Decline in trade and investment avenues pushing China towards WANA region

The passing year has been momentous for China and its globally linked economy. While an indiscriminate use of lock down policy by Chinese government has forced its export fueled industries to a grind, a wary world has begun to look beyond the country for imports. A dazed Beijing now confronts a diversification strategy wherein major countries are looking at China+1 system for sourcing their needs. The strategy is likely to deal a serious blow to Chinese exports in the coming years. One way to tackle this looming decline in demand is through expediting Chinese venturing into new arrangements with under-explored geographies.

China’s recent overtures towards West Asia North Africa (WANA) countries suggest that it is looking for a respite by forging investment and trade ties with these countries. On the other hand, WANA nations seem keen to receive Chinese support in infrastructure, weapons procurement, oil exploration, space research, and sustainable development. The rising popularity of Chinese language studies is another pointer in the region. China has also deepened engagement with many countries here by signing strategic cooperation agreements with Algeria, Egypt, Iran, Saudi Arabia and the UAE. The last one year saw many high profile visits and agreements with several WANA countries including visit of the foreign ministers of Bahrain, Kuwait, Oman and Saudi Arabia to Beijing.

In recent years, China has emerged as the main source of foreign investment in the Middle East countries. Energy cooperation with these countries has long been on Beijing’s radar. Notably, China-WANA energy cooperation has enhanced even as Saudi Arabia and UAE, major oil producers of Gulf, have had disagreements with the US over the issue of energy, particularly production cuts announced by OPEC+.
In October 2022, Saudi Foreign Minister Faisal bin Farhan and Chinese Foreign Minister Wang Yi co-chaired the 4th virtual meeting of Political and Foreign Affairs Committee under the Saudi-China High-Level Joint Committee. Affirming its support to ‘One China Principle’, Saudi Arabia revealed plans to host three summits with China, namely, Saudi-China summit, Gulf Cooperation Council (GCC)-China summit and Arab-China summit, on the sidelines of forthcoming visit of President Xi Jinping to the Kingdom.

Apart from cooperation in clean hydrogen and nuclear energy, the two countries are also believed to be pursuing joint investment in Belt and Road Initiative (BRI) countries. Reportedly, the two sides are mulling establishment of a regional centre for Chinese manufacturers in Saudi Arabia. For growing people-to-people connections with the Kingdom, Beijing is working to increase civil aviation collaboration and bilateral air traffic. China Railway 18th Bureau Group Co. Ltd. is working with a Saudi firm Abdulali Al Ajmi Co. for on a Tunnel project which includes development of tunnels, roads, telecom network, electricity and water distribution network.

In Kuwait, the Chinese giant, Huawei is involved in multiple projects, including the 5G, cloud services and ICT training to Kuwaiti youth. The company was recently presented with ‘Best Cyber Security Assurance’ award. In Iraq, China Petroleum Engineering & Construction Corp (CPECC) signed a three-year contract worth $386 million with Basra Energy Company Limited in October 2022 for the construction of new crude oil processing facilities at Rumaila Oilfield. Iraq’s Prime Minister Mohammed Shia al Sudani is believed to be strengthening the Chinese presence in energy sector. Similarly in Qatar, a Chinese state-owned military equipment trading, M/s China Vanguard Industry Corporation (CVIC) is supplying to Qatar Armed Forces. The supplies include missiles, auxiliary equipment, spare parts, and technical training. In Africa, Morocco has emerged as an important destination for Chinese investments with more than 80 projects across the country. It was the first North African country to sign the BRI cooperation plan. Morocco also signed the ‘Joint Belt and Road Implementation Plan’ in January, 2022. Though China has made the initial moves for covering the WANA region through its investment blanket, it remains to be seen to what extent these countries get into Chinese fold. Considering the Chinese track record of laying debt trap for developing nations, the countries need to tread cautiously.


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