PRC Expands Financial Footprint in the South Caucasus
Nino Lezhava
Executive Summary:
In March, four Georgian banks, including Cartu Bank, gained direct membership in the People’s Republic of China’s (PRC’s) Cross-Border Interbank Payment System, which facilitates renminbi (RMB) clearing and settlement under the supervision of the People’s Bank of China.
Across the South Caucasus, the PRC is broadening its economic influence, though Armenia remains less integrated. The PRC’s internationalization of the RMB aims to reduce international reliance on the U.S. dollar, which the PRC views as a matter of national security.
While the South Caucasian decision to more broadly engage with PRC financial structures is driven by pragmatic economic considerations, it also creates conditions that are permissive of sanctions evasion. It reduces the political cost of aligning with non-Western financial networks.
In March, four Georgian banks, including Cartu Bank, gained direct membership in the People’s Republic of China’s (PRC) Cross-Border Interbank Payment System (CIPS), which facilitates renminbi (RMB) clearing and settlement under the supervision of the People’s Bank of China (PBoC) (see EDM, January 23, 2025; National Bank of Georgia, December 26, 2025; CIPS, accessed April 8). While complementary to SWIFT, CIPS also enables messaging independent of oversight from Western institutions, offering participants insulation from sanctions (Civil Georgia, July 18, 2025). Authoritarian regimes in Moscow, Tehran, and Minsk already exploit this system to bypass U.S.-led sanctions and maintain financial stability (The Moscow Times, March 21, 2024; OC Media, March 10). CIPS also efficiently facilitates financing for the One Belt One Road initiative, while promoting global RMB use (China Daily, August 23, 2024). For the PRC, facilitating access, even for a small economy such as Georgia’s, and for the South Caucasus as a whole, constitutes a strategic gain.
The PRC’s integration strategy in Georgia deploys a dual approach that embeds institutional and commercial influence. The National Bank of Georgia recently gained access to the China Interbank Bond Market (CIBM). It opened accounts with the PBoC and the CIBM depository infrastructure (Georgia Today, February 13). Approximately five percent of Georgia’s international foreign exchange reserves are now invested in RMB (National Bank of Georgia, February 12; Business Media, March 1). At a glance, this is a relatively small proportion, reflecting economic diversification. Politically, it is more significant, as Tbilisi demonstrates a willingness to integrate with PRC economic structures.
PRC commercial presence strengthens its financial footprint in Georgia and provides it with institutional access. The Hualing Group owns Basis Bank in Georgia, providing UnionPay services that facilitate RMB-denominated transactions for tourists and local businesses (Basis Bank, accessed April 8). Discussions are ongoing regarding additional acquisitions, including Liberty Bank.
Beijing’s financial cooperation with Baku is also on an upward trend. As Azerbaijan’s third-largest trading partner, the PRC saw bilateral trade reach $4.87 billion in 2025, with $420 million recorded in January alone (Azertac, March 29). Beijing and Baku are exploring a joint investment fund between the Azerbaijan Investment Holding and the China Silk Road Fund to finance infrastructure, logistics, energy, and industrial projects (Day.Az, March 32). Their central banks signed a memorandum to expand cooperation in monetary policy, payment systems, and fintech (CBA, September 4, 2025).
Azerbaijan’s State Oil Fund (SOFAZ) has steadily increased RMB-denominated investments, from $500 million between 2015 and 2024 to $1.6 billion in 2024 alone (Daily Sabah, July 3, 2015; Caspian-Alpine Society, November 1, 2024). By the end of 2024, the PRC’s bond market had grown to $24.6 trillion, becoming the world’s second-largest, and SOFAZ’s exposure to PRC assets exceeded 3 percent of its portfolio (ABC.az, January 24, 2025). The Chinese Investment Corporation and SOFAZ have also established a framework for sustainable investment models, further strengthening PRC–Azerbaijan relations (APA, September 8, 2025). UnionPay and the Central Bank of Azerbaijan are also enhancing cashless payments and digital infrastructure, further boosting PRC financial influence in Azerbaijan (Central Bank of Azerbaijan, January 30).
Armenia, on the other hand, lags behind its neighbors in PRC financial integration. It is still progressing gradually, but Beijing appears to be prioritizing higher-impact partners, aligning resources to maximize returns and influence. Two Armenian banks, Converse and Akba, have access to UnionPay and have launched operations (Verelq, November 20, 2023). By 2025, the PRC was ranked as Armenia’s second- or third-largest trade partner, partly due to the PRC’s imports of Armenian minerals. The same year, Armenia joined the Asian Infrastructure Investment Bank, becoming the final South Caucasian state to do so (Asian Infrastructure Investment Bank, accessed April 8).
PRC-led international blocs have also become attractive to Armenia and Azerbaijan. Both countries have sought full membership in the Shanghai Cooperation Organization (SCO) and BRICS (see EDM, October 16, 23, February 18; CivilNet, September 2, 2025) [1]. These organizations publicly seek to create alternatives to the existing global financial system, which the U.S. dollar, the euro, and the RMB have long dominated. One of the most tangible expressions of this ambition is the “R5”—a symbolic currency unit representing the Russian ruble, Brazilian real, Indian rupee, South African rand, and the PRC’s RNB—the core currencies of founding BRICS members (The European Institute for Asian Studies, December 15, 2025). Armenia’s consideration of membership in PRC-led blocs demonstrates that Beijing remains in an advantageous position. Armenia remains a viable target for the PRC’s deeper financial integration in the South Caucasus.
The PRC has maintained currency swap and local currency trade agreements with Armenia, Azerbaijan, and Georgia for over a decade and periodically renews them (2023 RMB Internalization Report, accessed April 8). These arrangements allow countries to bypass third-party currencies such as the U.S. dollar or the euro, reducing transaction costs, foreign exchange risks, and dependence on global financial systems dominated by Western currencies. The PRC’s central bank has currency swap agreements with dozens of countries, and trillions of dollars in goods trade are now settled in RMB (New Central Asia, January 26). In 2025, the PRC signed local currency settlement agreements with more than 40 countries (The Diplomat, October 24, 2025).
The South Caucasus is contributing to broader de-dollarization efforts and to a parallel financial architecture aimed at competing with Western financial leverage. These developments coincide with the RNB intermittently surpassing the euro as the second-largest currency in global trade finance since late 2023, reaching 5.99 percent in June 2024 and repeatedly reclaiming the number-two position thereafter (Global China Daily, July 30, 2024). While the South Caucasian decision to more broadly engage with PRC financial structures is driven by pragmatic economic considerations, access to liquidity, trade facilitation, and risk diversification, it also creates permissive conditions for sanctions evasion. It reduces the political cost of aligning with non-Western financial networks. This trajectory sits uneasily alongside expanding U.S. and European interest in regional connectivity and infrastructure initiatives, including projects such as the Trans-Caspian International Trade Route (TITR, or the Middle Corridor) and the Trump Route for Peace and Prosperity (TRIPP) (see EDM, October 15, 2025).
The PRC’s growing presence in the South Caucasus demonstrates a quiet but deliberate strategy. Through targeted financial instruments and selective partnerships, the PRC is steadily promoting its RMB, banks, and investment influence across the South Caucasus, turning a historically peripheral region into an extension of its economic ecosystem.
Note:
[1] BRICS is a loose political-economic grouping originally comprised of Brazil, Russia, India, the PRC, and South Africa, but now comprising 11 member states (BRICS Info, accessed April 8).
This article was originally published in Eurasia Daily Monitor.