Tag Archives: China

First it was pirates. Now it’s Yemen.

February 8th, 2010

I‘ve early written that Somalia‘s pirates may be the accidental spark for greater Chinese military intervention in the region. Here‘s another spark. This article from China Energy Web worries that unrest in Yemen may threaten China‘s oil imports from the region.

The author says “The United States recognizes Yemen‘s geographic ability to choke China‘s oil import life lines“. He then hints that the United States may bring the war on terror to Yemen, and “strangle China‘s oil imports and strangle China‘s economy“. The rest of the article carries on in a similar tone.

Now, the author is a reporter, not an official. But the fact that he is considering Yemen in this manner raises the possibility that officials are as well. China certainly has strong commercial interests in Yemen, as I‘ve written about here and here. Many of its top Arabic-speaking diplomats have also served in the country.

Haixin hopes to keep Egypt, and its neighbors, cool

February 2nd, 2010

haixinMore please. I found this article today and it illustrates a trend I’m hoping will develop further. The article talks of a Chinese home electronics company, Haixin, which has built a factory making air-conditioners in a suburb near Cairo. It’s targeting markets in East Africa, North Africa, the Middle East, and Europe. Haixin says it’s trying to take advantage of Egypt’s low-costs and its customs union agreements with neighboring countries.

I’m expecting a growing number of low-cost Chinese manufacturers to follow Haixin abroad to places like Egypt. Why? In part, because rising manufacturing costs are gradually eroding the country’s competitiveness for certain low-cost goods. But, and most importantly, also to escape growing trade protectionism. Chinese manufacturers have captured market share rapidly in most emerging markets over the past few years. It’s unsustainable, and there are growing complaints from New Delhi to Sao Paulo.

I’m not suggesting that all low-cost Chinese manufacturers will move abroad. Far from it. There’s still compelling reasons to stay at home. But it only takes a few to make a difference in a country like Egypt. China’s exports to Europe were worth $240 billion in 2009. That’s more than Egypt’s annual economic output of $160 billion. Egypt just needs to capture a small share of that trade to have a useful impact on growth. Here’s hoping.

Trucks and Central Asia

January 25th, 2010

I have to admit, I wasn’t always excited about Central Asia. The region’s economy is no bigger than Singapore’s, but spread over a land mass the size of Europe. It has oil, but mostly concentrated in Kazakhstan. It’s also land-locked without easy access to ports. For an economist, it isn’t a compelling story.

But that was before I spoke with Umberto De Pretto. We met at last month’s Fikr conference in Kuwait, while speaking on a panel on Arab economic integration.

De Pretto is the Deputy Secretary General of the International Road Transport Union. He naturally spends much of his time thinking about the future of road transport. He is also genuinely excited about Central Asia, and believes that the region might yet resurrect its role as a trade link between China and Europe.

After listening to what he had to say, I can only agree.

China’s relations with Algeria catch attention

January 24th, 2010

China’s commercial relations with Algeria are among the strongest in the Middle East owing to the size of the construction projects and large number of construction workers. This first article, by Chris Zambelis for the Jamestown Organization, provides a good review. I’m a big fan of analysts getting their hands dirty, and it seems that Zambelis has actually visited Algeria for the research.  I would only add that there appear to have since been efforts to tighten restrictions, as I’ve written earlier in this post. This second article by the Associated Press covers similar ground.

Market Forces Rule

January 17th, 2010

I see China’s Commerce Minister, Chen Deming, was in Riyadh last week. The Saudis might as well leave the red carpet unrolled, so common are visits by Chinese officials. It isn‘t surprising, of course, given China’s thirst for oil.

But I would resist the temptation to claim a special strategic relationship between the two.

I‘ve spent the past few months researching a chapter for a book, sponsored by the U.S. Naval Academy, on China’s relationship with Saudi Arabia. Most of that time has been spent talking with oil analysts─the sort of people who live and breathe this stuff. The conclusion? Market forces rule.

It’s a remarkably simple explanation. Saudi Arabia needs to sell vast amounts of oil every day. China needs to buy much the same. Both countries have large domestic challenges, so they are looking for stable partners happy to sign long-term contracts and, most importantly, not provide any surprises.

Al Sharq Al Awsat editorial hints at trade frictions

January 6th, 2010

I’m intrigued by this editorial in the Arabic-language Al Sharq Al Awsat. It’s written by Jaafar Karar Ahmad. I haven’t heard of the author before, but he’s reportedly associated with a University in Shanghai. He’s also on record as working for Qatar’s Embassy in Beijing. Either way, he seems to know China. The editorial is largely a review of Arab-China relations over the past sixty years and is generally positive. But what grabbed me was his comment in the final paragraphs “that a mentality of profit rules over Chinese officials charged with developing trade between China and the Arab world”, and that for all China’s talk about increasing its imports from the Arab world, little has been achieved. He writes that this mentality has helped turn China into a major economic power, but that it’s time for China to open its own markets to the Arab world. I’ve argued in earlier blogs, and an editorial, that unless China starts to share some of its economic gains it might find popular sentiment towards it turns. Here’s hoping Karar’s views get some traction in Beijing.

China v Jordan. A 2-2 draw in Yiwu.

January 4th, 2010

Here’s a gentle start to the New Year. It’s not a story you’ll find in the Financial Times or New York Times, but it neatly underscores how relations between China and the Middle East are developing. It seems that the Chinese coastal city of Yiwu hosted a football match between China and Jordan on December 31. Why Yiwu? The city is a virtual Arab market town with more than a dozen Arabic restaurants in the main street. The match was a warm-up ahead of the Asian Cup Qualifiers. Apparently, China scored the first two goals only for “poor skill to break the door”, according to this good-humored Chinese-language article, and Jordan subsequently equalized to leave the match drawn at 2-2. The article claims that 300 Jordanians attended the match and another 20 went to meet the team at the airport. But the match was an international affair — two Koreans were first in line to buy tickets when they went on sale and 1,000 foreigners made up part of the 10,000 strong crowd. The article is worth a look if only for the sight of Jordanian flags being waved madly in a small Chinese stadium. For those keen, China is playing Syrian in Hangzhou on January 6.

A few things I heard in Kuwait and Qatar

December 13th, 2009

I’ve spent the past few days in Kuwait and Qatar, speaking with bankers, lawyers, and academics, as well as participating in the Arab Thought Foundation’s annual conference. Below are a few points of interest:

- Industrial Commercial Bank of China has around 30 staff at their Doha office. The branch had a spectacular opening in 2008, but apparently has been relatively quiet in 2009. The branch is reportedly keen to lend to gas and government-related projects.

- I later spoke with the Chinese Ambassador in Kuwait. No surprise, but China’s commercial relations with Kuwait are characterized by Chinese construction firms funded by Chinese banks. As an aside, the Ambassador, a multi-decade veteran of the Middle East, said his English was deteriorating because he uses only Arabic and Chinese.

- I hear that the Kuwait’s Emir recently purchased a jet that could transport his helicopter to Mongolia. Why? The Emir is a big fan of falconry, and Mongolia is one of the better places to participate in the sport. This confirms what I heard earlier from a lawyer based in Ulaanbaatar that Arab royalty are indeed regular visitors to the country.

- I’m still yet to meet Arab investors ready to plunge into China. There’s a lot of interest, but limited experience. Moreover, I’m left with the impression that Arab investors are spoilt for choice. Many are comfortable investing in Africa, the Middle East, South East Asia, not to mention Europe and the United States. For now, investing China seems too difficult, and I’m not expecting that to change in the next few years to judge by the slow pace of liberalization in China’s investment regime.

- What’s up with Turkish businessmen? Friends in Cairo tell me of influx. And now I’m hearing of much the same in the Gulf. I’ve earlier blogged on this phenomenon, and there seems to have been a real improvement in commercial relations between Turkey and the rest of the Middle East over the past year.

- I also hear that Kuwaiti businessmen are talking of Syria as the next big thing. Chinese businessmen think much the same. Let’s hope Syria’s economic reform momentum doesn’t fade.