The Gulf presence in the Chinese economy is increasing while the American presence is declining, yet the connection to the United States remains a fundamental matter for both Beijing and the Arab and Gulf capitals, according to the British newspaper The Economist.
This comes at a time when Arab and Chinese economists and businessmen have unusually met openly in the Hong Kong Stock Exchange lobby during the "FII Priority" summit, which was the first meeting of its kind in East Asia. To The Economist, it appeared that this would not be the last.
The newspaper reported that Gulf investment funds have stated their readiness on several occasions to invest more capital in China, the world's second-largest economy. According to the newspaper's commentary, these funds believe they can do so without angering the West, which is increasingly worried about China.
The Economist pointed out that Chinese investment firms and their supported companies currently need friends. As the Sino-American geopolitical situation deteriorates, investments from the United States into the world's second-largest economy have plummeted. Chinese tech companies received $1.2 billion in American investments in 2022, down from $14 billion in 2018.
Merger and acquisition activities by American companies in China fell below $9 billion in 2023 compared to $20 billion in 2018. In contrast, the value of deals made by Gulf entities ballooned from a negligible amount in 2019 to nearly $9 billion in 2023, according to the newspaper citing data from LSGI, a financial information company.
Chinese venture capital firms do not disclose their limited partners, but they confirm in private conversations that the interest of Middle Eastern companies has greatly increased over the past two years, as mentioned by the British newspaper.
The Economist indicated that the United States remains a vital and essential partner for the Gulf states. However, the British newspaper also saw that the emerging Sino-Arab relations would not replace the weakening Sino-American relationship. It stated that the capitals of these countries would not be able to match the depth of experience of Silicon Valley in California and the capital markets in New York.
Indicative Numbers
- The volume of Chinese-Arab trade doubled in 2022, reaching $431.4 billion.
- During the first half of 2023, the total trade between China and the Arab countries reached $200 billion.
- Trade between the United States and the Middle East was around $212 billion in 2022, according to estimates from official US data.
- US exports to the Middle East were $103.6 billion in 2022.
- US imports from the region were $108.5 billion in 2022.
- The US trade deficit with the region was $4.9 billion in 2022.
- The total trade between China and the United States was $758.4 billion in 2022.
- US exports to China were $195.5 billion.
- US imports from China were $562.9 billion.
- The US trade deficit with China was $367.4 billion, according to China's official news agency "Xinhua".
