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China Arab economic and trade cooperation under the background of Belt & Road Initiatives

By Luo Lin (People's Daily Online)    13:58, May 27, 2019

China's Belt & Road Initiative (BRI) is widely supported and welcomed by the Arab League.

In the 8th Ministerial Meeting of the China-Arab States Cooperation Forum (CASCF) held in Beijing last July, China and Arab countries signed three important outcome documents including the Beijing Declaration, the Action Plan for 2018-2020 and the Declaration of Action on China-Arab States Belt and Road Cooperation.

Earlier, China signed a nonbinding memorandum of understanding on the Belt and Road Initiative with 9 Arab countries, including Saudi Arabia, Sudan, Iraq, Oman, Qatar, Kuwait, Lebanon, Egypt and Morocco. At the same time, cooperation documents on energy with 5 Arab countries including the United Arab Emirates, Algeria, Saudi Arabia, Sudan and Egypt were signed as well.

Further, seven Arab countries including the United Arab Emirates, Saudi Arabia, Jordan, Oman, Qatar, Kuwait and Egypt have become the founding members of the Asian Infrastructure Investment Bank (AIIB). The Arab countries and Arab League actively participated in the first Belt and Road Forum for International Cooperation in Beijing in May 2017.

Through the continuous efforts, both sides have made significant progress in cooperation under the background of BRI.

Take the progress of key infrastructure projects as an example, China and Arab Countries actively participated in many construction cooperative projects, for example Algeria central port, Egypt's "10th of Ramadan" suburban railway, the Egyptian main power grid transmission line, the Egyptian glass fiber production line and the Egyptian small satellite assembly test center.

Besides, China and Arab Countries have made other achievements in areas such as the Abu Dhabi ports in United Arab Emirates, the extension of friendship port in Mauritania, the "Mohamed VI bridge" and the Morocco and China Reinforce Energy Cooperation in Morocco, the Road stadium in Qatar, the oil shale power station in Jordan, the independence power station project in Oman and the upper Atbara water conservancy project in Sudan.

Financially, China has set up 15 billion US dollars of special loans (loans for special purpose) to support industrialization in the Middle East and 10 billion US dollars in concessional loans (loans on favorable terms). Meanwhile, China has set up RMB clearing centers in Qatar and the United Arab Emirates, and has set up a joint investment fund totaling 20 billion US dollars with the two countries as well.

With the efforts from both China and Arab Countries, the cooperation between them has made remarkable progress, for instance the Sino-Egyptian Suez Economic and Trade Cooperation Zone, the Sino-Arab Industrial Park in Oman, Saudi Arabia Industrial Agglomeration Zone, and the United Arab Emirates Capacity Cooperation Demonstration Park in China have been continuously promoted.

On the other hand, China and Arab countries also focus on strengthening dialogue and consultation to exchange their bilateral development strategies and policies, and to push forward the BRI in line with the development strategies and policies of these countries based on their own situations.

Countries have expectations for mutual benefits and win-win results from BRI. For instance, China and Arab countries highly benefited from each other in economic and trade exchanges. Specifically, in recent years, the business environment of Arab countries has been improved, and the governments have made great efforts to attract Chinese investors.

Under this background, both China and Arab countries try to sign more BRI cooperation documents, such as the BRI and the "2030 vision" docking plan. Both China and Kuwait are working out a plan for bilateral cooperation. At the same time, the BRI projects have linked with other strategies like the Qatar's 2030 National Vision, Bahrain's Vision of 2030 Economic Development", Egypt's Vision of 2030 Sustainable Development Strategy, Morocco's Economic Takeoff Plan and the Development Strategy of the Industrial Revitalization Plan 2014-2020.

With the further development of BRI, it will also help the enterprises to actively express their expectations and demands as well as to participate in international economic governance.

In terms of economic cooperation, China should actively promote a road towards peace and friendship by enhancing mutual understanding and trust as well as strengthening all-round exchanges. As China is committed to peace and cooperation, openness and inclusiveness, mutual learning and benefit, it promotes cooperation in all fields, and works to build a community of shared interests, destiny and responsibility featuring mutual political trust, economic integration and cultural inclusiveness.

To keep the promise, China put forward proposals of policy coordination, facilities connectivity, unimpeded trade, financial integration and people-to people bond. Thus, BRI between China and Arab States is a road of building peace, prosperity, opening up, innovation and civilization between China and Arabia world, which helps expand the cooperation and serves the common interests of both sides. On the other hand, Arabian countries are supportive to the rules of the multilateral trading under the framework of WTO to achieve the goal of improving the sustainable development of all nations in the world.

However, there are still some problems in China-Arab economic and trade cooperation such as the unstable political situation in different countries, chaos, economic policy, and government efficiency as well as the strict legal and compliance rules in the Middle East, which reduces the confidence of Chinese investors. Also, the prominent financial risks make financing difficult. All these instabilities hinder the progress and development of Chinese-funded enterprises in Arab countries.

In this circumstance, the Chinese business community should strengthen its cooperation with the Arab commercial sector to standardize and give guidance to business activities under the framework of BRI.

Namely, Chinese investors are to promote the dialogues with Arab countries on the basis of the existing industrial and commercial cooperation mechanism, with a focus on the safety, taxation, social security and employment restrictions for Chinese companies. Chinese companies should strengthen the investigation and analysis of the market environment, political, legal, cultural and religious situation of Arab countries to improve the risk evaluation and risk control.

On the other hand, investors should build a good connection with legal agencies and committees to ensure the legitimate rights such as the intellectual property rights (IPR) of Chinese enterprises and prevent overseas legal disputes.

To sum up, China and Arab countries should put forward the BRI on the basis of their own situations and characteristics. And all sides must adhere to an inclusive approach towards cooperation, and promote openness to achieve mutual benefits.

The author, Prof. Luo Lin is the Director of International and Regional Studies Institute, Dean of Middle East Studies School, Director of Arab Studies Center, Beijing Language and Culture University. 

(For the latest China news, Please follow People's Daily on Twitter and Facebook)(Web editor: Hongyu, Bianji)

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