Chinese investment in Georgia is set to increase significantly after a Chinese-led consortium was awarded the contract to develop a deep-sea megaport on Georgia’s Black Sea coast, part of Beijing’s envisaged ‘Middle Corridor’ trade route to Europe. But critics say the Georgian government is putting the country’s economy and democracy at risk by turning away from Western partners and toward the east.
Anaklia, on Georgia’s Black Sea shoreline, is currently little more than a small coastal resort of some 1,500 people. Under the plans, it is set to become a port capable of handling large volumes of containers and other cargo, to be built and run by Chinese firms.
The Georgian government last month awarded a 49% stake in the project to a Chinese-Singaporean consortium, thought to be worth several billion dollars. The exact details of the deal have not been revealed. The remaining 51% stake is held by the Georgian state.
The announcement was made a day after the government passed its so-called “foreign agent” law, similar to one in Russia, widely seen as a clampdown on Western-funded non-governmental organizations and independent media. The legislation triggered ongoing anti-government protests amid fears the ruling “Georgian Dream” party is turning away from a Western-aligned future in the European Union.
“That also obviously coincides with the very direct and open anti-Western rhetoric that we’ve been hearing from the government,” said Giga Bedineishvili, a Georgian financier and dean of the business school at Tbilisi Free University.
“So, the speculation — and I think it’s a well-founded one — is that the Georgian government is thinking about the possibility of losing Western investment and compensating for it [with] some money from Russia and China,” he told VOA.
Georgia’s government denies it is seeking to turn away from the West and says publicly it still aims to join the European Union by 2030.
Georgia maintains EU aspirations
Georgian Prime Minister Irakli Kobakhidze defended the awarding of the Anaklia port contract to the consortium led by the China Communications Construction Company.
“At this time, it is one of the largest Chinese companies, which has extensive experience, including in this type of project. The successful bid by the Chinese company ensures the highest-level implementation of the Anaklia project,” Kobakhidze told reporters May 30.
The Anaklia port project has been in the pipeline for several years and was set to be built by a joint American-Georgian consortium in a contract worth $2.5 billon. However, the government canceled that deal in 2020, claiming the group had not met contractual terms. The consortium partners accused the ruling party and its oligarch founder Bidzina Ivanishvili of deliberately sabotaging the project.
Why Chinese investment?
So, what’s in it for China? The port would lie at the western end of what Beijing calls the ‘Middle Corridor,’ an envisaged trade route to Europe through Kazakhstan and Azerbaijan to Georgia’s Black Sea coast, and beyond to the European Union. Currently, most rail and road freight from China to Europe goes through Russia, but the future of that route is in doubt, with Moscow now heavily sanctioned by the West after its 2022 invasion of Ukraine.
Tinatan Khidasheli, a former Georgian defense minister who now chairs the Civic IDEA organization, which analyzes China’s activities in Georgia, fears the project could leave Georgia in a so-called “debt trap.”
The big question, Khindasheli said, is where the Georgian government will get its funding for the project.
“They are going to [borrow] the money for fulfilling the obligations they have under this 51%,” he said. “And I’m pretty sure — it’s not fact yet — but I’m pretty sure that that money is going to come from China as well. And we will end up in a situation like Sri Lanka ended up, or Philippines, or in Malaysia. They had also similar problems, Tanzania, they had similar problems.”
The state-owned Chinese firm that is leading the Anaklia port consortium, the China Communications Construction Company, is subject to U.S. sanctions over its role in building artificial islands in disputed regions of the South China Sea. The firm was also banned from World Bank contracts until 2017 over corruption scandals.
China already has a visible presence in Georgia, including the Hualing Tbilisi Sea Plaza, a vast 420-hectare shopping mall, hotel and housing complex on the outskirts of the capital. Chinese companies are also involved in building new highways.
In 2023, Georgia signed a strategic partnership agreement with China, and is part of Beijing’s Belt and Road Initiative and Global Security Initiative.
Despite Georgia’s overtures to Beijing, direct Chinese investment in Georgia remains relatively small at just over $47 million in 2023, making it the ninth largest investor — and far smaller than European and American investment in the country. In 2023, Britain was the biggest single direct investor in Georgia at $392 million, according to official statistics.
“When people just drive throughout the country, they see all these Chinese signs from different companies. It creates an image that we have such a huge Chinese investment. Everywhere you go, you have Chinese companies working. In reality, none of that is an investment,” said Tinatan Khidasheli of Civic IDEA.
“It’s all Georgian [state] budget money, which is granted to the contractors, whomever wins the bid. And the reality of Georgian bidding story is that every single contract that is over $100 million usually is won by a Chinese company,” she said.
Georgia’s government says China could become its leading trading partner. Others urge caution.
“China and Russia, they strategize when they do something like that — they want to invest to then have political influence and have an impact on the local situation. And therefore, we need to be careful on that,” said Bedineishvili.
A NATO official who spoke on condition of anonymity told Radio Free Europe/Radio Liberty, or RFE/RL, that the alliance had concerns about China’s development of the port.
“It’s well known that China has long sought influence in major overseas infrastructure projects. The Black Sea remains an area of strategic importance to NATO,” RFE/RL reported the NATO official as saying.
