Buckinghamshire: At the end of November 2022, UK prime minister Rishi Sunak announced that the “golden era” between Great Britain and China was over.
China may not have been too bothered by this news however, and has been busy making influential friends elsewhere.
In early December, Chinese president Xi Jinping met with the Gulf Cooperation Council (GCC) a group made up of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates to discuss trade and investment. Also on the agenda were talks on forging closer political ties and a deeper security relationship.
This summit in Saudi Arabia was the latest step in what our research shows is an increasingly close relationship between China and the Gulf states. Economic ties have been growing consistently for several decades (largely at the expense of trade with the US and the EU) and are specifically suited to their respective needs.
Simply put, China needs oil, while the Gulf needs to import manufactured goods including household items, textiles, electrical products and cars.
China’s pronounced growth in recent decades has been especially significant for the oil rich Gulf state economies. Between 1980 and 2019, their exports to China grew at an annual rate of 17.1 per cent. In 2021, 40 per cent of China’s crude oil imports came from the Gulf more than any other country or regional group, with 17 per cent from Saudi Arabia alone.
And the oil will likely continue to flow in China’s direction. In 2009, it was predicted that China would require 14 million barrels of oil per day by 2025. In fact, China reached that figure in 2019 and is expected to need at least 17 million barrels per day by 2040. At the same time, the US became a net oil exporter in 2019 and thus achieved a longstanding foreign policy goal: to overcome its dependence on Middle Eastern fossil fuels.
China has benefited from increasing demand for its manufactured products, with exports to the Gulf growing at an annual rate of 11.7 per cent over the last decade. It overtook the US in 2008 and then the EU in 2020 to become the Gulf’s most important source of imports.
These are good customers for China to have. The Gulf economies are expected to grow by around 5.9 per cent in 2022 (compared with a lacklustre 2.5 per cent predicted growth in the US and EU) and offer attractive opportunities for China’s export-orientated economy. —PTI