Commerce and economy ministers from China and member states of the Gulf Cooperation Council have agreed to boost ties in the energy sector and accelerate the process leading up to a free trade agreement.

Li Jinzao, China's vice-minister of commerce, said China is one of the world's biggest oil importers while the GCC states are the world's largest producers of crude oil, accounting for about 20 percent of global supply and 40 percent of proven oil reserves.

China passed the United States to become the world's largest net importer of oil, rising to 6.12 million barrels in 2012, while the US dropped to 5.98 million barrels in the same period, according to China's General Administration of Customs and the US Energy Information Administration.

“The Chinese government is not only encouraging capable Chinese companies to invest in the infrastructure and manufacturing sectors, but also offering new technologies for building advanced oil and gas storage and transportation facilities, and petroleum engineering solutions to the member states of the GCC,” Li said.

Established in Abu Dhabi in 1981, the GCC is a political and economic union of Arab states comprising of the United Arab Emirates, Bahrain, Saudi Arabia, Oman, Kuwait and Qatar. It accounted for 70 percent of the trade volume between China and the Arab League last year.

Thanks to the internationalization process of the Chinese currency, started in 2009, Chinese companies are allowed to use yuan (or renminbi) to make trade payment with business partners in the GCC.

China-GCC trade reached $155 billion in 2012 and GCC members exported $101 billion worth of products to China. Trade between China and the GCC mainly focuses on the oil, steel, electronic product, mechanical and textile sectors.

The UAE and Saudi Arabia are major export destinations for China, with its exports to the two countries accounting for more than two-thirds of exports to the GCC. Heads of China and the Arab states set a trade target of $300 billion by 2014.

“By 2015, 55 percent of energy consumed by China will come from the Gulf region, China will overtake India to become the UAE's largest trading partner by 2015, when trade between the two countries will reach $60 billion in goods value,” said Abdullah Saleh, vice-minister of the economy of the United Arab Emirates.

The Gulf nation is planning to explore China's Muslim food market, valued at $3.7 billion in 2013 and increasing by 11 percent annually, according to a report from the UAE ministry of foreign trade.

“To a certain extent, trade between China and the UAE will be further boosted by the upcoming free trade agreement between China and the GCC,” Saleh said. “This agreement is highly likely to be signed by both sides between October and December this year.”

China and the GCC launched free trade agreement negotiations in 2004, with both sides reaching consensus on most areas of goods trade after four rounds of ministerial-level talks.

“We are confident that the bilateral economic ties have remained close in recent years and see a significant increase in trade volume, especially from our oil industry,” said Ahmed Dheeb, Oman's vice-minister of commerce and industry.

Because the GCC is a major oil exporter, setting up an FTA with it will ensure crude oil supplies for China. Therefore the FTA can be regarded as China's oil guarantee for development.

“From a long-term perspective, we will also turn our attention on the investment fields of new energy, manufacturing and dry-land farming, because we are willing to gain the opportunity of sustainable development and look for a more comprehensive cooperation,” said Dheeb. “Chinese joint ventures, construction projects and technologies will surely be needed.”

Hou Jinhua, professor of international trade at Ningxia University in Yinchuan, said the FTA will help Chinese enterprises further explore the Middle East market, where Chinese goods are in high demand.

“The GCC is close to Asian, European and African markets, it is a good region for Chinese companies to set up manufacturing facilities, logistics centers and financial service branches,” Hou said.

The GCC has also made trade and investment agreements with the US and a number of Arab nations, including in North Africa.

Chinese investment and their products made in this region can also enjoy favorable tax policies.

“The FTA with the GCC will stimulate companies in the Gulf region to set up petrochemical enterprises in the Chinese market, which can promote industry efficiency and reduce energy prices,” Dheeb said.