“I think we’ve got to put china’s ‘slowdown’ into perspective. People are saying ‘it’s a tragedy that Chinese growth has fallen to 7.5 percent’ but most countries would kill to have 7.5 percent growth,” David Eldon laughs.
“China doesn’t sit on its hands… even Chinese businesses are looking for alternative ways in which to find business — this region clearly being one of them,” he adds.
If anyone is well-placed to comment on trade relations between the Middle East and China, it is Eldon. HSBC Middle East's chairman has spent much of his 48-year banking career living and working in the Gulf and China and says he sees remarkable opportunities for the two regions working together.
China, fuelled by a generation of economic reform, is set to overtake the US as the world’s biggest trading nation by 2016 amid rising demand from emerging markets, HSBC said in February. Rapidly rising oil prices coupled with increasing investment in infrastructure in the Middle East provide clear synergies with China. Bilateral trade between the two surged to $190bn in 2010 while Chinese trade to Qatar, Bahrain and Egypt is expected to grow above fourteen percent annually over the next five years.
“It clearly has to increase. I think the linkages that used to exist have fallen away so what we’ve seen over the last few years with commodities like oil, as Asia has grown up, has been the start of a renewed set of relationships [and] you’ve now got investment starting to go in both directions,” says Eldon.
“The prospects for its growth over the next few years, I think, are remarkable. You are beginning to see it already, for example in terms of infrastructure. China has developed a lot of expertise in building all sorts of things into the western parts of China, into remote areas that are difficult to work in. They’ve built up a lot of expertise and they provide a source of labour, which is skilled at reasonable prices so people in the Middle East will be interested,” he adds.
Chinese Premier Wen Jiabao conducted a six-day tour of the Gulf in January in a bid “to promote the development of China-Arab relations and relations with the Islamic world,” China’s Foreign Ministry spokesman Liu Weimin said in January. Jiabao signed several deals with Gulf states during his visit, including a $5.54bn currency swap agreement with the UAE that aims to boost two-way trade between the two countries, and a nuclear pact with Saudi Arabia.
Despite the huge potential that China’s rising status represents for companies looking to grow their business, Eldon admits China is not always an easy country to navigate. “At the moment I think [the biggest challenge] is the knowledge or perhaps the lack of it,” he says.
“I see many otherwise sensible organisations — partly because the board of directors has said you have got to be in China — go to China, arrive and leave their common sense behind them and do some of the most amazing deals they wouldn’t dream of doing anywhere else,” he adds.
It is not only China’s resilient growth and strong public finances that have dominated headlines in recent months. Much of the world’s focus — and indeed the Middle East’s — has centered on China’s economic policies as it seeks to protect itself from a slowdown in foreign demand.
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