperation should also be taken into gia-China cooperation on the different
consideration to have a broad picture. level.

OBOR - what’s in it for Georgia? Despite timely reforms, Georgia still

struggles with high unemployment and
As mentioned above China and Georgia poverty levels. The main challenges
have a well-established if not particularly Georgia faces in term of its national de-
deep economic relationship, neverthe- velopment are 1) weak competitiveness of
less this relationship is bound to find a the private sector, 2) lack of human capi-
new life under the OBOR initiative. Up tal and 3) limited access to finance.
to date Georgia China relationship has
been defined in the economic and cul- Table 4 summarizes the developmental
tural perspective. Sino-Georgia trade trajectory set by GoG.

Table 4: Georgia’s National Development Strategy

Strategy Direction Activities
Private sector competitiveness • Improving the investment and business environment;
• Innovation and technologies;
• Facilitating and diversifing exports;
• Developing infrastructure and fully realizing the country’s transit
potential;
Human capital development • Developing the country’s workforce to meet labour market require-
ments;
• Ensuring the accessibility and quality health care;
• Tightening the social security net;
Access to finance • Mobilization of investment;
• Development of financial intermediation;

Source: (Government of Georgia, 2013).

29 Funke, C., 2015. Georgia and China strengthen economic ties. Analytical Articles; it should be mentioned that
trade turnover has dropped in 2015-16, compared to 2014

21
The most recent Public Attitudes Poll “Georgia can help build a Silk Road of
revealed that national sentiment regard- trade from Brighton to Beijing” – an ar-
ing five national issues: (1) jobs and un- ticle published by the Telegraph on 28
employment; (2) poverty; (3) territorial October, 2015 and written by the then
integrity; (4) rising prices and inflation; Prime Minister of Georgia echoed the
and (5) pensions, have not changed since thoughts expressed in the Tbilisi Silk
200930. Therefore, the goal of GoG is to Road Forum held in the capital of Geor-
create a platform to support long-term gia in response to China’s OBOR initia-
inclusive economic growth and improve tive. ‘My government’s goal is to build
the overall welfare of its population. The Georgia into a prosperous country that
economic policy of the country focuses leverages its geographic location as a
on three aspects: (1) fast and efficient eco- vital crossroads connecting East and
nomic growth of the real economy (pro- West, and North and South. A regional
duction); (2) facilitating inclusive eco- hub and centre for exchange, Georgia is
nomic growth; and (3) a rational usage Europe’s natural gateway towards Asia’31.
of natural resources towards economic The prime-minister emphasized the
development. friendly business environment and close
ties with the EU, especially after having
Towards achieving the aforementioned signed the Association Agreement (AA),
goals, in October 2015, Georgia hosted a including a Deep and Comprehensive
two-day high level meeting of the Tbili- Free Trade Agreement (DCFTA), open-
si Silk Road Forum, an annual initiative ing opportunities for the private sector
that gathered interested state and non- in Georgia due to its preferable access
state actors from more than 30 countries to the EU market. In this vein the Prime
to discuss the opportunities and chal- Minister of Georgia outlined four antici-
lenges of OBOR. pated projects under OBOR (see Table 5).

30 Thornton, L., Sichinava, D., 2016. Public attitudes in Georgia Results of a June 2016 survey carried out for NDI
by CRRC Georgia. National Democracy Institute (NDI);
31 Garibashvili, I., 2015. Georgia can help build a Silk Road of trade from Brighton to Beijing [WWW Document].
Telepraph. URL http://www.telegraph.co.uk/news/worldnews/europe/georgia/11959643/Georgia-can-help-build-a-
Silk-Road-of-trade-from-Brighton-to-Beijing.html

22
Table 5: Projects anticipated under the OBOR initiative
1) A new deep water seaport in Anaklia, the Black Sea basin, to handle 100 million tons of cargo per
year, with the ability receive large Panamax-type vessels.
2) Improvement of Georgia’s railway network to increase rail speed, tripling the transit capacity.
3) Constructing the Baku-Tbilisi-Kars railroad (in Azerbaijan, Georgia and Turkey, respectively) for
allowing 45% faster delivery of containers and freight and passengers from Asia to Europe.
4) Expanding the East-West Highway, Georgia’s main land road transport, in cooperation with the
World Bank, the Asian Development Bank, and other donors.
Source: (Djankov and Miner, 2016).

These projects are considered to be part sharply declining economies and poor
of Georgia’s National Development Strat- transportation systems in post-soviet
egy as well as being in line with the main countries. The general vision of the proj-
areas of cooperation of OBOR, in partic- ect was to strengthen the political and
ular connectivity improvement and trade economic cooperation of Commonwealth
facilitation. of Independent States (CIS)33 countries,
support regional cooperation, leading to
Connectivity Facilitation regional economic development through
attracting investments from private and
The idea of land connectivity of Europe international financial institutions. The
and Asia dates back to 1993 and is as- main challenge related to TRACECA was
sociated with the EU-backed initiative of the lack of a guiding vision informed by
establishing the Transport Corridor Eu- regional consensus, therefore connectiv-
rope Caucasus Asia (TRACECA).32 Orig- ity improvement largely depends on the
inally aiming to establish a West-East level of regional cooperation.
transport corridor starting from Europe,
going through the Black Sea basin and As suggested by the World Scenario Se-
the South Caucasus towards the Caspian ries report, the South Caucasus and Cen-
Sea, the project intended to stimulate the tral Asia regions have ‘the potential to

32 Currently there are three rail corridors connecting Asia to Europe. 1) Trans-Siberian running from China to
Western Europe via several possibilities via Kazakhstan, Mongolia Belarus/Poland or Ukraine to Western Europe;
2) Central corridor connecting China to the Eastern and the Western Europe though Kazakhstan and 3) Trans-
port Corridor Europe - Caucasus- Asia (TRACECA) an intergovernmental programme focusing on international
transport development in the Black Sea, Caucasus and Central Asia aiming to create a transport corridor between
Europe, the Black Sea, Caucasus, Caspian Sea and Central Asia (Islam et al., 2013).
33 As of December 1993 12 former Soviet Union countries represented Commonwealth of Independent States,
in particular Armenia, Azerbaijan, Belarus, Georgia Kazakhstan, Kyrgyzstan, Moldova, Turkmenistan, Tajikistan,
Russia, Ukraine and Uzbekistan. Due to Georgia-Russia 2008 war , Georgia has left CIS (Aris and Webber, 2016).

23
establish a fresh identity as a centre of na and Europe has been referred to as
activity within a new, 21st-century econ- the Trans-Caspian International Trans-
omy’34. This statement is best under- port Route (TIRT)36 (Map 3). Therefore,
pinned by the recent movement of South the hard infrastructure development
Caucasus and Central Asian counties in terms of connectivity improvement
towards regional cooperation, which has should be supported by establishing a
been driven by opportunities presented single-window system, a soft infrastruc-
by the OBOR. For instance, connection ture tool, to reduce the number of pro-
efficacy between the Xinjiang province of cedures required procedures to cross the
China to the port of Poti in Georgia, via border. Apart from the slow borders,
Kazakhstan and Azerbaijan, was tested. other issues include technical, operation-
Railway cargo loaded in China on 29th of al and geo-political conditions, higher
January, 2015 arrived in Georgia on 6th costs of transit, and damage and theft of
of February 2015; however, almost a third the cargo, all of these are common issues
of the time in transit was spent handling along all three roads37. Clearly these is-
administrative obstacles35. This rather sues should need to be addressed in the
ambitious new trade route between Chi- regional context.

Map 3: Trans-Caspian International Transport Route

Source: (Rogan, 2016).

34 World Economic Forum, 2014. Scenarios for the South Caucasus and Central Asia, World Scenario Series.
35 Djankov, S., Miner, S. (Eds.), 2016. The Rationale behind China’s Belt and Road Initiative, in: The Rationale
behind China’s Belt and Road Initiative, 16. Peterson Institute for International Economics.
36 Grey, E., 2015. Can the Trans-Caspian Route deliver the next freight revolution? Features. http://www.rail-
way-technology.com/features/featurecan-the-trans-caspian-route-deliver-the-next-freight-revolution-4684339/
37 Islam, D., Zunder, T., Jackson, R., Nesterova, N., Burgess, A., 2013. The potential of alternative rail freight
transport corridors between Central Europe and China. Transport Problems 8, 45–57.

24
For Georgia, OBOR can be seen as a ever the study did not consider the pos-
potential solution to some domestic is- sible implication for products and ser-
sues such as job creation, building infra- vices that have not been exported yet.
structure, and attracting FDI to boost the For instance, the study found that the
economy38. On the other hand, China’s China-Georgia FTA has the potential
interest in welcoming Georgia is under- to increase Georgia’s exports to China
pinned by economic considerations as it by approximately 9% mainly in terms of
represents the most efficient land con- wine (28.5%) and non-alcoholic drinks
nection between China and Europe. (36.7%)39. Yet, it is difficult to anticipate
the impact on export diversification. In
Trade Facilitation addition, an alternative study suggest-
ed that the goal of China-Georgia FTA
Along with infrastructure development, should be to go beyond tariff reduc-
trade facilitation is one of the five areas tions and focus on facilitation of trade
of cooperation under OBOR. In March by addressing non-tariff barriers and
2015, China and Georgia launched a fea- further harmonizing country of origin
sibility study on a Free Trade Agreement rules with those included in the DCFTA
(FTA). Such an agreement is important that Georgia has signed with the EU.
not only because of economic consid- By doing so Georgia can leverage its fa-
erations, but it also supports Georgia’s vourable trade conditions with the EU
desire to position itself as a logistic hub and match it with further cooperation
along the SREB. Nevertheless, it is im- with China. This is especially import-
portant to analyse where China-Georgia ant taking into account the desire to
FTA stands in terms of Georgia’s nation- act as a logistics hub linking Europe
al development, in particular in export and Asia. This puts Georgia in a good
promotion and diversification - one of position to develop a symbiotic pro-
the priority set by GoG. cess with regional actors which would
greatly contribute to its own national
The feasibility study found favourable development40.
outcomes of China-Georgia FTA, how-

38 Cecire, M., 2015. China’s Growing Presence in Georgia [WWW Document]. www.thediplomat.com. URL http://
thediplomat.com/2015/05/chinas-growing-presence-in-georgia/
39 University of International Business, and Economics (UIBE) and PMC Research Center, 2015. Joint Feasibility
Study on China-Georgia Possible Free Trade Agreement (Final Report).
40 Fuenfzig, M., 2016. A Quantitative Assessment of the Proposed China-Georgia Free Trade Agreement. Tbilisi.

25
Main challenges majority of the population support these
values, expressed in the desire to join the
Georgia has a favourable geographic lo- EU and NATO. Therefore, while seeking
cation, situated between Europe, Turkey for economic prospects, Georgia should
and China, combined with a friendly continue to strengthen institutions and
business environment and strong po- strive towards establishing consolidated
litical will to act as a logistics hub to democracy.
bridge Asia with Europe. However, de-
spite visible window of opportunity, there RECOMMENDATIONS AND
is a range of external factors pointing at CONCLUSIONS
regional power asymmetries. In this re-
gards the competing interest of China’s Georgia needs to determine how to be-
‘Silk Road Economic Belt’ and Russia’s come more than just a transit country.
Eurasian Economic Union initiative The fact that Georgia hosted such a
aimed at bringing a number of former high-level event related to the OBOR
Soviet states into a single economic puts emphasis on its intension to lever-
space should be mentioned. Although age from its geographic location. How-
leader of China and Russia have agreed ever, it needs to develop a coherent, co-
that these two initiatives will cooper- ordinated and complementary strategy
ate little progress have been detected41. based on national interests and reflective
While Georgia has the capacity to en- of the comparative advantage of different
able a favourable domestic business en- development and strategic partners42.
vironment and help build regional soft
infrastructure, the success of the initia- The national development strategy set by
tive depends on effective cooperation be- GoG prioritizes private sector develop-
tween large regional state and non-state ment to stimulate sustainable economic
actors and their ability to acknowledge growth and contribute to the job creation
the prospect of the initiative. More im- and human capital development that is
portantly GoG needs to base its strategy much needed (as revealed by the Public
on the democratic values. As the most Attitudes Poll). The five cooperation areas
recent public opinion poll indicated,the under the OBOR umbrella could serve as

41 Bond, I. (2016). Russia and China: Partners of Choice and Necessity?. [online] The Centre for European Reform.
Available at: http://www.cer.org.uk/sites/default/files/rpt_russia_china_8dec16.pdf [Accessed 27 Dec. 2016].
42 Pantucci, R., Lain, S., 2016. Tbilisi Silk Road Forum-Next Steps for Georgia and the Silk Road (Workshop
Report). Royal United Services Institute (RUSI).

26
an impetus for GoG to tailor the initia- Sectoral Approach
tive to support its national development.
There is clear interconnection between As mentioned above, connectivity im-
OBOR and Georgia’s national develop- provement and trade facilitation are the
ment strategy in terms of connectivity direct sectors that will be involved. Nev-
/ infrastructure development and trade ertheless, it opens opportunities for other
facilitation. However, these compatibili- sectors as well. The in-depth analysis of
ties are rather general and lack clarity. the OBOR should not only be concen-
Thus, to fully harness the opportunities trated on these areas, but rather, GoG
put in place by the initiative, GoG needs should develop other sectors and accu-
to establish working groups involving key mulate human capital to participate in
public and private stakeholders within OBOR-related projects in the future.
the country and in the region to discuss
and establish a common vision. This ho- • ICT and Digital Technologies
listic approach should be applied at dif-
ferent levels and should be addressed to Development of Information and Com-
different audiences. Firstly, GoG needs to munication Technologies (ICT) and dig-
identify critical sectors that will be di- ital technologies sector could be seen
rectly or indirectly influenced as a result as one of the key areas that could be
of the improved connectivity and trade. indirectly affected by the initiative. In
By doing so, GoG will maximize the 2015 Georgia ranked 73rd out of 141 in
positive spillover effect on these sectors. the Global Innovation Index, leaving
Secondly, the focus should be made to a space for improvement43. Currently
establish a policy in respect to the near the World Bank has approved a loan of
neighbourhood to improve the restricted USD 40 million to Georgia to increase
regional cooperation. Lastly, GoG needs innovative activities of private sector
to conceptualize the initiative in regional and individuals as well as their par-
and global context to ensure the initia- ticipation in the digital economy44.The
tive is harmonized with its domestic as project has quite ambitions objective, in
well as foreign policy strategies. particular by 2020 to have 40,000 IT

43 Cornell University, INSEAD, and WIPO (2015): The Global Innovation Index 2015: Effective Innovation Policies
for Development, Fontainebleau, Ithaca, and Geneva.
44 The World Bank, (2016). World Bank Supports Georgia’s Investment in Innovation-driven and Knowledge-based
Economy. [online] Available at: http://www.worldbank.org/en/news/press-release/2016/03/18/georgia-national-in-
novation-ecosystem-project [Accessed 27 Dec. 2016].

27
export-oriented experts in Georgia, cre- of factors should be taken into consid-
ating USD 1.1 billion worth IT products, eration. In particular: 1) sound business
placing Georgia among the world’s top environment; 2) well-developed infra-
10 countries for information and com- structure; 3) access to foreign market and
munication technologies. This creates 4) skilled labour.
an avenue for Georgia to link its ICT
potential to building the so-called Digi- Analysis of current conditions reveal that
tal Silk Road (DSR)45. Thus, GoG should the cost of electricity in Georgia is low by
cooperate with China in order to share international standards. Partly the reason
China’s knowledge in these sectors thus for this is the low production costs. Nev-
enhancing skills related to ICT and in- ertheless, according to the Ten Year Net-
novative technologies sectors. work Development Plan for 2015-2015
(TYNDP) designed by TSO of Georgia
• Energy Sector and JSC Georgian State Electrosystem
by 2022 Georgia should develop its en-
Export diversification is another critical ergy production with availability to ex-
goal GoG has included in its develop- port 40% of production. This calculation
ment strategy. The FTA between Geor- is bases on the analysis of mainly hydro
gia and China could be a starting point resources. To attain this goal, estimated
to pursue of export diversification. In USD 9 billion investment is required in
this vein, GoG needs to foster export in the sector - more than half of current
higher-value-added goods. According to GDP. Therefore, there is an urgent need
several studies Georgia has a promising to attract foreign investment. Apart from
potential in energy-intensive products46. the financing challenge, Georgia needs
However, whether Georgia has a poten- to attract energy-intensive consum-
tial to develop comparative advantage in ers to avoid concentrating on export of
low-cost electricity production a range low-cost electricity47. It is obvious that

45 4 The Digital Silk Road (DSR) seeks cooperation in next-generation mobile technology 5G, cloud computing,
the Internet of Things, bid data, e-commerce, digital investment, smart cities, and smart energy. The DSR was the
subject of a high-level meeting in Brussels in July 2015.
46 Zachmann, G., Saha, D. and Peruzzi, M. (2015). Georgia’s economic specialisation: Present and future. Policy
Paper Series [PP/01/2015]. [online] Berlin/Tbilisi, April 2015: German Economic Team Georgia. Available at:
http://zachmann.be/wp-content/uploads/2014/06/PP_01_2015_en_Georgia%E2%80%99s-economic-specialisation.
pdf [Accessed 27 Dec. 2016].
47 Zachmann, G. (2016). Can low electricity prices be a comparative advantage of Georgia?. Policy Paper Se-
ries [PP/02/2015]. [online] Berlin/Tbilisi, May 2015: German Economic Team Georgia. Available at: http://www.
get-georgia.de/wp-content/uploads/2014/11/PP_02_2015_en.pdf [Accessed 27 Dec. 2016].

28
increased infrastructure development re- ing expects increase in Chinese visitors
lated project will also trigger the rise in to Georgia. Moreover, in light of SREB
energy consumption, therefore GoG need initiative, Hualing group believes that
to work with Chinese partners, who pos- this type of investment will be encour-
sess a solid experience and knowledge in aged by China. Hualing has a long-term
energy sector, to go beyond infrastruc- strategy to have 50 operational planes,
ture development. conducting direct flights between China
and Georgia in 5-10-year period. There-
• Tourism fore, GoG, in particular, Georgian Na-
tional Tourism Administration (GNTA)
Although OBOR is currently a govern- should take the lead and build on this
mental initiative, its future success de- opportunity.
pends on the involvement of private
sector. Thus, GoG needs to enable the Near Neighbourhood Policy
business environment to make the ren-
ovated trade routes attractive from the The existence of regional platform is
market standpoint. Tourism is another crucial. Therefore, Georgia should take
sector that could benefit from improved the lead and establish a platform in sup-
connectivity. Currently, United Nations port of the South Caucasus and Central
World Tourism Organization (UNWTO) Asian connectivity projects. The primal
operates Silk Road Programme that in- purpose of this institution should be to
cludes 33 states, including Georgia48. navigate Georgia’s Silk Road and Eur-
The OBOR initiative should be seen as asian connectivity activities. Again, in
an important contributor to further de- order to strengthen limited regional co-
velop the Silk Road Programme and put operation in these regions it is import-
the Ancient Silk Road on the global tour- ant to identify complementarities of each
istic map. The private sector has already country. What Georgia could offer is its
started working in this direction. For in- experience in administrative reforms.
stance, Hauling plans to invest in avia- For instance, the National Bank of Geor-
tion. As noted by the deputy CEO, Hual- gia (NBG) has already started exporting

48 UNWTO’s role in promoting the growth of Silk Road tourism dates back to 1994, when 19 countries called for
the ‘peaceful and fruitful re-birth of these legendary routes as one of the world’s richest cultural tourism desti-
nations’. Over the years, UNWTO worked closely with key UN agencies such as the United Nations Educational,
Scientific and Cultural Organization (UNESCO) and United Nations Development Programme (UNDP) to advance
sustainable development imperatives across the regions of the Silk Road. It was in 2010 that UNWTO developed
a specialised programme dedicated to advancing tourism along the Silk Road.

29
soft infrastructure tools, as its payment 2013 the trade volume increased from 93
system development project with the billion USD to 560 billion USD respec-
Central Bank in Tajikistan49. In light of tively. This has led to the acknowledg-
OBOR and Georgia-China relationship, ment of further increase of trade volume
it should be mentioned that the NBG in case of overland infrastructure im-
and People’s Bank of China have signed provement51.
a framework agreement on a currency
swap scheme in 2015.50 Georgia could On March 6, 2016 the Ministry of Econ-
and should share its experience further omy and Sustainable Development of
and contribute to the establishment of Georgia has issued the third action plan
regional soft infrastructure, an essential towards implementation of DCFTA. If all
element on order to benefit from the im- the requirements are met, Georgia will
proved connectivity. be able to have a preferential access to
the EU market52. The similar action plan
The main purpose of the regional plat- should be also prepared regarding OBOR
form should be to conduct a permanent in order to ensure that on the one hand
research on regional needs and establish the connectivity and policy harmoniza-
a common space to share knowledge and tion process is well-structured, and on
experience. the other hand these two processes are
in accordance with each other. By doing
Regional and Global Policy so, Georgia could leverage its geographic
location into trade facilitation, which is
Apart from the near neighbourhood con- one of the five areas of OBOR.
text, GoG needs to conceptualize the
initiative in broader geographical terms. Furthermore, GoG needs to seek the op-
Expanding trade between China and the portunities to integrate its policy with its
EU has been considered an important strategic partners’ interests. Apart from
driving force of the SREB. From 2002 to the support from the EU and facilita-

49 National Bank of Georgia, (2013). The Delegation From The Central Bank Of Tajikistan Visited National Bank
Of Georgia. [online] Available at: https://www.nbg.gov.ge/index.php?m=339&n=&newsid=2221&lng=eng [Accessed
27 Dec. 2016].
50 Globaltimes.cn. (2015). China, Georgia sign framework deal on currency swap - Global Times. [online] Avail-
able at: http://www.globaltimes.cn/content/944793.shtml [Accessed 27 Dec. 2016].
51 Starr, S.F., Cornell, S.E., Norling, N., Central Asia-Caucasus Institute and Silk Road Studies Program, 2015. The
EU, Central Asia, and the development of continental transport and trade.
52 economy.ge. (2016). DCFTA. [online] Available at: http://www.economy.ge/ge/dcfta [Accessed 27 Dec. 2016].

30
tion of the TRACECA project, the Unit-
ed States of America has also identified
South Caucasus and Central Asia con-
nectivity as an important development
issue. In 1999 Senator Sam Brownback
who at that time was the chairman of the
Senate Foreign Relations Subcommittee
on Near Eastern and South Asian Affairs
has proposed Silk Road Strategy Act of
1999. It was aimed at the economic and
political independence of the countries
of the South Caucasus and Central Asia
and was referred as a part of the USA’s
foreign policy. The legislation was not
enacted, however, as Senator Brownback
is anticipated to be a member of the
new establishment, GoG should see the
OBOR initiative in strategic terms and
further investigate possibilities to harmo-
nize its policies.

It has only been three years since the

OBOR initiative was launched, therefore
it is too early to evaluate it in any de-
tail. However, by analysing its potential
implications in the current infancy stage,
will enable a better understanding and
an ability to positively navigate this ini-
tiative in the future.

31
 ABOUT EPRC & GEORGIA AND THE NEIGHBORS

EPRC is a rare think- and do- tank which brings to light the most
pressing economic issues confronted by the society, provides cut-
ting-edge analysis, offers evidence-based recommendations, and stim-
ulates public debate and education. EPRC was established in 2002
and from the very beginning has played an active role in linking the
civil society and the public sector, providing guidance and advice
in various fields of public policy, budget oversight, and monitoring
the implementation of the major state and donor-funded programs.
Throughout the past decade EPRC has earned a reputation of an ob-
jective, reliable, and non-partisan source of information on the issues
related to economic, financial, and social policies.
 GEORGIA & CHINA IN 2016*

145 mln $464 mln 11,660.00

EXPORT TO CHINA IMPORT FROM CHINA VISITORS ENTERED

IN GEORGIA FROM
CHINA

$3,1 mln $1,7 mln

REMITTANCES FROM CHINA FDI FROM CHINA

KEY GLOBAL BENCHMARKS

48 of 168 23 of 178 16 of 190 66 of 140

83 of 168 144 of 178 78 of 190 28 of 140

TI CORRUPTION HERITAGE WORLD BANK’S WORLD ECONOMIC

PERCEPTION INDEX FOUNDATION’S ”EASE OF DOING FORUM GLOBAL
2015 ECONOMIC BUSINESS” 2016 COMPETITIVENESS
FREEDOM INDEX INDEX (GCI)
2016 2015-2016

* October 2016

Economic Policy Research Center (EPRC)

85 Paliashvili str. Building I. Floor IV. Tbilisi.Georgia
(995 32) 2 207 305
[email protected]
@EPRC_Georgia
Economic Policy Research Center
www.eprc.ge

The Brief is published with the financial support of the Open Society Foundation’s Think Tank Fund