Q&A: Why China has become the Middle East's favorite customer
China’s stake in the Middle East is growing. It buys more oil and sells more goods in the region than any other country, including the US. So why did Beijing vote in favor of Iran sanctions?
The Chinese government needs oil to fuel its modernization and markets to sell its "Made in China" brand. Regional stability is crucial to getting both.Skip to next paragraph
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"Particularly since the Iraq war, the Chinese are more and more willing to sort of question whether ... [US] policy itself isn't becoming, in some ways, a threat to stability in the region," says Flynt Leverett, senior fellow at the New America Foundation.
As a result, China has become more involved in the region, particularly in Iran, from which China gets 11 percent of its oil imports. Mr. Leverett sees China becoming more concerned with "what they see as excessive US unilateralism in the region." Thus its interest in funneling the US desire for Iran sanctions through the United Nations Security Council, which would place some constraints on the US. A few questions regarding China's regional aims:
What's China's economic role?
Chinese trade with the Middle East has roughly doubled in the past five years. This year, China replaced the US as the top exporter to the region.
Chinese exports to the Middle East, including Turkey, were worth $57 billion in 2009, up from $28 billion in 2005. Chinese imports from the region stood at $61 billion, up from $34 billion in 2005. China's global exports for the same period grew 58 percent – from $760 billion to $1.2 trillion.
This rise in trade with the Middle East is not just oil-related. "It is small- time traders with their own shops or street stalls who are traveling between the two regions to either buy goods or sell goods," says Ben Simpfendorfer, of the Royal Bank of Scotland in Hong Kong and author of "The New Silk Road."
In addition, he says he's seen a marked increase in Chinese construction companies winning contracts across the region. Chinese banks continue lending to finance projects, so Chinese companies are able to bring not only their own labor and materials, but their own credit. "They're providing construction services that are at cheap prices compared to their competitors. They bring often the Chinese banks along with them," says Mr. Simpfendorfer.
How much Mideast energy does China consume?
China is the largest importer of Middle Eastern oil, buying just over a tenth of the crude oil exported by Gulf states. It's also Iran's top customer, taking 23 percent of Tehran's oil.