It is difficult to believe that the diplomatic relations between China and Saudi Arabia were only established in the year 1990. Since then though, the growth in economic ties has been rapid and, in some ways, have become symptomatic of the Gulf-China trade relations.
It is only pertinent that China, the world’s second largest economy and the G20 summit host this year, and Saudi Arabia, the only Arab country in this elite league, are both trying to take this partnership to the next level.
As Saudi Arabia’s Deputy Crown Prince Mohammed bin Salman represents the country at the G20, being held in the Chinese city of Hangzhou, this is an opportunity for him to showcase Saudi Vision 2030. Yet, this also shines a spotlight on the Gulf region, which realizes the need to enhance its partnership with China.
In China, Gulf countries have had a reliable trade partner for several years now and the results have been showing. According to one estimate, China has been the single largest foreign business stakeholder in the GCC since 2014.
The two sides announced earlier this year that they are committed to conclude a comprehensive free trade agreement (FTA) within 2016. Whether this really fructifies will be a challenge going forward.
One Belt One Road
China’s growth has slowed down since last year leading to skepticism over the most populous nation on the planet making a comeback. Yet, as a World Economic Forum report claims, China will still be emerging as the world’s largest economy by 2030.
One of the key aspects, not mentioned in the World Economic Forum report, is the One Belt One Road (OBOR) Initiative and Maritime Silk Roads that, many believe, will help in reshaping China’s economy. This is where the trade potential of China and the GCC comes under spotlight.
China is keen to enhance its international production capacity and cooperation in the fields of infrastructure, trade and investment facilitation, nuclear power, space satellite as well as energy, agriculture and finance. Earlier this year, China issued Policy Papers for Arab states to coordinate development strategies with Arab states and to put into play each other’s advantages and potentials.
Experts believe that a big project of rail links, motorways, special economic zones, dry ports and other infrastructure projects that are underway across Pakistan will bring China closer to the GCC by more than 10,000 kilometers. Needless to add, this will enable the transit of cargoes to and from the Gulf to China in 10 days instead of 45.
Timing is the key
While rapidly transforming economic and geo-strategic realities are keeping nations on their toes, it is equally important to consider the reality on the ground.
Mhamed Biygautane, Researcher on public-private partnerships in the GCC states at Monash University and Non-resident Fellow at MBRSG Dubai, says Deputy Crown Prince Mohammed bin Salman’s trip to Asia is undoubtedly an important and strategic one in its pursuit to urgently diversify its economy and move away from its dependence on oil.
“Nonetheless, I think the timing of this visit amid slowing Chinese and Japanese economies and gloomy horizons for their recovery in the near future might not entirely fulfill the aspired ambitions from this trip,” says Biygautane.
However, this is as much about what the GCC collectively wants from its “look East” strategy. Another analyst, who spoke on condition of anonymity, said the GCC have enormous economic and strategic interests in Asia.
According to him, these economies have profound and enduring interests in strengthening economic ties, rooted in the belief that this largest-emerging market in the world is critical to the GCC’s future prosperity.
“The GCC will be pursuing a very important agenda that has an enormous bearing on the long-term interests of the Gulf region,” he said. It is this agenda that will set the tone for future relations between these two very important parts of the world.SHOW MORE