Late last month, China’s ambassador to Saudi Arabia, Chen Weiqing, noted that nearly 90% of the free trade negotiations between Beijing and the Gulf Cooperation Council (GCC) have been completed. Indeed, bilateral trade is ticking along nicely.
Oil and gas were the most prominent exports from the Gulf countries to China, which is just as well because China is the world’s largest oil importer.
Meanwhile, China’s exports to the Gulf, including consumer goods, were characterised by the region’s growing consumer needs.
Chen stressed that communication continues between the two parties, but analysts wonder what other areas free trade agreements between the Gulf and China could include.
Gulf exports to China reached $131bn in 2021, while its imports amounted to $98.3bn. Oil and oil-related products accounted for 83% of Gulf exports to China.
In October 2023, GCC and Chinese economy and trade ministers met for the first time in an inaugural forum held in Guangzhou.
On the agenda was expanding the Joint Plan of Action for Strategic Cooperation in the Economic and Trade Fields. The most important issues raised relate to trade, investment, industry, and technology, in which China is now a world leader.
It is an incredible leap in just over a generation.
China’s seismic shift
China’s economic reforms began in the late 1970s. This monumental transformation, which addressed the distortions left by Mao Zedong’s socialist regime, gave the country huge export capabilities.
It flung its doors open to foreign investment and provided an attractive environment for US and European commercial giants.
They, in turn, brought modern technology and management system to their factories in China, from which the Chinese learned, but it was a win-win, with the big Western companies benefitting from China's lower labour costs.
In the early years, China's middle-class was much smaller, meaning that domestic consumer demand was far less than its manufacturing output. This quickly enabled China to become the world's leading exporter of products.
Europe, the United States, Asia, and the Gulf all welcomed these affordable exports, and trade relations between China and the Gulf countries only got stronger. China's economy got stronger, too. From 2006-22, it grew by more than 550%.
The Gulf has other trading partners around the world, including the European Union, the US, Britain, Japan, and in subsequent years, South Korea, but China is expanding into areas that other partners once dominated.
