In order to spur trade with the Arab nations, the Export-Import Bank of China has approved export sellers’ credits-government-sponsored credits provided by the bank to Chinese exporters-worth $3 billion over the past five years to finance trade with the Arab nations.

To date, China’s investment in the Arab countries has reached over $5 billion. Investment from Arab countries in China totals $700 million. For example, in 2003, Sinopec and Saudi Aramco established a joint venture in Saudi Arabia, 80 percent of which is owned by Sinopec. The company won a bid to develop a 388 million square km gas field in the Rub al-Khali Desert in eastern Saudi Arabia in March 2004.

In addition, Sinopec, Exxon Mobil and Saudi Aramco jointly invested in a refinery plant in Fujian Province, of which the three companies own 50 percent, 25 percent and 25 percent, respectively. Construction on the $3.5 billion project began last July, and the plant is expected to begin operation in the first half of 2008. In March 2004, the Kuwait Fund for Arab Economic Development extended 10.8 million Kuwaiti dinars of low-interest loans to the Hohhot-Jungar railway project in Inner Mongolia.

Sino-Arab exchanges over the years have been a process during which two distinctive civilizations merge. Despite their differences in history, culture, social system and development mode, China and Arab countries all stand for cultural diversity and dialogue between different civilizations. China has signed cultural cooperation agreements with many Arab countries, documents that provide an important platform for various forms of bilateral cultural exchanges. Some universities in Egypt such as Ain Shams University and Cairo University run Chinese departments to teach Chinese language and culture.

Coordination between China and the Arab countries on major international affairs has strengthened. Over the past 50 years, many events with global implications have taken place in the Arab world, such as Middle East wars, the Gulf war, the Iraq war, the Palestinian issue and devastating terrorist attacks. China and the Arab countries conducted extensive consultations on these issues. They also held consultations on the UN reform and reached a broad consensus.

Forging links

As China and the Arab nations do not have any fundamental conflicts or historical problems, friendship and cooperation are the themes that dominate their relations. However, while enjoying solid political bonds, China and the Arab countries are haunted by many problems in their cooperation. For example, the general public does not know much about each other’s culture. People-to-people linkages have yet to be promoted. Cooperation in tourism is developing only slowly.

Worse still, economic and trade cooperation between China and the Arab countries is limited. China’s annual trade volume with Japan, the United States, the European Union, the Association of Southeast Asian Nations and South Korea can reach over $1 trillion. By contrast, its trade volume with all Arab countries is only some $50 billion. While China attracts over $50 billion in foreign investment, only a small fraction comes from Arab countries. China’s investment in the Arab countries is insignificant, too.

As a matter of fact, China and the Arab nations have complementary advantages in their economies. As the largest developing country in the world, China boasts a huge consumer market. Ever since its accession to the World Trade Organization, it has stepped up its integration into the global market. China’s comparative advantages lie in science and technology, human resources, labor and capital. With a total population of 270 million, the Arab world offers boundless market potential in labor services, finance, tourism, science and technology, and natural resources.

In particular, the Arab countries are endowed with huge oil reserves. Some 70 percent of the world’s verified oil reserves are concentrated in these countries. Their oil output accounts for 30 percent of the world’s total. Moreover, the Arab countries have 22.4 percent of the world’s natural gas reserves and are responsible for 8 percent of the world’s natural gas output. With low costs and huge output, the Arab countries are a major energy supplier to the world. China imported some 122.8 million tons of crude oil in 2004, 40.9 percent of which was from Arab countries.

At present, the Arab countries are redoubling their efforts to boost their national economies through cooperating with other countries, while China is eager to collaborate with others to foster a well-off society at home. There is a mounting urgency for the two sides to further their cooperation.