Is China an alternative super power for the Muslim World?

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Due to the West’s anti-Islamic policies, Muslim countries in the Middle East, Central Asia, and Africa are turning to China for mutual benefits through trade and investment

By Abdul Shakoor Shah

The Arabic saying goes “seek knowledge, even if it takes to go to China.” It entails that China was long known to the Muslim world for its civilization, prosperity, knowledge, and development.  It also means that fostering closer relations with China was encouraged at least for knowledge, technology, and scientific purposes. The rise of China is vividly magnetizing the world. The anti-Muslim policies of the west and American invasions have compelled the Muslim world to look for an alternate power for alliance and reliance. China is also ambitious of such collation and their support. The oil-rich Muslim countries in the Middle East, Central Asia, and Africa are chipping with China for mutual benefits. With the exception of oil requirements and trade benefits of emerging China, its petroleum dependency on Saudi Arabia, Iran, Kuwait, Oman, and Qatar in the Middle East is another thread of connectivity.

Saudi-China trade relations

Saudi-China diplomatic relations since 1990 have been very fruitful. KSA is the world’s largest petroleum exporter with 261.9 billion barrels of assets. China, with ever-escalating oil requirements, developed consistently strengthening strategic partnerships with KSA. Chinese purchases touched 86,000 barrels per day in 1995. The Saudi oil gush to China surged extremely by 59% in 2005 following the 9/11 occurrence. The oil trade pulled Saudi-China to the 2006 accord. This made KSA the largest crude oil supplier, trade partner, and second-largest export market for China in West Asia and Africa. Consequently, bilateral trade jumped from $2 billion in 1999 to $15 billion in 2005 and almost $40 billion in 2010. KSA is investing profoundly in China. Alike, China completed several projects ranging US$7.95 billion. There were 82 Chinese-financed projects and 19,000 Chinese staff in KSA.

In 2009, KSA-China signed 35 new agreements, some of them reaching US $6.27 billion. The prospects of $60 billion were achieved by 2015. During 2003-8 China-Saudi trade recorded a 30 to 50% annual growth rate. In 2008 it reached 64.7 % China’s daily crude oil imports rose by over 12 % in 2008 to 800,000 barrels. It touched 13.9 % to 200 million tons in 2009. China also arranged nearly 13,000 Muslims for the KSA pilgrimage. According to COMTRADE, China-KSA exports were US$23.92 billion during 2019, ChinaKSA had the highest trade ever in history during 2020.

Kuwait’s loan to China

Kuwait-China ties have improved immensely since 1971. It was further triggered in 1990. China has more than 17 high-profile state visits during 1989- 2008, while 21 like Kuwaiti visits were made during 1990-2009. Kuwait-China trade volume reached $2.8 billion during 2006 -7 which was one-fifth of the total trade between China and the GCC states during 2006-7. Kuwait-China trade touched US$6.78 billion in 2008. Chinese exports were US$1.74 billion and imports US$5.04 billion. Kuwait has been the largest supplier of preferential official loans to China among Arab countries. From 1982 till now, Kuwait has provided China with US$ 810 million of loans on favorable terms. In 1998, Kuwait bequeathed US$3 million of cash to China during China-floods. Kuwaiti-Chinese companies signed an accord for a 35 kilometer long Sea Bridge valued at Dhs1.8bn.

Kuwait also constructed a $5 billion refinery and petrochemical industry in China in 2010. The National Bank of Kuwait has operated a branch in Shanghai. Kuwait-China Investment Co. was established in 2005 with a total share of $300 million.

Investments in Iran despite US sanctions

China enjoys unique economic relations with Iran with multi-billion dollars of investment. The Iran-China deal of US$2 billion dollars was signed in 2007. China could not be deterred by the USA sanctions and imported 170,000 BPD of oil from Iran in 2000, which jumped to 244,000 BPD in 2006. Sinopec of China is going to purchase 250 million tons of liquefied natural gas from Iran in the coming decades.

Iran is the first Muslim country where Chinese automaker Cherry has invested $375 million. More than 100 Chinese state-owned companies operate in Iran. Compared to just $400 million trade transactions only a few years back, China was Iran’s top-most trade partner in 2009 with bilateral exchange totaling $21.2 billion which crossed $200 billion by 2020. In the energy sector, the annual trade for Iran is about $16 billion. China signed $12 billion contracts in the Iranian hydrocarbon sector during 2005-2010. China-Iran state-owned companies signed a $1.76 billion deal to develop Iran’s North Azadegan oil field, which is producing more than 75,000 barrels of oil daily.

In 2009 Iran-China signed a $3.2 billion gas deal to extract some 10 million tons of liquefied natural gas. In 2009 Iran-China signed a number of agreements totaling $17 billion in economic cooperation. The same year China-Iran signed another deal of $5 billion. The project is producing roughly 2 billion cubic meters of gas and 70,000 barrels of gas condensates daily. The trend continued during 2010. The value of bilateral trade was more than $200 billion by 2020. The Belt and Road project would connect the country’s heartland with Central Asia, linking China with Iran via Kazakhstan, Uzbekistan, and Turkmenistan. Kazakhstan has grown to be an important player in the global oil market with an estimated 29 billion barrels reserves.

More ventures in the Muslim world

China is also investing in Kazakhstan. CNPC has acquired 60 % of Kazakhstan’s Aktobermunaigas Corporation. Several projects have been bilaterally completed. China has signed a $600 million deal with Uzbekistan’s Uzbekneftegaz and joined a consortium of Malaysian, South Korean, and Russian companies to carry out exploration near the Aral Sea. China-Indonesia and Malaysia also enjoy cordial economic and political relations. Owing to long diplomatic relations, both countries have learned a lot from China. Indonesian investments in China are almost 20 times more than Chinese investments in Indonesia. Indonesia has invested 970 projects valuing US$ 2.024 billion in 2003 while Chinese joint investment is totaling US$ 0.27 billion. Banks and insurance companies are opened bilaterally. Bilateral trade is flourishing in the energy sector.

In 2002, China inked a deal worth $585 million for Indonesia. It made China the largest offshore oil producer in Indonesia. In 2004 Chinese company succeeded in purchasing 20.77 % of British BG’s shares and it became the biggest stockholder of Muturi Ltd. In 2002, China’s largest oil company made its first overseas purchase in Indonesia worth $216 million. Apart from economic ties, the military relation of China and the Muslim world are getting stronger. The number of weapons purchasing Muslim countries is moving to China. In terms of quantity of arms ordered, Pakistan ranks first, followed by Bangladesh, Iran, Kuwait, and Sudan. Among these countries, Iran and Sudan are under international economic sanction, and Pakistan and Bangladesh have been traditional recipients of Chinese arms since the 1960s. Other Muslim countries Saudi Arabia, Nigeria, Niger, Gabon, Egypt, Indonesia, UAE, and Iraq have long been arm purchasers from China.

The writer is an English Professor and freelance columnist, based in Lahore, Pakistan.

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