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China forging closer economic links with partners in the Gulf

By Wang Mingjie in Riyadh, Saudi Arabia | China Daily Global | Updated: 2024-04-30 03:41

This undated file photo shows neatly installed photovoltaic solar panels expected to provide 160,000 households in Abu Dhabi with clean electricity, forming a stark contrast to the desert. (Photo provided to China Daily)

Amid shifting global dynamics, China and the Gulf states are forging deeper economic connections, particularly in renewable energy, financial markets, and electric vehicles, experts have said.

The collaboration, which is rooted in their significant contributions to global GDP and mutual commitment to sustainable development, was reflected at the World Economic Forum Special Meeting in Riyadh, Saudi Arabia. The meeting ended on Monday.

Gao Jifan, chairman and CEO of Trina Solar, a leading Chinese solar energy company, said: "Gulf countries are actively engaging in the fight against climate change and demonstrate vast potential in the renewable energy sector, backed by significant technological innovation capabilities."

Reflecting this potential, in an initiative supported by the China-UAE Industrial Capacity Cooperation Zone, Trina Solar plans to open the Middle East's largest photovoltaic plant in the United Arab Emirates by 2027.

Lina Noureddin, managing director and CEO of Lamar Holding, which operates within Saudi Arabia's energy sector, emphasized the critical role of Chinese enterprises in the kingdom's Vision 2030 initiatives.

"The shift in Saudi Arabia from traditional government-led projects to more collaborative public-private partnerships has attracted Chinese companies," Noureddin said.

She also noted the societal benefits of these partnerships, including local talent development and direct foreign investments from Chinese financial institutions.

Ben Simpfendorfer, a partner at the Hong Kong office of the international consulting company Oliver Wyman, said: "The GCC's (Gulf Cooperation Council's) ambitions to develop clean energy opportunities will only bind the region tighter to China."

The GCC, which comprises the six Gulf states of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates, is pivotal in the burgeoning partnership.

China has established itself as a leading force in the clean-energy sector, holding substantial stakes in the global market in battery, wind, and lithium production.

According to UN Comtrade data, China's lithium battery exports to GCC countries surged by 26 percent from 2021 to 2022, with a striking 99 percent increase in the first three-quarters of 2023.

Financial integration is another promising area for China-GCC collaboration, with reforms in both sides paving the way for increased financial flow and investment opportunities.

These reforms have included Saudi Arabia easing foreign ownership limits and introducing a local derivatives market. The UAE has aligned its trading week with global standards to boost liquidity. And China's Stock Connect program has simplified access to its mainland market, which has encouraged cross-border investments.

Wilfred Yiu, deputy chief executive officer of Hong Kong Exchanges and Clearing, emphasized the strategic significance, saying: "As global economic growth shifts east, the importance of China and the Gulf region as growth engines is increasingly recognized."

The momentum is evident in the financial sectors as well.

According to the EY MENA IPO Eye Q4 2023 report, the Middle East and North Africa markets hosted 48 initial public offerings in 2023, collectively raising $10.7 billion. Similarly, Asia, with China at the core, led the way in IPO volumes in early 2023.

Omar Al Futtaim, chief executive officer of the Al-Futtaim Group, said: "The diverse partnerships between countries in the Middle East and China clearly demonstrate a commitment to collective growth, progress and development."

The group's collaboration with Chinese carmaker BYD to distribute electric vehicles in the UAE and Saudi Arabia exemplifies this growth.

"These initiatives highlight our commercial and economic goals, as well as our dedication to innovative solutions that consider and enhance both environmental and societal health," Al Futtaim said. "We are eager to pursue business partnerships that provide mutual benefits."

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