China, Middle East and
Friday, February 8, 2008
an unfolding courtship
By David B. Roberts
E veryone wants a piece of
the Middle East at the
moment. Israel,
unfortunately, takes this quite
literally and seems intent on
forever expanding its borders
with uncomfortable overtones of
Lebensraum. American
companies have, for the most
part, been falling over
themselves to find GCC cash to
bail themselves out of their
various woes. The list of those
seeking investment is a
veritable who’s-who of the
American blue-chip elite:
Citigroup, Dow Chemicals,
General Electric and Merrill
Lynch, to name a few. The
French seem to have placed, in a
rather un-Gallic, decidedly
capitalist fashion, a price tag on
their cultural heritage. For about
$1 billion, you can now purchase
priceless French art, plucked
from the bosom of the most
famous museum in the world,
the Louvre. Furthermore, the
French have also taken the name
of their most prestigious
university in vain by building a
“Sorbonne Abu Dhabi” with
infinitely easier entry
requirements. However, not
only have the French been
handsomely rewarded for
loaning a bit of cultural capital,
but they now have a military
base overlooking the Straits of
Hormuz; perhaps they knew
what they were doing after all.
The British were predictably
slow on the uptake and are now
desperately searching for Middle
Eastern cash to bail out the
collapsing Northern Rock bank.
Moving further east, Dubai
holdings have invested heavily
in the Indian bank ICICI, in
addition to having taken an
estimated billion dollar stake in
Sony of Japan. Among those
doing their utmost to make
friends and influence states in
the region are the Chinese.
They are doing this, however, in
a less brash manner. Indeed, to
some degree, they have inverted
the Europeans’ treatment of the
region by investing in the Middle
East. For example, two Chinese
state-owned companies are
investing some $4 billion in
Saudi aluminum production.
This is but one-half of an
example of reciprocal
investment between various
Middle Eastern states and
China. Expect to see a lot more
of it.
What makes partners
per fect?
China is the most natural
trading partner for countries in
this region. This may seem like
something of a bizarre
statement, but it stands up to
scrutiny. As any good (or even
only mediocre) economics
student will tell you, two crucial
factors when discussing trade
are supply and demand.
In terms of supply, the
Middle East has oil and money.
According to the US Energy
Information Administration, as
of January 2007, the Middle East
had 739 billion barrels of proven
oil reserves, more than the
combined rest of the world’s 578
billion barrels. As for money,
thanks to the bumper oil prices
of recent years, the region is
awash with cash. In 2007 alone,
Morgan Stanley estimates,
Persian Gulf countries invested
around $75 billion overseas.
This excludes the $500 billion
that the region’s states are
investing domestically to create
super-cities. The goal here, of
course, is to look ahead to the
paradigm-changing day when oil
runs out. Crucially, this inflated
oil price appears to be with us for
the medium term, as do the
record profits for Middle Eastern
governments and, with those,
their ability to generously invest
abroad.
As for demand, the same
economics student would no
doubt tell you that demand is
infinite. This is often stated in a
theoretical fashion, but when
discussing China, the theory
approaches praxis. China has a
population of 1.3 billion people.
By 2050, however, the UN
population division estimates
that the country’s population will
increase to a point somewhere
ANALYSIS
Perfect partners
between 1.5 and 2 billion people.
Not only will these people need
their energy needs taken care of,
but, thanks to China’s
phenomenal economic growth,
many people now have lifestyles
that simply require more energy.
With greater affluence, for
instance, comes greater demand
for bigger and better houses and
apartments and, of course,
bigger and better cars. In 2007
alone, the Chinese car market
grew 20 percent and overtook
Japan as the world’s second
largest automobile market,. With
tens of millions of people waiting
to dump their bicycles, this
market is only going to grow
faster in the coming years.
These lead us to the nearly
shocking conclusion that - to
take an estimate from
Commentary magazine - China’s
demand for imported oil will
grow by 960 percent over the
next two decades.
An unburdened panda
Issues of demand and supply,
therefore, are suitably poised for
a long and prosperous
relationship. Yet there remain
additional factors to consider.
After all, the rest of the world
demands oil and will continue to
do so for the foreseeable future.
So what makes China so special?
For one thing, China lacks
the historical or colonial baggage
weighing upon other states in
the region. This could be
construed as a good or a bad
thing. For example, France’s
long standing relationships with
the Emirates clearly made it
possible for Abu Dhabi to cede
some land for a French military
base, and America’s long history
in Saudi Arabia made it possible
for similar arrangements there
in the past. I would suggest that
the latter example is more
instructive, especially
considering the eventual
outcome of the US bases in the
land of the two holy places.
China, however, has a clean
slate; indeed, it took until 1990
for China to officially recognize
all GCC states. There are no old
policies whose effects need to be
ameliorated or defended.
Another aspect that appeals
to many governments
worldwide is that China is an
ideal partner in terms of
demands exogenous to the deal
itself: That is, there aren’t any.
For example, China will never
lecture, pressure, castigate or
otherwise try to impose its
ideals on another state. This is a
fundamental pillar of Chinese
policy: an absolute and utter
respect of sovereignty. Thus, if a
state is not appreciative of
America’s lectures regarding full
democracy or the rule of law
(especially regarding the
egregious hypocrisy of
Guantanamo Bay) then they will
certainly know that they would
receive no such criticism from
China. Along the same lines,
China makes it easier for Middle
Eastern companies to invest
there. While many countries
have invested heavily in the
West, there is still an element of
quasi-racism. This was clearly
shown in the Dubai Ports World
controversy, where a furor
erupted when it was revealed
that a Middle Eastern company
would be involved with security
arrangements at American
ports. This would, according to
some woefully misguided
segments of the American
media, lead to security concerns.
It is difficult to imagine such
security concerns from the
Chinese.
What West?
With significant anti-
Americanism in the Middle East,
and significant anti-Arab
sentiment in America and the
West generally, China could offer
itself as a neutral alternative to
the Middle East-
American/Western axis. It is no
great secret that parts of the
Middle East have security
concerns, which are answered in
one way or another by the West
generally or America specifically.
We need only look at arms sales
($20 billion only last week) or
instances of outright physical
protection, as in the Gulf War.
And yet it must not be forgotten
that China has been supplying
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various countries in the region
for a long time now. More to the
point, China is more willing to
sell certain weapons that the
West is, as a rule, is unwilling to
provide, such as ballistic
missiles and related technology.
China sold these to each side
during the Iran-Iraq war, to take
but one example. Furthermore,
with the amount of industrial
espionage in which Beijing
currently engages, certain
aspects of armaments
technology may not be so far
behind that of the US itself.
Caveats persist, however.
First, America is currently the
only power capable of offering a
meaningful security blanket,
such as the one that freed Kuwait
and protected Saudi Arabia.
Theoretically, were the Chinese
to sell an atomic bomb “off the
shelf” to the Saudis, doing so
could negate the necessity of that
particular US role. Such a
reckless policy, however, is
highly unlikely for the cautious
Chinese, beholden as they are to
meticulous long-term strategy.
Second, the prevalence of
American goods, ideas, motifs,
restaurants, books, films, TV
channels, and music throughout
the Middle East, compared to the
utter lack of Chinese
equivalents, shows that America,
or at least its manifestations, is
not going anywhere. It does not
seem at all likely that
McDonald’s will turn into Jowza
(dumpling) restaurants any time
soon. American culture,
therefore, may well be here for
the next 100 years, even if the
manifestations of American
power and trade are not.
David B. Roberts, a doctoral
candidate specializing in Sino-
Saudi relations at the University
of Durham, taught at the Kuwait
National English School from
2005 to 2007.