The rise of China in the Middle East

Another one from The daily Reconing Australia

This one by Ben Simpfendorfer

In early 2009, China overtook the United States as the world's largest exporter to the Middle East, having already raced passed the United Kingdom and Germany. It was the first time in over 60-years that the number one ranking had changed. The event marked an important milestone in what is a rapidly strengthening relationship between China and the Middle East.

But it is not Arab-style Wal-Marts who are responsible for the flood of "made-in-China" imports. It is instead individual Arab traders. Many of the traders can be found in Yiwu, a small Chinese city four-hours south of Shanghai. The city claims the world's largest wholesale consumer goods market selling the type of cheap gifts and household goods that sell in low-cost retail stores across the world.

Yiwu receives 200,000 Arab visitors annually. It is a virtual Arab market town with over a dozen Arabic restaurants lining its main street. However, the number of Arab visitors only started rising after 2001. Higher oil prices helped explain the increase, as they left Arab governments, and ultimately, Arab households with more money to spend on consumer goods.

However, visa restrictions were also important. How so? Western governments made it tougher for Arab traders to visit the West after September 2001 even as the Chinese government unofficially relaxed its visa policy. A few years ago, an Egyptian national might have taken 18 days or more to receive a visa to visit the United States. The same Egyptian could receive one to China in less than a day.

The number of Arab visitors to China surged as a result, filling up flights between Dubai and the main Chinese cities of Guangzhou, Shanghai, and Beijing.

The economic crisis has only intensified the trend. It's no wonder. The Middle East's imports from China are still growing, albeit in low single-digit figures, even as the United States imports from China collapse at near twenty percent rates relative to last year's levels. And Chinese manufactures are searching for new markets in the Middle East as a result. It is just one more sign of the change in demand.

Take Yang Linshan, for example, a fabrics manufacturer in the coastal province of Zhejiang. The Middle East now accounts for almost twenty percent of his exports. He is looking to set up a branch office in Dubai. Other manufacturers like Yang are meanwhile scouting for locations in the Middle East to build factories even as production costs at home rise. Egypt, with its low-cost workforce, is a particularly attractive investment destination.

There are other signs of the growing strength in trade relations. Wang Weishang, a local entrepreneur, also from the coastal province of Zhejiang, has set up Asia Business TV, a cable television channel. The channel broadcasts throughout the Middle East via Nilesat. It runs regular English-language promotional spots for Chinese products and services to the Middle East's traders.

It is individual stories such as these that help to underscore the depth of trade relations between China and the Middle East. And while the Middle East's $58 billion worth of purchases from China annually will grab headlines, it is the efforts of individuals like Yang Linshan and Wang Weishang that provide a more complete picture of strengthening economic relations between the two regions.