Monday, June 22, 2015

The great well of China

Oil is bringing China and the Arab world closer economically. Politics will follow

The Economist - Jun 20th 2015 | BEIJING, CAIRO AND RIYADH

FOR hundreds of years travellers have haggled over carpets, jewellery, spices and copperwork in the winding alleyways of Khan al-Khalili, Cairo’s traditional souk. Today the goods are more likely to have been mass-made in a factory in China than handcrafted in a local workshop.
Trade is central to growing ties between China and the Middle East. It has increased more than 600% in the past decade, to $230 billion in 2014. Bahrain, Egypt, Iran and Saudi Arabia all import more from China than from any other country. China is the top destination for exports from several countries in the region too, including Iran, Oman and Saudi Arabia. In April Qatar opened the Middle East’s first clearing bank to handle transactions in yuan.
The trade is driven by China’s thirst for oil. In 2015 it became the world’s biggest importer of crude, half of it—more than 3m barrels a day—from the Middle East (see chart). By 2035 China’s imports from the region will roughly double again, reckons the International Energy Agency, far exceeding that of any other nation. “This is a big shift rather than incremental change,” says Chaoling Feng of Cornell University.
Even the Middle East’s poorer countries offer a fertile market for cheap Chinese wares. In 2013 Xi Jinping, China’s president, proposed reviving the Silk Road, an ancient trade route linking China to Persia and the Arab world. Chinese cars crowd the streets of the Egyptian, Syrian and Iranian capitals. Chinese-made clothing, toys and plastics are ubiquitous. China sells a lot of small arms too, according to the United States Institute of Peace, a think-tank in Washington, DC.