Armenia–China: Strategic Partnership for Mutual Benefits

Armenia and China are both among the ancient civilizations of human history. They share millennia of mutual contacts via the ancient Silk Road. However, history is not the only thing which unites the two nations. Both Armenians and Chinese put enormous emphasis on protecting their national identities and traditions. Of course, it does not mean that Armenia and China are not interested or involved in the current wave of globalization. Simply both nations want to develop their culture and use the benefits of globalization to enrich their civilizations instead of diffusing it into common vague patterns. These common cultural values are a solid base for developing bilateral interstate relations. Meanwhile, Armenia and China share not only respect for national identity and traditions. There are geopolitical and geo-economic factors, which make the strategic partnership mutually beneficial.

The unprecedented economic growth of China for the last 30-40 years has relocated that country from backyards of world politics into its center stage. The 2008 Beijing Olympic games were a harbinger of new confident China, with second economy in the world besides only the US. The world financial crisis, started in the US just a month after the Olympics was both symbolic and real blow to the perceived might and invincibility of the collective West. The Greece debt crisis, economic hardships in Spain, Italy, and some other southern European states came to prove that the EU is not guaranteed from economic slowdown too. Thus, since 2008 China was steadily moving to reach the United States in economic terms. Chinese GDP (in PPP terms), passed the US in 2014. Meanwhile, China managed not only to raise more than half billion people from poverty but also transformed itself from the world factory with low skilled and low wage workforce into one of the world centers of the digital economy. Chinese IT giants are successfully competing with American and European counterparts in such advanced fields as artificial intelligence and 5G Networks. 

Geo-Political Interrelations

Meanwhile, impressive growth has raised anxiety and concerns in the West, especially in the US. President Obama launched the “Pivot to Asia” strategy, while President Trump’s administration is waging an open trade war. One of the possible ways to prevent the future growth of China is to disrupt the resources flow to China. The Chinese growing economy requires more and more resources, especially oil and gas. As for now, China mainly imports oil and LNG via international sea lanes. However, there are several choking points, such as Malacca straits, which the US has both capacity and capability to make dysfunctional, thus disrupting key supplies to China and wreaking havoc on the Chinese economy. 

One of the ways to overcome dependence on sea lanes is the development of pipeline infrastructure to import oil and especially natural gas via land borders. Not surprisingly China facilitated the construction of Central Asia – China gas pipeline which via three parallel lines brings Turkmenistan gas into Chinese Xinjiang region via Uzbekistan and Kazakhstan. China also signed a contract with Russia to construct “Power of Siberia” gas pipeline with an annual 38 billion cubic meters capacity, which should become operational until the end of 2019.

However, though the pipeline gas is not subject to marine pressure, it is not guaranteed from disruptions. Pipelines are subject too political instability and subversive actions. Central Asia – China gas pipeline originates and passes through Muslim countries. It’s hardly a coincidence that in recent years the US is leading a well-organized campaign of triggering anti-Chinese sentiments among neighboring Muslim states. The anti-Chinese feelings and the existence of radical Islamic cells may result in anti-China activities including possible attacks on energy infrastructure and other Chinese investments. Low scale anti-Chinese rallies in Kyrgyzstan capital Bishkek in January 2019, the activities of Ata – Jurt movement in Kazakhstan and recent small rallies against Chinese investments held in Nur-Sultan and Almaty are worrisome signs for China. 

Meanwhile, over the vast territories stretching from Xinjiang via Central Asia, Caspian Sea and Azerbaijan to Turkey, only two states are not susceptible to such Anti – China propaganda – Armenia and Georgia. However, the later is pursuing policy of Euro-Atlantic integration, vying for NATO and EU membership. Georgia signed Strategic Charter with the US in January 2009 following a Russia – Georgia war of August 2008. The tensed relations with Russia and strategic partnership with the US put some restrictions on China – Georgia defense and security cooperation, albeit Georgia is the only South Caucasian state, which signed a Free Trade Agreement with China. The US pressure on Georgia to prevent Chinese investments in the Anaklia deep seaport project is another proof of obstacles on the way of Georgia–China strategic partnership.

In this context, Armenia is the obvious choice for China to foment its strategic presence in the region. The balanced foreign policy of Armenia may contribute to these efforts. Armenia has managed to establish a strategic alliance with Russia simultaneously developing partner relations with the US, NATO, and EU. Even the membership into Russia led the Collective Security Treaty Organization (CSTO) did not preclude Armenia from signing Individual Partnership Action Plans with NATO and participate in NATO-led peacekeeping missions in Iraq, Kosovo, and Afghanistan. Simultaneously, Armenia, being a member of the Eurasian Economic Union, signed a Comprehensive and Enhanced Partnership Agreement with the EU. 

Given its tough geopolitical situation, Armenia needs to diversify its defense and security partnership portfolio. Thus, the growth of bilateral defense cooperation is of mutual benefit for both Beijing and Yerevan. Given the Russia–China comprehensive strategic partnership, the deepening of Armenia – China defense cooperation will not raise concerns in Russia as in case of further growth of relations between Armenia and the US/NATO/EU. The bilateral Armenia – China defense cooperation has been growing since 2007-2008 including spheres of professional military education and purchase of armaments. During the September 2017 visit of Armenian Defense Minister to Beijing, an agreement was signed to provide Armenia $1.5 million military assistance. 

As for Yerevan, the growing defense cooperation with China is another possibility to diversify its defense policy without jeopardizing its strategic alliance with Russia. Armenia does not want “to put all the eggs in one basket” and simultaneously can not afford to pass the red lines in its relations with Russia. This was the case in September 2013 when Armenia made a decision to cancel the signature of negotiated Association Agreement with the EU and enter the Eurasian Economic Union, as there was a clear signal from Moscow that Russia will perceive the Association Agreement as a hostile action by Armenia. 

Given the strategic competition with Azerbaijan Armenia needs to permanently improve its defense capabilities but has limited possibilities to do that in cooperation with the US or other Western actors. In these circumstances, deepening of defense cooperation with China is the only reliable option for Yerevan.

Common Geo-Economic interests

Armenia and China share also geo-economic interests. Given the Eurasian Economic Union – Iran free Trade Agreement and the Armenia – Iran land border, Armenia is a convenient launch pad to produce and export into 80 million Iranian markets with zero tariffs. The Meghri free economic zone in the southern part of Armenia close to Iranian border could become a beacon for Chinese companies interested in entering Iran. Definitely, the US decision to withdraw from Iran nuclear deal and restore sanctions creates tough obstacles for any large scale Iran related investments, but in case of US – Iran diplomatic breakthrough Armenia is ready to serve as a starting point for Chinese companies.

Armenia also enjoys the GSP+ system (Generalized System of Preferences Plus) with EU which entitles thousands of goods produced in Armenia tariff-free access to the EU. Given the high skilled and relatively cheap labor force, Armenia can be appealing for Chinese companies interested in production and tariff-free exports to the EU. The substantial growth in IT and agricultural sectors in Armenia make them attractive for Chinese investments. Thus, Armenia has the potential to become an additional gate for Chinese companies to enter the EU and Iran markets with tariff-free regulations. This will bring benefits both to China and Armenia creating thousands of new jobs.

Another strategic opportunity is the Chinese involvement into the “Persian Gulf–Black Sea” multimodal transport corridor and inclusion of later into the “Belt and Road” initiative as an additional China – Europe route. In 2016 Armenia together with Iran, Georgia, Bulgaria, and Greece have launched negotiations to establish a “Persian Gulf –Black Sea” corridor. The project envisages the transportation of goods from Iranian Persian Gulf ports to the Iran–Armenia border, then via highways across Armenia and Georgia to the Georgian Black Sea ports, and then by sea to the Ports of Bulgaria and Greece and further into Europe.

Given the existing railroads and highways in Iran as well as functioning Georgian ports, the key missing link in this project is the new highway through Armenia which should connect Armenia – Georgia, and Armenia–Iran borders. The construction of Armenia’s “North-South” highway has been launched in 2012 and till the end of 2020, the northern part connecting Georgia – Armenia border with capital Yerevan will be operational. Currently, Armenia is making efforts to find investments for the construction of the southern section connecting Yerevan with Armenia – Iran border. In January 2019 the EU has decided to provide €450 million for this project within Trans–European Transport Network (TEN-T)

Meanwhile, the China – Iran (Persian Gulf) sea route is operational and is a major transport artery for Iranian oil exports into China and imports of Chinese goods to Iran. Armenia and China may consider the launch of multilateral (China – Iran – Armenia – Georgia) negotiations to connect China – Iran sea route with “Persian Gulf – Black Sea” transport corridor and establish the Seventh Economic Corridor (China – Iran – Armenia – Georgia – Europe) within the Belt and Road Initiative (BRI).

Thus, in both geopolitical and geoeconomic perspectives Armenia–China bilateral strategic partnership will bring substantial benefits to both countries. The shared respect and emphasize on the significance of preservation of national identity and traditions make this strategic partnership a natural choice for both Armenia and China.

 

This post originally appeared: Poghosyan, B., „Armenia–China: Strategic Partnership for Mutual Benefits“, IndraStra Global Vol. 005, Issue No: 09 (2019), 0035, https://www.indrastra.com/2019/09/Armenia-China-Strategic-Partnership-for-Mutual-Benefits-005-09-2019-0035.html, ISSN 2381-3652