Oil is bringing China and the Arab world closer economically. Politics will follow

[Saif al-Arab]

China and the Arab world
The great well of China
Oil is bringing China and the Arab world closer economically. Politics will follow​

Jun 20th 2015 | BEIJING, CAIRO AND RIYADH |

FOR hundreds of years travellers have haggled over carpets, jewellery, spices and copperwork in the winding alleyways of Khan al-Khalili, Cairo’s traditional souk. Today the goods are more likely to have been mass-made in a factory in China than handcrafted in a local workshop.

Trade is central to growing ties between China and the Middle East. It has increased more than 600% in the past decade, to $230 billion in 2014. Bahrain, Egypt, Iran and Saudi Arabia all import more from China than from any other country. China is the top destination for exports from several countries in the region too, including Iran, Oman and Saudi Arabia. In April Qatar opened the Middle East’s first clearing bank to handle transactions in yuan.

The trade is driven by China’s thirst for oil. In 2015 it became the world’s biggest importer of crude, half of it—more than 3m barrels a day—from the Middle East (see chart). By 2035 China’s imports from the region will roughly double again, reckons the International Energy Agency, far exceeding that of any other nation. “This is a big shift rather than incremental change,” says Chaoling Feng of Cornell University.

Even the Middle East’s poorer countries offer a fertile market for cheap Chinese wares. In 2013 Xi Jinping, China’s president, proposed reviving the Silk Road, an ancient trade route linking China to Persia and the Arab world. Chinese cars crowd the streets of the Egyptian, Syrian and Iranian capitals. Chinese-made clothing, toys and plastics are ubiquitous. China sells a lot of small arms too, according to the United States Institute of Peace, a think-tank in Washington, DC.

As China looks west, Arab countries turn east. In part, this reflects the revolution in the energy market wrought by fracking. America is relying more on its own shale oil and gas and buying less fuel from the Middle East. In 2000 the region exported 2.5m barrels of oil a day to America; that dropped to 1.9m by 2011. By 2035 the International Energy Agency predicts America will buy only 100,000 barrels a day and 90% of Middle Eastern oil will flow to Asia.

Arab leaders such as Egypt’s Abdel-Fattah al-Sisi are keen to woo Chinese investors. They need cash to fix their crumbling roads and dilapidated ports. Mr Sisi and almost every other Arab head of state have visited Beijing since 2012. Chinese firms are building Tehran’s metro, two harbours in Egypt and a high-speed railway between Saudi Arabia’s holy cities of Mecca and Medina. Factories in a Chinese-run special economic zone at the Suez Canal churn out plastics, carpets and clothing. On June 15th Egypt and China signed an agreement for $10 billion-worth of new projects.

So far a purely economic partnership has worked well. Few Arabs worry that China is exploiting the region—a feeling widespread south of the Sahara. But the relationship may change in time. Many leaders in the Middle East fret over a perceived American withdrawal. Although officials recognise that China does not have America’s military or diplomatic clout, some want it to help fill the void. Alan Hakim, a Lebanese minister, says China should play a “leading political role” in the region. The Gulf, which has long relied on America for security, “is looking to diversify our political relations”, says an official in the Gulf Co-operation Council, a club of six states. “China is foremost among the targets.”

China may not have the soft power of America—despite an Arabic television channel run by the state broadcaster and ever more Arabic-speakers in China—but it is finding admiration in some quarters. Authoritarians such as Mr Sisi, who took power in a coup in 2013, seek to emulate the Chinese model of economic development without political pluralism. Abusive rulers in the Middle East like the fact that China doesn’t nag them about human rights—and return the courtesy. Saudi Arabia forged diplomatic relations with China only months after the massacre of pro-democracy protesters in Beijing in 1989.

Beijing has long espoused a policy of “non-interference” in other countries’ internal affairs. It opposed the American-led invasion of Iraq in 2003 and has voted with Russia to block action to end Bashar Assad’s rule in Syria. It has tried to remain friendly with both Israel and the Palestinians, and with the regional foes, Iran and Saudi Arabia. It is not taking part in the coalition of 60-odd countries fighting Islamic State (IS), despite its oil interests in Iraq and unsubstantiated reports of 300 Chinese Muslims fighting there. “We don’t really have the ability to lead in solving Middle East matters, nor have we ever thought about it,” says Li Weijian of the Shanghai Institute for International Studies.

It is notable that neither Mr Xi, nor his prime minister, Li Keqiang, has set foot in the Middle East, despite visits across the world. Mr Xi postponed a visit to Saudi Arabia in April, probably to avoid commenting on its air strikes in Yemen.

Too big to be neutral for ever

But China is finding it ever harder to stay aloof. By vetoing resolutions on Syria, for example, it is seen as one of the powers supporting Mr Assad. Chinese flags were set on fire in various Arab capitals after it vetoed a UN Security Council resolution calling for Mr Assad’s removal in 2012. Despite the vetoes it is also talking with the opposition in Syria.

And it has started to play a more active role in other parts of the region. It is one of the six countries trying to negotiate a deal to curb Iran’s nuclear programme, even as it engaged in joint naval exercises with Iran last year. Its navy also protects commercial shipping from Somali pirates around the Gulf of Aden.

The tumult following the Arab spring has fostered caution: China is increasing its stores of oil and seeking to forge more friendships in the region. Still, Mr Xi says he wants to co-operate in nuclear power, aerospace technology and renewable energy. Some Chinese investors have been scared away from turbulent countries such as Yemen, where nearly 600 nationals were evacuated in March amid fighting there, but many have looked to quieter spots such as Dubai. Chinese firms are eyeing opportunities in Iran, which will open up if a nuclear deal is struck this month.

As its economic interests grow, China may be sucked into the Middle East’s snake-pit politics, whether it likes it or not. Last year Barack Obama criticised China for avoiding the fight against IS. He accused it of having been a “free rider” for too long, offering little in return for a steady flow of oil. Some Arab leaders agree.

http://www.economist.com/news/middl...-arab-world-closer-economically-politics-will

@Shotgunner51 @Chinese-Dragon @ChineseTiger1986 @Wholegrain (our resident Arabist that has gone MIA unfortunately) @Pangu etc.

For more Sino-Arab news:

GCC and China sign deal to boost cooperation

Sino-Arab relations - Wikipedia, the free encyclopedia

 

[Akasa]

We've seen a spur in Chinese military exports to Saudi Arabia as well in what could be called a sign of deepening all-round trade relations.

 

[Sinnerman108]

This means just one thing;

the CPEC needs to complete asap !

China's Hindu free corridor to ME and NA

 

[Established_1965]

Actually, China is moving away from Middle east and going to Russia and Africa for oil.

Middle east Oil diplomacy is getting weaker :-/