President Obama’s speech in Cairo last Thursday was a remarkable achievement.
It was also a lesson in America’s ability to produce a foreign policy U-turn in a short space of time. It wasn’t long ago, after all, that President Bush was given a standing ovation by Israel’s legislature, as he spoke of risks of terrorism.
So, where does this leave China? The country had benefited from growing mistrust between America and the Middle East. Riyadh’s warming relationship with Beijing, for instance, was in part a hedge against its deteriorating relationship with Washington.
Critics will argue the speech puts Beijing on the back foot. And it perhaps isn’t a surprise that the People’s Daily, China’s official newspaper, referenced the speech, not on the front page like other major dailies, but instead on page three.
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I was put to task last week while speaking at the Middle East Institute in Singapore. “But how can Singapore benefit from strengthening relations between China and the Middle East?” asked an official from the Singapore Economic Development Board. It’s a fair question.
The problem is that just two percent of Singapore’s exports are destined for the Middle East, and only a small share of these are produced in China. So, trade isn’t the answer.
However, I’ve since given the issue more thought, and after visiting Beijing, Shanghai, Abu Dhabi and, of course, Hong Kong, in the past month, I’m convinced that Singapore will benefit not from trade, but rather in its ability to reach across national borders.
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Here’s one for the history books. China overtook the United States earlier this year as the world’s largest exporter to the Middle East. It’s the first time the United States has lost its number one ranking since at least the 1960s, or as far back as there is data available.
I haven’t seen the figure reported in the media. But I don’t expect to wait long. This is the type of easy to understand statistic that will rattle doors in Washington. I can see the cable news stations going into hyper-drive.
The rate at which China’s exports to the Middle East have grown is certainly remarkable. A decade ago, they were worth just $4 billion, but have since rocketed to $60 billion, overtaking the United Kingdom in 2002, Germany in 2006, and now the United States.
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I was speaking this week with a reporter from Denmark’s Jutland Post about the likelihood China will create its own Al Jazeera.
The reporter had mentioned that Richard Li, the son of a famous Hong Kong tycoon, has finally struck a deal with Caijing magazine, China’s leading financial magazine, to set up an English-language financial news service. A number of reporters from Hong Kong’s South China Morning Post, among other newspapers, have reportedly been headhunted to join the service.
A Chinese Al Jazeera is always possible, but only so long as it focuses on economic news, rather than political news. I’ve written about this earlier in my book, “The New Silk Road”, but it’s worth repeating in the light of the deal between Richard Li and Caijing. The important point is that the Chinese media already does an impressive job at reporting economic news, not just in China, but also abroad in developing countries.
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A few weeks ago I referred to an article in the Chinese media claiming that the number of Arab nationals arriving at Shanghai’s Pudong airport had jumped. The article stated that the Middle East was waking from a “winter’s sleep” and shaking off the economic crisis. I wanted to get excited, but wasn’t entirely convinced―after all, Emirates Airlines only just slashed its ticket prices to China by forty percent in February.
But now I am officially excited. The Middle East’s economy looks to be shaking off the worst of the crisis. What’s my proof? China’s exports figures, Hong Kong’s air-cargo numbers, Filipino worker deployments, and Malaysian tourism arrivals. The figures have all improved in recent months.
I’ll dig a little deeper into those figures shortly. But it’s first worth highlighting that the Middle East doesn’t have a whole lot of economic data to begin with. And much of it is released months, often many months, after the event. So, economists have a tough time of it trying to observe the last trend. Not so in Asia where the data is reported more regularly. In fact, the region can tell us a surprising amount about economic activity in the Middle East.
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I spoke with Wang Lihua last week. A Beijing native, she works in a large hotel in Abu Dhabi, greeting guests and taking orders in the hotel’s coffee lounge. I asked Wang what she thought of life in Abu Dhabi.
“It’s ok”, she said. “But not great”. “I’m a little lonely.” Wang had lived in Abu Dhabi for less than a year. “There are two other Chinese staff in the hotel. But most of the Chinese work on construction sites.” She left the statement unfinished, shrugging her shoulders as if to imply they weren’t her type of people.
Now, Chinese construction workers in Abu Dhabi are among a lucky minority who haven’t lost their jobs in as a result of the financial crisis. It’s easy to criticize lax lending standards as producing one of the world’s worst recessions. But cheap bank loans also helped to employ unskilled workers, especially in the construction and export sectors. In short, they lifted millions out of poverty. But that’s all about to reverse.
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A lot has been written on Dubai in the past few months. Some are fans. Others are critics. But few offer an idea of what the city might look like in a decade from now.
I was in Singapore last week and was struck by the amount of construction taking place. The number of cranes on the skyline reminded me of Dubai. Now, Singapore has its problems. Its economy is contracting. Its construction sector is suffering. But this isn’t the first time the city took a hit. It was also shaken by the Asia crisis in 1997, and its experience then offers a way to think about Dubai’s future today.
Here’s the most important lesson. It’s the construction sector that will take the biggest hit. In 1997, Singapore experienced a Dubai-like boom in its property market. The resulting crash was spectacular and the construction sector has only just recovered. In fact, it was only last year that the country started spending as much money building residential apartments and shopping malls as it did during the mid-1990s.
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Song Hongbing believes the West is using its currency policy to prevent the East’s rise. His best-selling Chinese-language book, “Currency Wars”, is being read by senior officials across China. They are dipping into such chapters as “Financial Nuclear Bomb: Target Tokyo” and reading how the Plaza Accords, signed in 1985 between Japan and four Western nations, including the United States, contributed to the collapse in the Japanese economy.
Critics will argue that Song is only appealing to conspiracy theorists. Maybe so. But the number of people who believe in Song’s views is often larger then we might think.
I was reminded of this while watching Al Jazeera. Who should appear? That’s right. Song Hongbing. He was being interviewed by Ahmed Mansour the anchor of No Limits. (The program is Al Jazeera’s version of the BBC’s HardTalk). Here was a Chinese author speaking on an Arabic-language TV program to an audience in the Middle East about how the West’s currency policy has been used to suppress the East’s economies.
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