China-Middle East investment links: Opening up the oil road
The economies of China and the Middle East are expanding at breakneck speed. Over the past 18 months, they have woken up to the importance of investing in each other’s growth. But as Chinese and Middle East investors still find it difficult to cooperate, what can be done to help? Dominic O’Neill reports.
Is it the renaissance of the Silk Road? Speaking at a conference on China-Middle East investment links, Geert Bossuyt seems captivated by the prospect of the 13th century’s most important trade route regaining world prominence in the 21st century. For Bossuyt, head of Middle East structuring at Deutsche Bank, these two partners have the perfect recipe for wealth creation: labour from China and oil from the Middle East. As such, he says, it is not a Silk Road. This, he says, is the Oil Road.
For both regions, the synthesis should be simple, and crucial. The Middle East is the largest exporter of the world’s most wanted commodity, oil. China will soon take over from the US as the world’s biggest oil importer.
Already, the prospect of this vital link is prompting cooperation that has powered ahead in the past 18 months, with both sides finally waking up to the urgency of coming together. At present, the Middle East supplies more than 40% of China’s oil imports; that is set to rise to 70% by 2015, according to the International Energy Agency.
Trade flows between China and the Middle East have been rising more than twice as rapidly as trade flows between the US or Europe and the Middle East.