China and the GCC join forces to tackle financial crisis

Despite the global economic crisis, Sino-Arab economic relations are experiencing a renaissance which could be the foundation for one of the strongest economic links in the future.

Since HH Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai visited China in April 2008, relations between the UAE and Beijing have gained momentum.

Trade between China and the UAE reached $17.8bn, according to Minister of Foreign Trade Shaikha Lubna Al Qassimi, who recently visited Hangzhou, the powerful economic provice south of Shanghai.

It is not only toys and transport vehicles that are reaching the GCC, people are coming too: Some 2,000 Chinese firms operate, and some 200,000 Chinese are living and working in the Gulf state.

Saudi Arabia is also seeking closer ties to Beijing. On February 11, China's president Hu Jintao and King Abdullah inked an $1.8bn contract to build a railway line between the Holy Cities of Mecca and Medina, to be completed in 2013; China Petroleum and Chemical Corporation (Sinopec) and Saudi Aramco have also signed a major energy accord.

Trade volumes between the GCC and China have increased to $80bn in 2008 from $12bn in 2002.
Today, connecting the Arab peninsula with the Far East is a must for any international carrier in the region.

Dubai's Emirates Airline, Abu Dhabi's Etihad Airways and Qatar Airways introduced new routes to Beijing, Guangzhou and Shanghai in recent years.

Trade hurdles

However, hurdles remain. A free trade agreement (FTA) between the six GCC member states and the People's Republic has been pending since 2004.

The trade balance still remains skewed: Over 95% of the aforementioned trade volume between the UAE and China are Chinese exports to the Gulf state.

'When China speaks, you hear one voice, but the Arab world still speaks with many voices', says Palestinian trade Manager Dr. Jodi, who is based in Chouzhou in the east of China.

And while Beijing builds up its ties with Tehran, the GCC is still in the process of finding a Modus Vivendi with the Islamic Republic over security issues.

Security and financial issues are also on the table. China wants secure ways of transport, whilst it gets 46% of its oil deliveries from the Persian Gulf.

In the financial sector, first steps haven been taken. The world's largest bank, ICBC from Beijing, opened a branch in October 2008 in the Dubai International Financial Centre (DIFC). At Nasdaq Dubai, China Security and Surveillance was the first, and only, Chinese firm ever being listed in the Middle East.

Both sides are ready to write history, if they are willing to remove the aforementioned hurdles. As the founder of the People's Republic, Mao Zedong, once said: 'Every long march begins with a first step'.