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Investment rises with Arab countries

By Zhong Nan in Yinchuan | China Daily | Updated: 2013-09-17 07:24

China and Arab countries should step up "two-way" investment and create a sound environment for multilateral economic cooperation to capitalize on the high-return industries of services, finance and environmental improvement, said senior officials of Arab nations.

Abdullah Saleh, vice-minister of economy of the United Arab Emirates, said China's economic engine currently is being shifted from an investment-dominated economy to a consumption-based economy. This would offer Arab nations investment opportunities to China's service sectors such as logistics, tourism, healthcare, transportation and telecommunication.

The changing global economic map and the lingering debt crisis in the eurozone have caused big losses for government-backed Gulf financial institutions and their sovereign wealth funds in developed markets such as the United States, the United Kingdom, France and Germany in recent years. Many Arab countries are shifting their investment focus from the West to China and Africa.

Currently, China and the UAE are planning to establish a $10 billion joint investment fund for collaborative projects of high-end manufacturing, aviation, clean energy, agricultural technology and environment improvement. Both countries will contribute $5 billion to support these future programs.

"As more Chinese companies become interested in investing in the Gulf region, we discovered that China has been looking to invest in different ways, instead of focusing only on energy and infrastructure projects," Saleh said.

China's investment in the Arab states amounted to $1.4 billion in 2012, a 120 percent increase from a year earlier. Investment areas are being expanded from resource exploration, light industry, textiles and garments to machinery manufacturing and automobile assembly, according to China's Ministry of Commerce.

By comparison, Arab states' investment in China rose 77 percent to $230 million during the same period mainly covering the fields of petrochemicals, hotels, machinery, halal food and fertilizers.

Mohamed Al-Sulaiti, an economics specialist at Qatar's Ministry of Energy and Industry, said closer financial cooperation between China and Arab countries through varied methods can effectively coordinate monetary and investment policies to prevent financial risk created in other parts of the world. Such a cooperative mechanism could discover new market growth points and promote economic development in a stable way.

China and Gulf states are two major foreign creditors of the US. China holds $1.2 trillion of US Treasury bills and the Gulf countries have $2.5 trillion of US debt bills.

Al-Sulaiti feels that carrying out "two-way" investment would help different Arab governments "ease their heavy dependence on purchasing US debt and build a fair and flexible trading environment between China and Arab markets".

Saad Al-Deen Taleb, Yemen's minister of industry and trade, said there is a possibility that the US might be close to self-sufficiency in energy by 2030 after it started a shale gas revolution throughout the country, which would further cut the energy trade with Arab countries and draw more capital from these nations back to the US market to gain higher returns.

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