Caspian Energy (CE): Mr. Jinghua, how would you evaluate the results of the bilateral relations in 2016 and the potential to intensify the relations in 2017?
Ambassador Extraordinary and Plenipotentiary of the People's Republic of China to the Republic of Azerbaijan Mr. Wei Jinghua: In December 2015, President of the Republic of Azerbaijan Mr. Ilham Aliyev paid a historic state visit to China. During the visit President Ilham Aliyev and the President of the People's Republic of China, Mr. Xi Jinping reached a common understanding on the wide range of issues, including the “One Belt, One Road” project. Since then the China-Azerbaijan relations have been on the rise, and currently these relations are passing through one of the most successful periods in the history. I am honored to arrive in Azerbaijan to serve as the Ambassador to China at such an important moment. At the same time I feel serious responsibility. From May to June 2016, the Permanent Member of the Political Bureau of the Central Committee of the Communist Party of China, Deputy Prime Minister of the State Council of the People's Republic of China, Mr. Zhang Gaoli and the Member of the Political Bureau of the Central Committee of the Communist Party of China, Secretary of the Central Political and Legal Affairs Commission of the Communist Party of China, Mr. Meng Jianzhu paid visits to Azerbaijan. Both sides reached important agreements and exchanged views on different sectors such as trade, economy, security, etc. Three high-level visits were paid in such a short six-month period. The history of the bilateral relations has never featured such a high frequency of high-level visits, and this testifies to the high level of the current China-Azerbaijan relations. In the coming years we would like to promote the exchange of mutual visits of the leaders of Azerbaijan and China.
In August, 2016 Baku hosted the 6th meeting of the China-Azerbaijan Intergovernmental Commission on Trade and Economic Cooperation. At the end of November 2016, the delegation chaired by Deputy Minister of Industry and Information Technology of the People's Republic of China Mr. Jin Shubo visited Azerbaijan to attend the international exhibition, Bakutel. So, if earlier the model of the trade and economic cooperation between China and Azerbaijan was primarily focused on the energy sector, currently the cooperation between the two countries also covers the non-oil sector, namely transportation, telecommunications, agriculture, tourism and many others that have a huge potential for cooperation.
The exchange of contacts in the humanitarian field is continuing. The 2016 year featured the state-backed exchange of the Chinese and Azerbaijani students. More than 200 Chinese students are currently studying in Azerbaijan. This is the highest figure in the history. The two Confucius Institutes and 12 centres for studying the Chinese language have already been opened in Azerbaijan, and this opens up the wide opportunities for closer acquaintance of the Azerbaijani people with the Chinese language and culture.
Azerbaijan’s influence in the international arena is growing
The 2017 year is a landmark year in the history of the China-Azerbaijan relations. 2 April marks the 25th anniversary of the diplomatic relations between China and Azerbaijan. We intend to hold a number of events to mark this date. During these 25 years our nations have treated each other with respect, according to the principles of equality and mutually beneficial cooperation. China has always respected the independence, sovereignty and territorial integrity of Azerbaijan and respects the development path chosen by the people of Azerbaijan. I am pleased to see the political stability, rapid economic development, continuous improvement of living conditions and welfare of the people in Azerbaijan as well as Azerbaijan’s influence in the international arena growing at fast pace. Looking back at the past 25 years, we are pleased with the achieved results in the development of the bilateral relations and, looking to the future, we strongly believe in even brighter prospects of the bilateral relations. The Chinese side is willing to make joint efforts with the Azerbaijani counterparts to continue the trend of mutual visits at the highest level, to unlock the potential of cooperation within the “One Belt, One Road” project, to strengthen business cooperation, especially in large projects in the non-oil sector, to promote contacts and exchanges in the humanitarian sector and cooperation between local regions, to bring the bilateral relations to a new level.
CE: What is the pattern of the trade turnover, which grew by 56% last year?
Wei Jinghua: I would like to clarify the fact that China and Azerbaijan refer to their statistical data. That is why the difference between the data is noticeable. The statistics of the China's side shows that in 2016 the trade turnover between our countries increased by 15.6% to comprise $769 million. This growth was driven by the expanding energy cooperation along with the growing Azerbaijan’s oil export to China. The sides have strengthened cooperation in such areas as transport, telecommunications, agriculture, auto industry.
Azerbaijan and the South Caucasus region have developed into an irreplaceable Eurasian transport hub
CE: Mr. Jinghua, how does China assess the investment attractiveness of Azerbaijan's economy? Are there any plans to create a free economic zone, industrial zone with participation of Chinese companies?
Wei Jinghua: I would like to note that geographically located at the junction of Europe and Asia, Azerbaijan and the South Caucasus region have developed into an irreplaceable Eurasian transport hub and increases the attractiveness of the country for foreign investors. The Azerbaijani Government takes much care of the development of the non-oil sector of the country's economy. China has the extensive experience in the field of technologies, and Azerbaijan has the abundant natural resources. There are extensive prospects of cooperation between the two countries. I believe that more and more Chinese companies will show interest in this region and contribute to the development of the Azerbaijani economy.
CE: In 2017 China intends to limit overseas investments. What impact will it have on plans in Azerbaijan?
Wei Jinghua: The Government of China does not have plans to cut investments abroad in 2017. The China's economy has faced a number of challenges. We lack dynamic rates of economic growth. But we believe this is just a phase in the process of economic development. China is committed to addressing these problems and has achieved great results in this area. The country continues to follow the policy of reforms and openness. According to the preliminary estimates, over the next 5 years China's exports will comprise $8 trillion, the amount of foreign investment in China will be $600 billion. China, in turn, will invest $750 billion into economies of foreign countries. This data shows that the Chinese side will invest more heavily. During this time period the number of tourists visiting China will comprise 700 million guests. All this once again proves that China is willing to cooperate with all countries of the world. The gates of our country are always open to all.
CE: China is one of the most successful global investors with the investment recently contributed to the creation of the economic industrial zone in the south of Sri Lanka, the agricultural complex in Kyrgyzstan, the plant for production of components for solar cells in Vietnam. Does China have similar plans to invest in Azerbaijan?
Wei Jinghua: Azerbaijan and China are actively cooperating within the “One Belt, One Road” project. In April 2015, Azerbaijan joined the Asian Infrastructure Investment Bank (ABII) as a co-founder. In July 2015, Azerbaijan got the status of the SCO dialogue partner. During Mr. Ilham Aliyev’s visit to China in December 2015 the Memorandum of Understanding was signed between the Government of the Republic of Azerbaijan and the Government of the People's Republic of China to promote jointly the creation of the Silk Road Economic Belt. This memorandum is of great importance for expansion of the trade and economic cooperation between the two countries. In 2017, Azerbaijan is continuing the economic reforms. We hope that the Azerbaijani side will make every effort to create favorable conditions for Chinese investors.
What we need now is to study how to reduce the cost of transportation from the east to the west
CE: What kind of projects do you mean?
Wei Jinghua: We do not have concrete projects yet. The Chinese Government welcomes all projects that contribute to the areas of convenience of mutual connectivity and mutual access. We are interested in the construction of the East-West route, but what we need now is to study how to reduce the cost of transportation from the east to the west. Our companies are willing to join the construction of the North-South railway as subcontractors. With regard to the East-West route, we would like to strengthen its competitiveness. Azerbaijan has developed the plan for economic development in the non-oil sector with agriculture, transport and tourism as prioritised sectors. For the Chinese side, these will be new directions for growth of economic cooperation between the two countries. Both sides should together consider issues of financing large projects of the business cooperation.
We will be happy to import more goods from Azerbaijan
CE: Do the Chinese companies intend to participate in projects of the agro-industrial complex?
Wei Jinghua: Currently mulberry and mulberry seedlings are imported from China to Azerbaijan now. China is home to the large population, while the water and land resources are scanty. We are very proud that the Chinese Government has already addressed the problem of ensuring food security. Still, we need such products as meat, milk, fish, fruits, etc. We will be happy to import more agricultural goods from Azerbaijan. These products feature good quality and competitiveness, and our countries have established the trust-based relations.
CE: Does China plan to invest in manufacture of these products? Are there any plans to set up joint ventures and other forms of business cooperation?
Wei Jinghua: This is another, namely a technical and economic side of cooperation. We should jointly manufacture products and then import them to the countries neighboring with Azerbaijan. A few joint ventures already work in Azerbaijan, but their number is not very high. In Nakhchivan the Lifan car factory, which was opened jointly with the Chinese city of Chongqing, assembles road-ready cars. There are also plants that produce building materials. The aluminum plant is running in Ganja. The Chinese companies were involved in the creation of some companies as contractors and subcontractors. Some projects are under study. At the same time understanding between our firms is still not enough, businessmen of China and Azerbaijan have scanty information about each other.
CNPC has established the close cooperation with Azerbaijan, and the company has been working in Azerbaijan for a long time. Much better conditions have been created for the company today, and CNPC is ready to work out a long-term strategic plan for cooperation with the Azerbaijani partners.
CE: Currently China is committed to diversifying energy imports, and Chinese oil companies buy oil and gas assets like international majors do. Does China have plans to expand the China’s presence in the energy sector of Azerbaijan, Kazakhstan and the Caspian region as a whole?
Wei Jinghua: The Chinese businesses have been cooperating with local companies in the oil-gas sector since 2002, and they are ready to expand this cooperation.
CE: Does China plan to import Azerbaijani gas in the future?
Wei Jinghua: At the moment the Embassy of the People’s Republic of China in Azerbaijan does not have information on gas imports. In China, the demand for natural gas is constantly growing and if the Azerbaijani side offers a competitive price, it will open up a possibility of importing natural gas from Azerbaijan.
CE: Is China ready to buy at a competitive price?
Wei Jinghua: The Chinese Government is trying to diversify energy imports. Given the friendly relations between China and Azerbaijan, we are pleased to import gas from Azerbaijan to China. But, of course, a very important pretext here is whether the gas price is competitive and how to address the problem with gas delivery.
Protectionism is like if Buddha locks himself in one completely dark room
CE: What is the China’s attitude towards globalization? Which economic benefits does China get from globalization? What negative aspects do you see in this regard?
Wei Jinghua: I would like to use the speech of the President of the People's Republic of China, Mr. Xi Jinping at the opening ceremony of the World Economic Forum recently held in Switzerland.
China is the beneficiary of economic globalization and its participant at the same time. Since the time of starting the reform and opening-up policy, China has received in total more than $1,700 billion as foreign investments, and has invested a total of $1,200 billion abroad.
At present, we are facing many serious challenges. For example, the refugee problem, the global financial crisis, etc. All these challenges are not the result of economic globalization. If it is customary to blame globalization for this, then this is not true and does not contribute to addressing these problems. Of course, we recognize that globalization is a double-edged sword. If the global economy collapses, the developed and developing countries can feel a strong pressure and blow, it causes the voices against globalization. We must pay attention to this phenomenon. But this is not the criterion for honoring antiglobalism. What we need is to firmly adhere to the open global economy, openness to share the chance and interests to realize mutual benefit and joint winnings. A ship should not return to the port when it faces winds and waves, otherwise it will never get to the other shore. We must make great efforts to develop global connectivity, to implement a simultaneous development of all states, to achieve mutual prosperity. We need to constantly develop free trade and investment all over the world, to promote liberalization and convenience of trade and investment with the firm stance against protectionism. Protectionism is like if Buddha locks himself in one completely dark room, being sure that neither wind nor rain will affect him. But he will have neither sun nor air. Therefore, the trade war will hit all sides.
How to address the existing problem? President of the People's Republic of China, Mr. Xi Jinping has suggested the option for China:
Adhere to innovations in creating a sustainable pattern of growth;
Adhere to assistance and joint efforts for creating an open, mutually beneficial pattern of cooperation;
Adhere to the principle of moving in step with the times, to create a real, equitable, rational pattern of governance, emphasizing that regardless of whether states are large or small, strong or weak, rich or poor, they are all equal members of the world community and should adhere to the principle of justice and tolerance, create a balanced and popular pattern of development.
Only together we define and possess such a solid understanding that we need to create a community of the mankind, to make joint efforts to assume responsibility and commitment to help each other, to cope with difficulties together, and then we can make our world more beautiful, and our nations more happy.
Regardless of whether states are large or small, they are all equal members of the world community
CE: Russia today strongly supports the development of the Eurasian Economic Union (EEU). How will this union be economically linked to China? Does China plan to continue buying energy resources in Russia and Kazakhstan?
Wei Jinghua: The Chinese side welcomes any integration process to develop the economy in the region. At present, China and Russia are actively considering and implementing a close matching between the concept of the Silk Road Economic Belt and the EEU. In this regard, the Heads of State of China and Russia have already reached important agreements. The special regime for regulating this issue and a program for their matching are already in place within the EEU. We believe that China and Russia have a great potential for cooperation in the fields of energy, transport, production capacities, trade facilitation, etc. The two concepts can indeed be mutually beneficial and secure win-win benefits. Moreover, better results can be obtained in some specific areas, both in the 1+1 format, and more-than-two format. China, Russia and Kazakhstan are trading in the energy sector for a longer term. For example, in 2013 China and Russia signed the $270 billion deal to import 360 million tonnes of oil from Russia to China during the next 25 years. In 2009, the oil pipeline was constructed between China and Kazakhstan to supply 20 million tonnes of oil per annum. This oil pipeline begins in Atyrau, Kazakhstan, on the northern shore of the Caspian Sea. In 2005, the China-Central Asia gas pipeline was built between China and Kazakhstan. 100 billion cubic meters of gas have been already been delivered to China via the Kazakhstan-Turkmenistan-Uzbekistan gas pipeline.
CE: In 2013, China initiated the “One Belt, One Road” mega-project. It includes the onshore and offshore sections via Africa. What will be the role of Azerbaijan and the Caspian region in general in this project? Does China have plans to invest in the development of the East-West transport corridor?
Wei Jinghua: The President of the People's Republic of China, Mr. Xi Jinping, put forward the One Belt, One Road cooperation initiative based on the principle of joint coordination, joint construction, and joint consumption in order to promote joint development and prosperity of all states and regions along the One Belt, One Road route. This initiative has already become the most popular concept for international cooperation at the present time. The Chinese side is making efforts to implement the matching between the One Belt, One Road concept and “Azerbaijan 2020: Look Into The Future” concept of development. As part of this work, we intend to expand a new range of cooperation, create new prospects and secure mutual and win-win benefits.
Azerbaijan is the important state along the Great Silk Road. The Caspian Sea region is the hub and the important trade corridor between Europe and Asia. The Chinese side welcomes and highly appreciates the project of building the East-West transport corridor. As far as I know, freight trains have already made 5 trips along this route from China to Europe. The presentation of this project was hosted in Beijing in late February. The Chinese side welcomes all projects that contribute to the development of transport routes across the region and is ready, together with the Azerbaijani side, to consider ways to reduce the cost of freight transportation along this corridor so that this project could develop steadily and become a real transport route of the Great Silk Road project.
Thank you for the interview