China-GCC strategic dialogue resumes

I write this week from Beijing, where the third round of “GCC-China Strategic Dialogue” was held on Jan. 17 at the opulent Diaoyutai State Guesthouse in the western part of the city. China, in particular, made great efforts to make this meeting happen, because of the importance it attaches to its relationship with the GCC.
High-level interest in China’s GCC ties was expressed by China’s President Xi Jinping, who met with the GCC delegation at the Great Hall of the People in Beijing. Chinese TV and newspapers gave the meeting top billing. China Daily, the main English language newspaper, led with news of the meeting on its first page, as did other official media.
China has for some time made it clear that it considered the GCC, as an organization, one of its top priorities, in addition to its interest in GCC member states individually. With its keen advocacy of Third World capabilities, it considers the GCC an effective regional organization composed and run by developing nations, like China itself.
Former President Hu Jintao twice made that point during his visits to Saudi Arabia, to express his support and interest in the organization. I noticed in my meetings with Hu during his official visits to Saudi Arabia in April 2006 and February 2009 how much he knew about the GCC and how keen he was to cement that relationship. His knowledge of the minute details of GCC-China relations was unusual and duly impressive.
Based on that interest, China and the GCC launched their strategic dialogue in the signing of an agreement setting up the parameters and mechanisms for strategic cooperation, in Beijing in June 2010. Prior to that time, relations were dominated by trade and investment concerns, as was evidenced by the Framework Agreement for Economic, Investment and Technical Cooperation, which was signed in 2004, to pave the way to free trade negotiations, which started in 2006.
FTA negotiations stalled in 2009 because of China’s protective policies and were later suspended by the GCC pending an overall evaluation. China sought to limit access of GCC petrochemical exporters to its markets. While China was always interested in pursuing FTA negotiations, it could not agree to open its markets to GCC petrochemical and chemical products, seeking to shield its own producers from competition.
In his meeting with the GCC delegation, President Xi Jinping called for the speedy conclusion of the FTA deal, and emphasized the importance of China-GCC trade. In a statement issued after the meeting, Xi Jinping said, “Negotiations on the China-GCC FTA have been in the works for a decade. Both sides have done extensive planning for the agreement. I hope both sides can sign the agreement at an early date.”
Chinese officials have recently reassured the GCC that they were ready to provide the utmost flexibility on outstanding FTA issues, if FTA negotiations were to resume.
The FTA is significant for China for several reasons. First, it would provide treaty guarantees for the already thriving GCC trade. Two-way trade has steadily and rapidly multiplied, from a mere $9 billion in 2001 to $151 billion in 2012. In particular, China is interested in safeguarding oil supplies from the GCC, which is currently its main source of energy imports. As such the GCC is key to China’s “economic security,” according to Chinese experts at the China Institute of International Studies.
Second, China hopes to plug the trade deficit it has experienced with the GCC since 2010. In 2012, for example, GCC exports (mainly crude oil) were valued at $90 billion, compared to $60 billion of Chinese exports to GCC countries. China would like to increase its exports to the GCC to reduce that gap.
Third, over the past few years, China has negotiated free trade agreements with its neighbors and far-away partners, including Japan, Korea, and Australia, in addition to the ASEAN group and Pacific Rim countries. Although China is somewhat of a late believer in free trade, now it appears to be eager to engage in free trade agreements with most of its key partners, recognizing that is the way to the future.
Fourth, the GCC figures prominently in the new “Silk Road” initiative China is promoting its external trade. This is such a fascinating venture with wide strategic implications that I would like to devote my next week’s column to it.
But trade, where they largely agree, does not define the whole GCC-China relations. Although China has expressed great interest in its GCC ties, the two sides have not always seen eye to eye on some issues, mainly the Syria question. China has avoided the boisterous Russian style of publicly and aggressively defending the regime of Bashar Assad. Nevertheless, it has twice joined ranks with Russia to veto United Nations Security Council resolutions related to the Syrian conflict. The GCC supported both resolutions.
Partly due to disagreement over Syria and partly because of the recent transition in Chinese government and party leadership, a fully-fledged strategic dialogue meeting had been postponed for over two years. The last such meeting was held in Abu Dhabi in May 2011. Since then, ministerial meetings were scheduled and postponed, except for meetings held on the sidelines of the United Nations General Assembly, in New York, and technical meetings that were held in the context of economic and technical cooperation.
It was thus quite significant that the Jan. 17 meeting was held at all after a 32-month hiatus. Since the meeting was held just a few days prior to Geneva 2, the Syrian issue was high on the meeting’s agenda. The GCC is counting on China to support a robust outcome of the conference that would allow Syria to have a new transitional governing body with full powers, to rid Syria of the Assad regime and enable Syrians to have their own freely chosen government.

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