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Trip signals China's growing role in MENA

Updated: 2016-01-22 09:40
By Farzam Kamalabadi (China Daily Africa)

Nation's peaceful policies primed to enhance multi-win geopolitical, financial and commercial relations

The visit by President Xi Jinping to the Middle East and North Africa has fate-changing, history-making significance.

Coming right after the launch of the Asian Infrastructure Investment Bank, it signals the official launch and execution, as well as deeper implementation, of the Belt and Road Initiative, which has far-reaching strategic implications.

Trip signals China's growing role in MENA

Moreover, it signals China's increasing role in affairs in the Middle East and North Africa, known as the MENA region, which has an important geopolitical position, comprising the world's leading oil and gas producers, and a megarich yet early-stage market with colossal room for further Chinese participation.

The careful and wise selection of the countries Xi will visit - Egypt, Saudi Arabia and Iran - has further implications.

First, the visit is not limited to Arab countries, as it includes Iran. Second, the visit is not limited to the Middle East, but also covers North Africa. Third, it starts with the Gulf Cooperation Council's leading nation, and includes the most populous Arab country.

Several regional and global development factors also enhance the visit's significance. They are:

the prolonged drop in global oil prices for the foreseeable future;

Trip signals China's growing role in MENA

the potential shift in global capital flows due to slowdowns in the United States and European economies, and in economic growth in the Gulf Cooperation Council and MENA region, and changes to the wealth situation and investment allocations;

the volatile global stock markets;

the globalization of the renminbi and the need for fast, wide and vast placement;

the lifting of sanctions on Iran and the country's rapid entry to the global market;

the instability in the MENA region, and escalation of tensions and wars, with potentially larger divisions and wars, or even the downfall of nations and systems.

China's influential leadership role and positive functional contributions can be of decisive importance, while at the same time the win-win-win gains created can also be highly lucrative for all stakeholders.

China, which since the beginning of the millennium has adopted the domestic and foreign policy of "the peaceful rise of China" and "harmonious society", and has chosen peacemaker as its self-appointed mission and long-term global function, and has adhered unwaveringly to the policy of creating stability in the global new world order. It now has the opportunity to exercise its multilateral peaceful development balancer effect policies, and implement multi-win geopolitical, financial and commercial relations.

China's basic features of a peaceful domestic and international ancient culture and civilization, as well as its modern moderate religious and ideological policies and practices of unity in diversity and mutual peaceful co-existence, can have a positive, pacifying effect on inter-Arab and Arab-Persian relations. China's enhanced participation ultimately can lead to the creation of a well-developed and peaceful MENA region.

In addition, the bidirectional increase and multiplication of capital investments weaving the greater China region into the MENA region will see the ultimate creation of a solid super economy. A new financial hub and capital corridor between China and the MENA region will create a new Silk Road financial capital over the next decade.

Having masterminded much of the above by positioning and bringing the sovereign wealth funds of Kuwait and Qatar into ICBC and Agricultural Bank of China and CITIC assets, Future Trends Group has secured specific intent from numerous banks, financial institutions, royal families and family houses to invest in China, and vice versa. These include Doha Bank, Qatar International Islamic Bank, Al-Rayan Bank, Bahrain Islamic Bank, Bahrain Al-Baraka Bank, Al Zayani Investments, Abu Dhabi Stock Market ADX, Abu Dhabi Global Market ADGM, a host of mega financial payers who will take proactive action as a result of the agreements to be signed during Xi's visit this month.

Trip signals China's growing role in MENA

Saudi Arabia, Iran, Egypt, the Gulf Cooperation Council, other Arab countries, and the MENA region hold the following long-term opportunities for China:

steady and secure of supply of oil and gas, now more readily available and at much cheaper prices;

diverse and significant mining opportunities;

investments and/or contract bidding for infrastructure;

a second transfer of capital, technology, equipment and services in numerous sectors;

a series of industry and factory building capacities.

Although a major boost in bilateral regional collaboration is imminent in light of this historic visit, the blocks and barriers will remain solid, and for decades will impede meaningful mutual total immersion. These are what I call the "invisible great wall", not only in mindset, but also protection policies.

These include mental, habitual, cultural, linguistic and lifestyle comfort zone barriers, a lack of history of broad-based mutual participation, a lack of mutual "weaning" from the West, a lack of large-scale, top-level Arab foreign community presence in China, and deplorably close-to-zero Arab investor participation in China, and vice versa, except in Dubai, which has mostly small traders of Chinese products. There are many more elements that remain to be tackled and overcome.

Top among the corrective measures that need to happen during Xi's presidency is the vast increase and fast multiplication in mutual establishment of banking institutions and facilities.

Bahrain has traditionally been known as the Wall Street of the MENA region. Yet not one of Bahrain's 498 banks and financial institutions are established in China.

Saudi Arabia represents the Gulf Cooperation Council, and it alone occupies 70 percent of the council's population and economy. The council holds 50 percent of the world's oil and gas resources, as well as several trillion US dollars in cash wealth. However, there is a significant mismatch in the ratio of its huge share of oil supply to China in comparison with its negligible foreign direct investment in China, to the point that there is no GCC Holding Corp in China. This necessary readjustment is the core focus of Future Trends Group.

The author is president of the Future Trends International (Group) Corp, a group of companies conducting business in various regions, with a core focus on oil, gas and energy, and related funds and investments in China. The views do not necessarily reflect those of China Daily.

(China Daily Africa Weekly 01/22/2016 page10)

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