RIYADH: Since 2020, China has replaced the EU as the main trading partner of the Gulf Cooperation Council. Saudi Arabia was China’s top crude oil supplier in 2021. Its neighbor the United Arab Emirates has become an important platform for the re-export of Chinese products to the region and Africa.
Moreover, Qatar has become a key supplier of natural gas for China.
“There is a very strong Chinese moment in the GCC that has been built over the past 15 years of (trade) relations,” said Mohammed Al-Sudairi, head of the Asian studies program at the King Faisal Center for Research. and Islamic Studies, in an interview with Arab News.
He pointed out that the general assessment across the GCC is that relations with China are much more important than before, “as it has become a leading partner at the bloc level.”
China also plays a key role in the development of non-oil sectors in the region, according to Robert Mogielnicki, resident scholar at the Arab Gulf States Institute in Washington.
The researcher believes that strong complementarities exist between China and the GCC in many sectors. These include tourism, telecommunications, artificial intelligence, smart cities and renewable energy, among other technology-driven industries.
Reciprocity, mutual understanding and predictability are the most important aspects of GCC-China relations, said Tang Tianbo, a researcher at the China Institute of Contemporary International Relations, known as CICIR, in an interview with Arab News. .
“The GCC is vital for China’s energy security, while China provides the GCC with a stable market for exports. It’s a win-win relationship,” he said, adding that the GCC and China never impose anything on each other.
“Both parties recognize and defend each other’s independence and choices,” the Chinese scholar said, while calling the relationship “pragmatic, stable and constantly evolving.”
“It’s very valuable in a world full of uncertainties,” Tianbo said.
GCC member states also compete to capture Chinese trade and investment flows in the region, Al-Sudairi explained.
While the UAE has been at the forefront since 2004, other GCC member states have followed suit by linking their national development plans to China’s Belt and Road Initiative, also known as BRI.
He added that they have developed Jazan in Saudi Arabia, Duqm in Oman and Silk City in Kuwait as key areas for Chinese companies’ operations and expanded Chinese trade and investment in the Middle East and the Middle East. East Africa.
“China’s digital silk road overlaps perfectly with technology-driven development plans in the Gulf, but especially in places like Saudi Arabia, the United Arab Emirates and Qatar,” Mogielnicki said, in a statement. interview with Arab News.
He pointed out that these governments and their public entities possess significant financial resources and have been tasked with rapidly developing the digital economy. “Chinese companies are willing partners, offering cost-effective, high-quality services that can be completed in a short timeframe,” Mogielnicki added.
Tianbo pointed out that China can add value to the GCC in terms of e-commerce, industry 4.0, new energy, among others. “China and the GCC can cooperate in areas where China has a competitive advantage and the GCC has an interest.”
The CICIR researcher explained that China’s manufacturing technology and equipment can contribute to the economic transformation of the GCC and create more jobs in non-oil industry.
SWFs are also strengthening China-Gulf relations.
For example, Abu Dhabi’s Mubadala, China Development Bank Capital, and the China State Administration of Foreign Exchange established a $10 billion UAE-China joint investment fund in 2015. Recently, Gulf sovereign wealth funds are allocating increasingly a larger share of their portfolios to China. .
However, bilateral relations still face many challenges.
The GCC has failed to fully integrate into China’s Belt and Road Initiative.
However, Mogielnicki said, “It’s not so much that the BRI has failed to expand into the GCC, but rather that the GCC isn’t quite a hub or ultimate destination of major corridors. economics of the BIS.”
Some GCC projects and initiatives are marked as part of the BRI. But the researcher said he was skeptical that the BRI would bring an economic boon to the region over the next few years.
“It is important to remember that the BRI emerged against the backdrop of growing economic ties between China and the Gulf – it was not the starting point for strong economic ties,” he added.
A lack of economic diversification continued to prevail in the Gulf, despite government efforts in this direction.
In the GCC, the oil and gas sector still dominates the economy and accounts for the majority of the countries’ revenue. This creates indirect dependence on China, as it is considered a major energy consumer.
Most Gulf countries depend on different trading partners for crude oil exports. However, Oman is heavily dependent on China, which bought 83% of Oman’s oil shipments in the first half of 2021, according to figures provided by Mogielnicki.
He explained that the strength of the bilateral relationship ultimately comes through diversification – mainly the diversification of trade flows or foreign investment.
“Gulf Arab economies would benefit from a more diversified mix of exports – beyond hydrocarbons – to China. Gulf officials and businessmen also want to see more Chinese investment in the non-oil areas of their economies,” Mogielnicki added.
Moreover, attempts to attract Chinese capital have failed to gain momentum, with the Middle East only managing to attract 2-3% of Chinese investment over the past decade.
For Tianbo, the GCC is perceived as a high-end market with considerable purchasing power, a strong desire for new products and intense competition.
“Companies must try to provide their best products and services to be successful. Compared to Western countries, China is a latecomer to the GCC, and there is a lot to learn and adapt,” the researcher concluded.