Economy

China looks to Arab states for opportunities

By Ding Qingfen (China Daily)
Updated: 2011-04-09 09:13

The nation will increase investment in energy and infrastructure sectors

BEIJING - China will increase its investment in the energy, infrastructure and labor-intensive manufacturing sectors in Arab nations because the political turmoil sweeping through the region is expected to create "more opportunities", said the Ministry of Commerce.

An official from the West Asian and African Affairs Department of the ministry, who declined to be named, made the remarks on Friday during the opening ceremony of the Center for China-Arab Economic and Trade Relations in Beijing.

Since last December, some Arab and North African nations including Tunisia and Libya have witnessed social unrest, and many are worried the political upheaval will hurt Chinese investment in the region.

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However the ministry has no such concerns. It said the Arab nations will probably turn to China and become more eager to strengthen economic and trade ties rather than going to the West, where some nations are still troubled by the debt crisis.

"Their willingness is growing stronger and their demand for capital and expertise from China is increasing. This is a general trend," said the ministry official. "There are huge opportunities there."

China will try to enhance energy cooperation with Arab countries in "tapping, reserving and processing crude oil and setting up a diversified and solid energy cooperative mechanism", considering that Arab nations will "open wider" in the energy industry, their pillar industry, to revive their economies, said the ministry.

As the Arab and North African nations are expected to enhance efforts to develop labor-intensive industries to address job shortages, China will also encourage its domestic companies to "invest more in the manufacturing sectors of electrical home appliances, automaking, light industry and textiles".

Another opportunity lies in the infrastructure sector. China will "encourage companies to develop contracted projects specifically in high-end sectors, such as telecommunications and transportation".

The League of Arab States is composed of 22 nations including Tunisia, Libya and Sudan. They have become important destinations for Chinese investors thanks to rich energy resources and a huge consumer base.

By the end of 2010, China's accumulated direct investment in Arab nations reached $15 billion, including non-financial investment worth $4.2 billion. The nation's total contracted projects were valued at $116.9 billion.

China's investment has been mainly distributed in the energy, light industry, textiles, automobile and chemical sectors. China has a large volume of investment in energy in Sudan, Egypt and Algeria.

Comparatively, the Arab nations' total investment in China was estimated at $2.15 billion by mid-2010, mainly in the real estate, chemical and food sectors.

Despite the investment zeal, the political turmoil in some Arab nations has "seriously damaged" Chinese investment there, said the Ministry of Commerce

So far, 75 Chinese companies have invested in Libya, including 50 large contracted projects valued at $18.8 billion. More than 500 Chinese companies have invested in Egypt.

"While the situation is still in limbo, safety will be a big concern," said the official.

The ministry said recently that China will not make any further investment in Libya until the situation stabilizes.

The Arab nations are the eighth-largest trading partner for China. In 2010, Sino-Arab trade reached $150 billion.

China's imports from the Arab nations are mainly crude oil, chemicals and fertilizers, and its exports are mechanical and electrical products, shoes, textiles and tires.

While there is still no timetable on when the turmoil will end and the supply of crude oil remains unstable, "the bilateral trade will probably drop to around $100 billion this year", said Yang Fuchang, former vice-minister for the foreign affairs.