2023-07-10 15:46:29
Its growing political influence China at Middle East reinforced by the fact that billions of dollars are already being invested in Chinese companies from the Gulf countries.
On the occasion of the visit of the Chinese leader Xi Jinping in Saudi Arabia in December, officials and business executives from the two countries signed a series of deals with an estimated value of about $50 billion.
Earlier this year, Beijing brokered a resumption of diplomatic contacts between of Saudi Arabia and Iran, in a rare political intervention by China in the region. In the wake of political deals, business deals followed.
AP
Saudi Aramco, the state oil giant, plans to invest $3.6 billion in Rongsheng Petrochemical, a company based in Hangzhou. Saudi Arabia’s investment ministry has signed a $5.6 billion joint venture deal with Human Horizons, a Chinese electric vehicle company.
At the China-Arab World business conference in Riyadh in June, the head of Hong Kong’s stock exchange predicted that the Middle East’s largest sovereign wealth funds could allocate between one and two trillion dollars in investment in China by 2030.
They break the American embargo
The growing economic ties between China and the Middle East point to the challenges the US will face in the coming decades. Saudi Arabia is trying to expand its list of allies. This has created an opportunity for China, the world’s largest oil importer, to turn its economic influence into political capital—and vice versa.
At the same time, analysts believe that China is an investment opportunity. The head of Hong Kong’s stock exchange said that major sovereign wealth funds currently invest only 1% to 2% of their assets in China. He believes that this (amount) will increase by 10 times.
AP
“The trade relationship between the US and the Gulf Cooperation Council has deteriorated,” said Ethan Chan, chairman of Hong Kong-based asset manager ARTE Capital Group.
A sovereign wealth fund that Chan works with in the United Arab Emirates currently invests about 7% of its total portfolio in Chinese assets, one-fifth of the funds it invests in the US.
Middle Eastern funds have already proven to be a useful alternative for Chinese companies cut off from the US financial system.
SenseTime, a Hong Kong-based artificial intelligence company that has been blacklisted by the US, has signed deals in Saudi Arabia. The company first started operating in Saudi Arabia in 2018, including signing a joint venture with the Public Investment Fund.
Mubadala, Abu Dhabi’s sovereign wealth fund, is an investor in Chinese artificial intelligence firm 4Paradigm from at least 2021, according to S&P Global Market Intelligence. The US, for its part, placed 4Paradigm on the Commerce Department’s list of restrictions.
But at the same time, ties between China and the Middle East are creating opportunities in the other direction as well, with architects, construction firms and technology companies signing or negotiating deals with Middle Eastern officials who dream of sustainable smart cities.
A typical example is the Chinese telecommunications giant Huawei Technologies. The company found itself at the forefront of the US-China tech dispute nearly five years ago. However, today Huawei is steadily expanding its operations in the Middle East, including helping to build the first 5G network in the Gulf region. Finally, it has also signed agreements with Saudi Arabia’s state-owned telecommunications company.
China’s relations with Middle Eastern countries are also good news for Hong Kong. Hong Kong Governor John Lee led a delegation to Saudi Arabia in February, seeking state oil giant Aramco to sell shares on the Hong Kong stock exchange.
Source: Wall Street Journal
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