US trade war casts shadow over GCC-China ties

Largely positive about their growing ties with Beijing in recent years, countries in the region continue to look at the Chinese economy through the BRI, in the long term, which promises many global projects.

By Ehtesham Shahid (Reality Check)

Published: Thu 8 Aug 2019, 10:10 PM

Last updated: Fri 9 Aug 2019, 12:11 AM

They may look like a motley group of stern, photo-snapping people, but ignore the Chinese tourist at your peril. Around 1.6 million of them travelled to the GCC last year and their number is likely to reach three million in 2022.
If you argue that they don't spend enough, think again. A McKinsey report says over 70 per cent of Chinese tourists travel with family and friends. More importantly, they register the highest international per trip spending among global travellers.
According to one estimate, China is set to account for a quarter of international tourism by 2030.
No wonder, most countries in the region offer visas on arrival to them. Even logistically that makes more sense. Hotels employ mandarin hotline and concierge service while service providers try to add unique and personal touches to their travel experience.
Airports on both sides have played their part, registering the fastest rise in hub connectivity worldwide in the last 10 years. All the major regional airlines provide direct flights to various cities in China and have arrangements in place to connect more destinations and offer more flexible flight schedules.
Dubai-based Emirates Airlines operates 38 weekly flights in the sector. Abu Dhabi's Etihad Airways has 28 flights to China every week and has transported five million passengers to and from China since it took off for Beijing 11 years ago.
Yet, a very large segment of this market remains untapped. Only 7 per cent of people in this country of 1.3 billion have a passport. As is the case with any middle-class surge, upward mobility boosts spending capacity.
Albert Khaoutiev of the Allegis Group puts it rather succinctly. "Chinese middle class is becoming increasingly rich and spends more and more on leisure including luxury travel," he says. So where there is a demand, there is the will to supply.
But there are also other dimensions to the GCC-China relations some of which is fuelled by the belief that China plans big, and plans centrally and decisively. It also plans long-term.
The need to enhance cooperation is mutual, too. In the words of Khaoutiev, China sees the GCC as stable political partners and as a gateway to the Arab world in general. "It uses multilevel diplomacy through trade, culture, military and other forms of collaboration."
China watchers believe that most of these factors are likely to remain relevant going forward. Energy access and security will always be primary and China's ambitious Belt and Road Initiative (BRI) will continue to offer a vital paradigm for mutual investment and development.
But a new set of reality is also emerging.
After 30 years of China's economic rise, which dazzled the world and shouldered global growth, the dragon appears to be slowing down, at least for the moment.
Even before an ongoing intense trade war with the United States started, China experienced a slump in domestic demand and has a mounting debt problem.
The year 2018 was the weakest for the country since 1990.
As a result, questions that were unthinkable until recently are beginning to be asked. So, should the Gulf economies leverage more on China?
Largely positive about their growing ties with Beijing in recent years, countries in the region continue to look at the Chinese economy through the BRI, in the long term, which promises many global projects. So what are the bumps on the way?
Dr Josef Gregory Mahoney, professor of politics and executive director, International Center for Advanced Political Studies at the East China Normal University, says US-China discord is probably the biggest factor driving a potential great leap in China-GCC relations.
"The greatest danger to China-GCC relations is likely to be American unilateralism and associated diplomatic and economic pressures, to which some GCC member nations may feel especially susceptible," he says.
The good news is we are looking at an expansion of ties over and above the age-old energy interdependence and trade. Saudi Arabia continues to be the largest source of China's crude oil imports. The UAE-China trade, which is worth around $60 billion annually, is being projected for a threefold increase. So the avenues for cooperation are constantly growing.
Yet for Gulf economies, it should be a case of once bitten twice shy. While it is good to prepare for a set of projected tourist numbers but to believe it as written in stone could be tricky. It makes sense to reap dividends if these numbers materialise but it will help to have a backup plan if they don't. As far as catching a cold is concerned, both China and the US will have to sneeze perpetually for the contagion to reach here.
Ehtesham Shahid is a senior journalist based in Dubai.

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