China’s market has been the catalyst for international expansion for years. The international community is now left to wonder: How will China’s malaise affect the rest of us with this machine & nbsp slowing down and Chinese leaders expressing uncharacteristic concern?
Theoretically, China’s slower economic growth, including consumption, may result in a decline in the demand for imported goods and raw materials. This will be terrible news for both resource-rich nations and export-focused markets.
It might seem obvious that China’s financial slowdown would eventually have negative effects on the Middle East given the rely on power exports by oil-producing nations. However, this assumption is oversimplified given the intricate and diverse relationship between China and the area. Many factors stand out.
Second, slower economic activity doesn’t generally or immediately result in slower energy imports. China’s economic growth in 2022 & nbsp, at 3 %, was the lowest since the nation started its reform and opening period in 1979. However, China’s crude oil imports from last year — 508 million tons — were only & nbsp, 0.9 % lower than the previous year.
Furthermore, Saudi Arabia was the largest of the 48 nations that exported fuel to China in 2022, surpassing also Russia, which increased exports after the invasion of Ukraine. China’s crude oil imports from Saudi Arabia were almost the same as the previous year, at 87.5 million tons andnbsp.
Chinese oil imports from Saudi Arabia and the United Arab Emirates increased by 5 % and 9 %, respectively, between January and July this year compared to the same period in 2022, according to data gathered by China’s customs agency. Although Saudi Arabian oil exports fell by 12.4 % and nbsp in July compared to June, China’s overall demand for Middle Eastern oil is still high.
As China lowers fuel use to achieve its climate change goals, this path is probably going to continue.
attempting to invest abroad
Second, China will be more keen to attract foreign funding to preserve its economy growing because it has fewer resources available from its own resources. The inland power investments in China are a prime example of this. & nbsp,
For example, Saudi Arabia announced two significant opportunities in China in March. A new$ 10 billion facility in Panjin & nbsp will be able to refine 300,000 barrels per day and generate 1.65 million tons of petrochemicals annually. & nbsp,
The Saudi oil major will be able to acquire a 9 % stake in Zhejiang Petrochemical, an integrated refinery and petrochemical complex in the city of Zhoushan that produces 800,000 barrels of product every day, thanks to another project between & nbsp, Aramco, and the province of Che Jiang.
The action emphasizes China’s desire to bring in foreign investment to increase its domestic supply while also reiterating its commitment to position itself as the country ‘ leading energy companion.
It is well known that China’s faltering market has negatively impacted the Belt and Road Initiative. This decline in consumer spending during the Covid – 19 pandemic has contributed to this. However, BRI paying patterns differ from region to nation.
Between 2021 and 2022, construction spending and investments decreased by 44 % and 65 %, respectively, while sub-Saharan Africa and West Asia, as well as Arab and Middle Eastern nations, saw a significant increase in China’s economic engagement, growing by 21 % during the same time. & nbsp,
According to these statistics, Middle Eastern nations may be able to withstand China’s economic slowdown and also increase their share of Chinese foreign investing. & nbsp,
China will seek to participate in particular industries, generally based on the state of diplomatic ties. Middle Eastern states become preferred partners as relations between the United States and China deteriorate and American governments issue a warning against doing business with Taiwanese investors. & nbsp,
Sino-Middle Eastern industry is currently comparatively limited and focuses primarily on power. However, as nations like Saudi Arabia and the UAE work to diversify their markets and move away from an oil-based economy, China and China will collaborate on new areas, such as the development of new facilities, new energy sources, and digital and knowledge technologies. & nbsp,
China and the largest economy in the Middle East are rediscovering each other in their research for political position and economic chance after years of concentrating solely on fuel.
Long-term trends will & nbsp, for China and its Middle Eastern partners, defy momentary economic constraints. Even though China’s economic downturn will result in numerous global challenges, the Middle East does at least be less difficult to deal with due to the convergence of interests.
The copyright-holding Syndication Bureau, & nbsp, provided this article.
At the Stimson Center in Washington, Yun Sun serves as the director of the & nbsp, China & NbSp program and a co-director for the AndnBsP, East & NBP, Asia program.