Baku: Azerbaijan has solidified its position as China's largest investment destination in the South Caucasus region, with a significant rise in Chinese foreign direct investment (FDI) over the past decade. According to APA-Economics, citing the Eurasian Development Bank (EDB), China's FDI in the region has increased 2.5 times, reaching $690 million in the first half of 2025.

According to Azeri-Press News Agency, Approximately 60% of the Chinese investments are funneled into Azerbaijan, while the remaining 40% is directed towards Georgia. The EDB report highlights Azerbaijan's continued dominance in attracting Chinese capital, making it the primary destination for such investments in the region.

According to the EDB's assessment, the processing industry and energy sectors are the focal points of Chinese investments. This shift in focus signifies China's gradual transition from an extraction-oriented investment approach in the South Caucasus to more diversified sectors.

Despite a global decline in foreign direct investment flows by 11% in 2024, Chinese investments in the Eurasian region have continued to rise. Over the past 18 months, Chinese capital in the region has surged by $7.4 billion, surpassing $66 billion.

While the South Caucasus holds a smaller share of this investment pool compared to Central Asia and the Eurasian Economic Union, it is distinguished by its stable and high-quality investment portfolio. China's total FDI portfolio in the Eurasian region reached $66.1 billion by mid-2025, marking an 80% increase over the past decade. The processing industry and energy sectors are now emerging as new growth drivers, moving away from China's previous focus on extractive industry projects.