Secretary-General of the Gulf Cooperation Council (GCC) Abdulrahman Attiya recently announced that finance ministers of the six-nation alliance will visit Beijing from May 30 to June 2 to sign a landmark economic cooperation agreement with China. Regarding China as a huge promising market, the GCC pins great hopes on the framework agreement to "open negotiations for further deals and finally strike a free trade accord," as said Abdulrahman Attiya.
Obviously, the GCC, which groups Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates (UAE), is developing economic ties with China in a pattern copying that of its trade with the European Union (EU). The GCC made a framework deal with the EU 16 years ago, and the two sides are expected to ink a free trade accord in November.
Traditionally, the GCC states have given priority to trade relations with European and American countries. Nonetheless, witnessing China's entry into the World Trade Organization and the nation's sustained high-speed economic growth, the GCC states, lured by the singular Chinese market with a population of 1.3 billion, began to readjust their trade policies, aiming at further boosting trade relations with China and taking more shares of the Chinese market.
Over the recent couple of years, there has been a progressive increase in trade volume between the GCC and China. For instance, the trade volume hit a record high of US$16.9 billion in 2003, up 46 percent than that in 2002. And China has become the GCC's fourth largest trade partner after the EU, Japan and the United States. However, holding that the above-cited trade volume takes only 2 percent of China's total foreign trade volume, which is unmatched with the nation's colossal market, the GCC wishes to further expand trade cooperation with China.
Despite a total population of merely 30 million, the GCC market is of world renown, due to its oil industry, geographical position (a hub of communications linking Asia, Africa and Europe), convenient sea and air transport, and low-tariff free trade in particular.
Chinese businessmen can be found everywhere in the GCC states. In the UAE alone nearly 500 Chinese firms are doing business. Chinese commodities in large pouring into the Gulf region have greatly reinforced the status of the GCC states as an entrep?t trade center, and stimulated the development of tourism and other relevant industries in the region. With the aid of the GCC states, China also expects to open more markets in the Middle East, Central Asia and Africa. Currently China and the UAE are jointly constructing a Chinese commodity distribution center in Dubai, a worldwide famous free port for entrep?t trade. After its completion, the center -- the largest overseas commodity transaction platform established by China -- will provide business negotiation venues, storehouses as well as transportation and accommodation services for about 5,000 Chinese enterprises.
Oil deal
The verified oil reserves in the GCC states reach nearly 500 billion barrels, making up 45 percent of the world's total. Relying on the oil industry, the GCC states have meanwhile developed petrochemical and aluminium products industries.
In sharp contrast, the GCC's oil output accounts for only 20 percent, and its oil export, 13 percent, of the world's total.
The latest report by the Organization of Arab Petroleum Exporting Countries (OAPEC) predicts that from now on until 2020, the global crude oil demand will increase at an annual rate of 1.7 to 2 percent. Within the next 30 years, Arab oil producing countries are supposed to invest at least US$1 trillion in oil and gas production to meet the growing global demand. The GCC states also need to expand oil export to gain a firm foothold in the international oil supply market.
As post-war Iraq has gradually resumed its crude oil supply, the GCC states are losing some of their traditional oil export markets. For instance, in the past, roughly 60 percent of the UAE's exported oil flew into Japan. However, since last November, Japan has reduced its oil import from the UAE from 987,000 to 793,000 barrels per day, at a rate of 19.5 percent. At the same time, Japan reduced its oil import from Saudi Arabia, Qatar and Oman correspondingly.
Against such a background, China's steep rise in oil demand due to its economic growth has grabbed the attention of the GCC states. At present, China has oil deals with only three GCC oil producing countries. In 2003, China imported over 10 million tons of crude oil from Saudi Arabia, some 70 million barrels from Oman (approximately seven barrels weight one ton), and about 2 million tons from Kuwait. Facing China's colossal oil consuming market, the GCC as a whole will spare no efforts to pursue deeper cooperation with China.
(China.org.cn by Shao Da, May 28, 2004)
