Digital Silk Road Cements China-Armenia Bonds

The Belt and Road Initiative proposed by China in 2013 ushered in a new era for international development. It offers a new paradigm for mutually beneficial cooperation between participating countries based on a people-centric approach and the revolutionary idea of building a community with a shared future for humanity.

In 2017, China launched the Digital Silk Road, adding a new dimension to the initiative. The program aims to boost digital connectivity among participants and provide the developing world with the necessary digital tools to foster economic development. Digital infrastructure is becoming even more essential to modern economies with the arrival of faster networks, cheaper sensors, and the proliferation of connected devices.

As one of the world’s ancient civilizations, Armenia played a vital role in the functioning of the ancient Silk Road. Its medieval capital of Ani was situated along the road connecting Asia with Europe. The country played a critical role in developing the information technology (IT) of the Soviet Union from the 1960s to the 1980s.

Armenia gained independence in 1991 and, after the initial problems of the transition period, it regained its status as the IT and digital hub in the region. In the recent decade, IT was the primary tool for developing the Armenian economy, registering an astonishing average annual growth of 20-25 percent. The country is home to some of the most successful global IT startups, including Picsart, Krisp and Renderforest. The government has allocated significant resources to the advancement of the sector, including funding for the establishment of a modern education system to prepare younger generations for a future in IT. Even the global economic slowdown triggered by the COVID-19 pandemic could not stifle the growth of Armenia’s IT sector.

Armenia has forged a strong partnership with China. This relationship is based not only on more than 4,000 years of shared history, but also on the mutual desire to keep up national traditions and values such as respect and care for the elderly and children. Both Armenia and China have embraced globalization and simultaneously have executed efforts to retain their national identity.

Armenia welcomes the Belt and Road Initiative. Their similar and sometimes identical views on critical issues faced by the international community have paved the way for the rapid development of Armenia-China economic relations. Bilateral trade reached almost $1 billion in 2020. However, there still exist vast untapped resources for further development. The Digital Silk Road program may take on a vital role in boosting economic cooperation.

The developing IT sector in Armenia requires a quick deployment of 5G networks, which will allow for the rapid growth of the Internet of Things. Chinese companies such as Huawei may play a primary part here. The land borders with Georgia and Iran make Armenia a favorable data transit country to connect Europe with the Middle East, and Central and Southeast Asia.

Meanwhile, Armenian IT companies can act as a bridge for Western companies to enter the Chinese market. With one branch already operating in Xi’an, capital of China’s Shaanxi Province, the Digital Silk Road Center opened in the second largest city of Armenia, Gyumri, in May, lifting Armenia-China IT cooperation.

Its 2015 accession to the Eurasian Economic Union provides Armenia with tariff-free access to the vast Russian market, while the Generalized System of Preferences+ allows Armenia to export products to the EU with zero customs duty. This combination creates yet another opportunity for Chinese IT companies to invest and produce in Armenia and later export to the aforementioned markets.

The Digital Silk Road is a long-awaited boost to close the gap between developing and developed countries in the digital realm. As a regional IT hub, Armenia welcomes this program and is ready to use the opportunity to further advance its relationship with China.

The author is chairman of the Center for Political and Economic Strategic Studies, Armenia.

Source: Beijing Review