China is steadfastly making progress in its quest to make its economic achievements count in international relationships, so much so it is likely to surpass traditional powers such as the US and the EU. Within a matter of years, China has risen to be the world’s second largest economic power. It also managed in the past year to be the world’s largest car market.
Recently, China has outstripped the US as the major investor in the Middle East. Expectations are that economic relations between China and the UAE will develop further, and specifically in Dubai within construction, transport and banking services.
This formed the backdrop of the sixth China-Arab Cooperation Forum in Beijing on June 5, which was attended by representatives from all the Arab states. The China-Arab Cooperation Forum was formed 10 years ago, following a joint announcement by China and Arab states at the headquarters of the Arab League in Cairo. It was established shortly after the founding of the China-Africa Cooperation Forum, which has since contributed to firming bilateral relations, and turned Africa into a prime source of raw materials for China’s industrial sectors.
In his welcome note at the China-Arab Forum, Chinese foreign minister Wang Yi said, “It is an important diplomatic move by the Chinese government toward the Arab world under the new circumstances. It is also a major event in the course of Sino-Arab relations. The forum gains special importance as it offers a platform for both sides to review the previous achievements and explore future perspectives.”
It seems that future prospects do look bright for China-Arab relations, which can be seen in the phenomenal milestones notched up by the two sides. In the last 10 years, trade has increased eightfold to $239 billion in 2013, backed by an annual growth rate of 25 per cent. China’s oil imports rose from 4 million tonnes to 133 million tonnes, an annual growth of 12 per cent and a development which reflects the behemoth’s growing dependence on energy supplies and oil imports from Arab countries.
These developments are not confined to sources of energy and trade, but included other key sectors such as the financial services, engineering and contracting and transport. The value of new contracts concluded between Chinese and Arab companies in contracting was estimated at more than $29 billion compared to just $2.6 billion over a decade ago — an year-on-year increase of up to 27 per cent. Direct investments by Chinese companies have soared from a modest $17 million to $2 billion.
In the past decade, China has also become the second largest trade partner for Arab countries, while the regional bloc ranks seventh when judged from China’s perspective. This is quite indicative of the enormous shift in Sino-Arab economic ties. Therefore, further expansion of economic relations will undoubtedly have significant impact on strategic, political and cultural areas and in turn reflects the new balance in global power alliances.
The Gulf states, whose export-import volumes constitute the largest share of China’s trade with the Arab world, will seek a free-trade agreement with China, which in itself would mark a milestone that should take economic relations to unprecedented highs.
Strategic and political relations will have significant implications due to the interlinked economic interests between the two sides. This is because China, which has become increasingly dependent on the Gulf’s oil, would find that it is in its interest to ensure security and stability in the region, while Gulf states on their part would seek an enhanced role for China in furthering shared interests.
All of these developments, either in tandem or on their own, would lead to enhancing mutual interests, and in effect reshaping the map of regional power equations for future stability and economic progress.
Dr Mohammad Al Asoomi is a UAE economic expert and specialist in economic and social development in the UAE and the GCC countries.