Jordan keen to profit from China's robust growth

The kingdom played host to the second Arab-Chinese Businessmen conference which saw close to 1,000 Chinese and Arab delegates look to establish more bilateral trade and investment. A number of government officials and industry figures were looking to secure agreements across various sectors including energy, tourism, transportation, finance and insurance at the two day event, which was organised by the Arab League General Secretariat.

Tiger economy

The Arab world's readiness to tie up more deals with China is understandable. The country has recorded double digit growth for the past four years and while a number of analysts have predicted a slight downturn in 2007, a recent World Bank report revised its GDP growth prediction upwards to 10.4 per cent and also estimated a current account balance amounting to about 11 per cent of GDP, or $340bn. China witnessed an impressive six fold increase in its GDP in the 20 years up to 2004.

China's stock markets have been booming with the Shanghai Composite Index recently hitting a new record high, while the powerhouse's foreign exchange reserves passed the $1 trillion dollars mark last year and now account for more than 20 per cent of all global reserves.

Unsurprisingly, China's stellar economic growth has also made an impression on the Middle East. The country is the world's second biggest consumer of crude oil, after the US, and this fact alone provides a major platform for sizeable trade with much of the Gulf, if not the rest of the Middle East. Indeed, according to the UAE's Economy Minister, Sheikha Lubna Al Qasimi, the GCC nations are anticipating a 20 per cent spike in trade with China this year, with the total passing $17bn.

Driving through a deal

Jordan of course does not have the luxury of copious reserves of oil and so needs to engineer other ways of attracting Chinese capital. The signing of an agreement on the sidelines of the Arab-Chinese Businessmen conference for the establishment of a car assembly and manufacturing plant in the kingdom is a small but significant step forwards.

China's Hebei Zhongxing Automobile and Jordan's Ayass Motors have formed a $30m joint venture and hope to have the facility operating sometime in 2008, with an initial production capacity of 4,000-6,250 vehicles, according to the AFP news agency. The firm will manufacture two and four wheel drive cars, as well as pick-ups, and it will look to ramp up production to 12,000 units a year before ultimately hitting 24,000. The firm sees its market as primarily being in Eastern Europe and the Arab region.

The factory will be built in Um Rasas, to the south of Amman, and it is hoped the venture will generate around 17,000 new jobs. Ayass CEO, Mazin Ayass, said investment in the firm will be lifted gradually with $50m being pumped into the project in the first five years and a total of $230m could eventually be earmarked for it. Ayass added that around 25 per cent of the vehicle parts will also be manufactured in Jordan and this too will have a positive effect on the kingdom's industrial sector.

The total volume of trade between the Arab world and China is expected to hit a hefty $100bn in less than a decade and it was already more than halfway there back in 2005. It is a sure-fire bet that the overwhelming majority of this trade will be between the oil rich Gulf and China, but Jordan, with its strategic location and steely determination to raise foreign direct investment levels, also stands to gain and it will surely build significantly on a total Chinese investment in the kingdom of less than $50m at the present time.

See also:
Gulf based investors set up shop in Jordan


FDI hitting new levels in Jordan