How GCC, China can strengthen their trade relations

Analysis  China’s technology and manufacturing equipment can contribute to GCC’s economic transformation and create more jobs in the non-oil industry. Shutterstock
China’s technology and manufacturing equipment can contribute to GCC’s economic transformation and create more jobs in the non-oil industry. Shutterstock
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Updated 13 March 2022

How GCC, China can strengthen their trade relations

How GCC, China can strengthen their trade relations
  • China is playing a key role in the development of the region’s non-oil sectors

RIYADH: As of 2020, China replaced the EU as the Gulf Cooperation Council’s largest trading partner. Saudi Arabia was China’s top supplier of crude oil in 2021. Its neighbor, the UAE, has become an important platform for re-exporting Chinese goods into the region and Africa.

Additionally, Qatar has become an essential natural gas supplier to China.

“There is a very strong China 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 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 top partner at the level of the bloc.”

China is also playing a key role in the development of the region’s non-oil sectors, according to Robert Mogielnicki, asenior resident scholar at the Arab Gulf States Institute in Washington.

The researcher believes that strong complementarities exist between China and the GCC across many sectors. These include tourism, telecommunications, artificial intelligence, smart cities, and renewables, among other technology-driven industries.

Reciprocity, mutual understanding and predictability are the most important aspects of GCC-China relations, said Tang Tianbo, a research fellow at China Institutes of Contemporary International Relations, known as CICIR, in an interview with Arab News. 

‘Win-win relationship’

“GCC is vital for China’s energy security while China provides GCC with a stable market for exports. It is a win-win relationship,” he said, adding that the GCC and China never impose anything on each other.

“Both sides recognize and defend each other’s independence and own choices,” said the Chinese researcher, while calling the relationship “pragmatic, stable and ever-growing.”

“This is highly valuable in a world full of uncertainty,” Tianbo underlined.

The GCC member states also compete among each other to capture Chinese trade and investment flows into the region, explained Al-Sudairi.

While the UAE has been at the forefront of this since 2004, other GCC member states have been following the suit by linking their national development plans with China’s Belt and Road Initiative, also called BRI.

He added that they have developed Jazan in Saudi Arabia, Duqm in Oman, and the Silk City in Kuwait as key areas for Chinese companies’ operation and spread Chinese trade and investment across the Middle East and East Africa.

“China’s Digital Silk Road overlaps neatly with technology-oriented development plans across the Gulf but especially in places like Saudi Arabia, the UAE, and Qatar,” said Mogielnicki, in an interview with Arab News.

He pointed out that these governments and their state-owned entities possess significant financial resources and have been tasked with quickly growing the digital economy. “Chinese firms are willing partners, offering cost-effective, high-quality services that can be completed over short timeframes,” added Mogielnicki.

Tianbo underlined that China can bring added value to the GCC in terms of e-commerce, Industry 4.0, new energy, among many others. “China and the GCC can cooperate in fields where China has a competitive edge and the GCC, an interest.”

Economic transformation

The CICIR researcher explained that China’s technology and manufacturing equipment can contribute to GCC’s economic transformation and create more jobs in the non-oil industry. 

Sovereign wealth funds are also strengthening China-Gulf relations.

For example, Abu Dhabi’s Mubadala, China Development Bank Capital, and China’s State Administration of Foreign Exchange set up a $10 billion UAE-China Joint Investment Fund in 2015. Recently, Gulf sovereign wealth funds are increasingly allocating a larger share of their portfolios toward China.

Yet, bilateral relations still face many challenges ahead.

The GCC has failed to fully integrate into the Chinese Belt and Road Initiative.

However, Mogielnicki said, “It’s not so much that the BRI has failed to expand to the GCC, but rather that the GCC is not quite a central component or ultimate destination of the BRI’s primary economic corridors.”

There are certain projects and initiatives in the GCC that are branded as part of the BRI. But the research scholar said he is skeptical of the BRI bringing an economic windfall to the region over the coming years.

“It is important to remember that the BRI emerged within the context of growing Sino-Gulf economic ties — it wasn’t the starting point of strong economic linkages,” he added.

A lack of economic diversification continued to prevail in the Gulf, despite government efforts to do so.

In the GCC, the oil and gas sector still dominates the economy and represents a majority of countries’ revenues. This creates an indirect dependency upon China, given that it is considered a major energy consumer.

Most Gulf countries rely on different trading partners for crude oil exports. However, Oman is highly dependent on China, which purchased 83 percent of Oman’s oil shipments in the first half of 2021, according to figures provided by Mogielnicki.

He explained that strength in bilateral relations ultimately comes through diversification — primarily diversifying trade flows or foreign investments.
“Gulf Arab economies would benefit from a more diversified mix of exports — beyond hydrocarbon commodities — to China. Gulf officials and business people also want to see more Chinese investments in non-oil areas of their economies,” added Mogielnicki.

Chinese capital

Additionally, attempts to lure Chinese capital have failed to gain momentum as the Middle East managed to attract only 2 to 3 percent of Chinese investments in the last decade.

For Tianbo, the GCC is perceived as a high-end market with considerable purchasing power, a vivid desire for new products and intense competition.

“Companies have to try and provide their best products and service to succeed. Compared to Western countries, China is a latecomer in the GCC, and there is a lot to learn and adapt,” concluded the researcher.


ICT infrastructure in Makkah, Madinah fully operational for Hajj with 41% rise in 5G towers 

ICT infrastructure in Makkah, Madinah fully operational for Hajj with 41% rise in 5G towers 
Updated 10 sec ago

ICT infrastructure in Makkah, Madinah fully operational for Hajj with 41% rise in 5G towers 

ICT infrastructure in Makkah, Madinah fully operational for Hajj with 41% rise in 5G towers 

RIYADH:  The Communications and Information Technology Commission, Saudi Arabia’s digital regulator, on Wednesday announced that communication infrastructure is fully operational in Makkah and Madinah and ready for this year’s Hajj.

The CITC has ensured the functioning of over 5,900 communication towers and more than 11,000 Wifi access points in the two holy cities, according to a statement. 

The number of 5G towers rose 41 percent to reach more than 2,600.

 “The Kingdom’s infrastructure readiness will not only help smooth the passage of fulfilling a lifelong dream,” said CITC Gov. Mohammed bin Saud Al-Tamimi, “it will significantly enhance their (pilgrims) digital experience.” 

 


Saudi Electricity sells entire stake of its subsidiary to the government

Saudi Electricity sells entire stake of its subsidiary to the government
Updated 29 June 2022

Saudi Electricity sells entire stake of its subsidiary to the government

Saudi Electricity sells entire stake of its subsidiary to the government

RIYADH: State-owned Saudi Electricity Co. has transferred its entire stake in the Saudi Power Procurement Co. to the government, the company said in a bourse filing.

SPPC as of today is an independent company wholly owned by the government, following completion of all legal arrangements for sale and transfer of assets, liabilities, and contracts

SPPC and SEC also signed energy conversion agreements, bulk supplies, and fuel supply novations, all effective July 1.

With that, SEC, SPPC and the Ministry of Finance signed a fuel inventory sale agreement, which stipulates that the ministry shall pay SEC its net book value for the fuel inventory.

The sale price shall be calculated based on the book value of SPPC's net assets at the end of the second quarter of 2022.

SEC does not expect the carve-out of SPPC to negatively impact its business since SPPC possesses no material tangible assets.


Red Sea Development Co.’s study reveals diversity of habitats as it calls for responsible tourism 

Red Sea Development Co.’s study reveals diversity of habitats as it calls for responsible tourism 
Updated 29 June 2022

Red Sea Development Co.’s study reveals diversity of habitats as it calls for responsible tourism 

Red Sea Development Co.’s study reveals diversity of habitats as it calls for responsible tourism 

RIYADH: The Red Sea Development Co. has revealed rich diversity of habitats, flora, and fauna in one of the world’s largest environmental surveys of wildlife ecosystems, carried along the Saudi Arabian coast.

The 11-month long study has included a number of endangered species such as the Halavi Guitarfish, Hawksbill Sea Turtle and Sooty Falcon, according to a statement. 

Released at the UN World Ocean Conference in Lisbon, the research has also included an eight-meter-high single coral colony estimated to be around 600 years old. 

Conducted from January through November 2021, it has revealed that many threatened and endangered species inhabit the area, which shows the environmental protection and regeneration efforts in the region. 

“We want to prove to the world, and our peers in the tourism industry, that creating world-class destinations can go hand-in-hand with protecting and enhancing the environment,” CEO John Pagano  said. 

“We’re challenging ourselves and others to do better and be better as global pioneers in responsible development and are issuing a call to action for tourism as an industry to step up when it comes to the impact on wildlife and biodiversity,” Pagano added. 

A lion fish observed by TRSDC scientists (Supplied)

The tourism industry places significant stress on local land and marine areas if action is not taken. 

UN Environment research shows that the growth of tourism and its impact on the environment is growing at an unsustainable rate, with a 154 percent increase in energy consumption, 131 percent increase in greenhouse gas emissions, and 152 percent increase in water consumption expected by 2050 if action is not taken.


Riyadh governor inaugurates $2bn environmental, water projects in sustainability push 

Riyadh governor inaugurates $2bn environmental, water projects in sustainability push 
Updated 29 June 2022

Riyadh governor inaugurates $2bn environmental, water projects in sustainability push 

Riyadh governor inaugurates $2bn environmental, water projects in sustainability push 

RIYADH: Some 93 environment, water and agriculture projects in Riyadh have been inaugurated by Gov. Prince Faisal bin Bandar.

The launch of the projects, worth over SR8.5 billion ($2.2 billion), comes to support water and environmental sustainability in line with the objectives of the Kingdom's Vision 2030, according to the Saudi Press Agency. 

The projects include the Kingdom’s largest water transmission system, the Jubail-Riyadh transmission system, with a capacity of 1.2 million cubic meters per day.

In addition to a dual transmission system, with a total length of 821 kilometers, with a total cost of over SR6.3 billion.

Implemented by the Saline Water Conversion Corp., National Water Co. and  the Undersecretary for Water, and the National Center for Vegetation Cover and Combating Desertification, the projects will contribute to the rising demand for water. 

They will also contribute to raising  operational efficiency in water transportation and distribution, enhancing environmental sustainability and increasing vegetation cover in the region. 

 


MENA Project Tracker: KSA launches Arts Valley project in AlUla; Honeywell, Anchorage to build $2bn petrochemical complex in Egypt 

MENA Project Tracker: KSA launches Arts Valley project in AlUla; Honeywell, Anchorage to build $2bn petrochemical complex in Egypt 
Updated 29 June 2022

MENA Project Tracker: KSA launches Arts Valley project in AlUla; Honeywell, Anchorage to build $2bn petrochemical complex in Egypt 

MENA Project Tracker: KSA launches Arts Valley project in AlUla; Honeywell, Anchorage to build $2bn petrochemical complex in Egypt 

RIYADH: The Royal Commission of AlUla, also known as RCU, has announced the launch of an Arts Valley as Saudi Arabia moves steadily to become a top global tourist destination, a goal outlined in Vision 2030. 

The Arts Valley, which spreads over 65 sq. km, is touted as a cultural asset of the “The Journey Through Time” masterplan launched in April, Trade Arabia reported. 

Noorah Al-Double, the CEO of the General Directorate for Arts and Innovative Industries said that these projects will transform AlUla into a pioneering international destination for arts, heritage, culture and nature by 2030. 

Honeywell and Anchorage to work on Egypt’s $2 billion Suez Canal project

US-based multinational conglomerate Honeywell and Anchorage Investments have signed a memorandum of understanding to construct the $2 billion Anchor Benitoite Petrochemicals Complex in Egypt’s Suez Canal Economic Zone, according to a MEED report.

The agreement entails that Honeywell Process Solutions will be hired as the Integrated Main Automation Contractor. 

HPS also will supply sufficient technologies to ensure operational safety and security to Anchorage Investments. 

Dana Gas halts Iraq oil field project following rocket attack

UAE’s Dana Gas has just pressed pause on its KM 250 oilfield expansion project following 3 rocket attacks near its Khor Mor Block in Iraq’s Kurdistan region, MEED reported. 

Citing a company statement to Abu Dhabi Securities Exchange, Meed reported that two rockets landed very close to the Khor Mor Block on June 24 and 25. 

The report further added that there were no injuries following the attack. 

The Khor Mor 250A project is an asset to Iraqi oil production, as it has shown immense yearly growth of 552 million cubic feet of gas a day in production in comparison to its average of 450 million cubic feet of gas a day. 

Upon talks with the Kurdistan Regional Government and the Iraqi Government, more forces have been deployed to protect the facilities. 

Damac awards $168m contract to Pivot

UAE-based property development company Damac has awarded the $168.2 million construction contract for the Costa Brava cluster within its Damac Lagoons development to Pivot Engineering and General Contracting Co., MEED reported.

According to the report, the scope of work under this contract includes the construction of 976 townhouses for the project.

The project includes villas, townhouses, artificial beaches, and community facilities.