October 2021

We start this issue of the ChinaMed Observer with an article published by Muhammad al-Minshawy, writing for al-Jazeera, assessing the impact of China’s rising international influence on Arab countries. Al-Minshawy claims that Arabs will inevitably increase their involvement with China, especially in light of the heavy reliance of the Chinese economy on its Arab oil and gas imports and the volume of the trade exchange between the two parties (which amounted to more than 240 billion dollars in 2020). [1] Moreover, the author considers China’s very limited political engagement and its complex and extensive relations with the different rivals in the region (namely Israel, Saudi Arabia, and Iran) as positive factors for Arab governments, which, in turn, support Chinese position on the Uyghurs issue. In addition, the US perception that China does not have the adequate military capacity to protect the international shipping lanes might be proven wrong in the future.

However, al-Minshawy claims that the impact of China’s economic engagement in the region, despite the increase of its soft power, is still very limited. Arabs do not have “a unified perception of their future relations with Beijing.” Also, possibly because of cultural barriers and lack of meaningful contacts, he believes that many Arabs “are just as dissatisfied with China as they are with the United States and Europe.” Therefore, the author suggests that the Arabs will continue prefer dealing with Western countries but this might change in the long run, as their governments might want to seize the opportunities created by the evolution of the rivalry between China and the United States.

In this regard, the Tunisian writer Malik al-Triki published an interesting note in occasion of the Non-Aligned Movement Summit in Belgrade. [2] Al-Triki calls for a renewal of the Non-Aligned Movement, provided “with effective mechanisms of action, appropriate to the challenges of the twenty-first century,” which he considers “a new era of bipolarity marked by tension, crisis, economic and technological competition, and the possibility of armed conflict” between the two rival superpowers - United States and China. In the note, al-Triki gives two main reasons as to why reviving the Non-Aligned Movement “is more needed than ever,” especially for countries in North Africa and the Middle East. On the one hand, he states, both superpowers offer the same economic prescriptions, that is a productive capitalism that only leads to more production, the destruction of the environment, and the creation of “societies with no civilizational horizons.” On the other hand, al-Triki believes that none of the political models of governance proposed by China and the United States are suitable for “Afro-Asian and Arab-Islamic societies.” The Chinese model is “but the latest innovation in the rule of fear and oppression […] armed with the lies of ideology and the methods and manipulations of technology.” As to the American model, it is “a democratic mockery that has gone too far in its dependency on the interests of the ‘military-industrial complex’.”

The US-China rivalry continues to shape the regional media debate. For example, Nadhir al-Dalalʿa, professor of international relations at Shandong University in China, and Abd-Allah Khalifat Mutraf, director of the Turkish and Iranian Unit in TRENDS, published a study for the Abu Dhabi-based TRENDS Research and Advisory which addresses the two superpowers’ competition in the framework of their interactions with Tehran. [3] According to the two scholars, “China's growing influence in the region, and its rapprochement with Iran, prompted the United States to try to solve the Iranian nuclear crisis” to limit China’s influence. Yet, this is seen as unachievable because it is impossible to balance cooperation vis-à-vis Iran, and competition with China in Asia. Moreover, Iran’s intransigence in the nuclear negotiations and its belief, reinforced by the election of the hardliner Ebrahim Raisi, that it can confront the US from on equal footing in international fora, also thanks to Chinese support, are likely to keep the relations between Washington and Tehran tense in the foreseeable future.

However, al-Dalalʿa and Khalifat Mutraf argue that the “Iranian bet on China will not be successful” for several reasons. In the first place, despite the continuing confrontation between Washington and Beijing since the election of Joe Biden, the two authors affirm that cooperation in the Middle East better serves the interests of both parties in achieving regional stability. Secondly, although Iran is a key factor for Chinese economic interests, China will not jeopardize its relations with the countries of the region for Tehran’s sake.

Overall, Iranian media seem to share similar views. According to a study published by the Parliamentary Research Center, joining the Belt and Road Initiative (BRI) could “not only be a step towards reducing the economic impact of sanctions, but also an effective strategy to neutralize their trans-economic goals.” [4] The trans-economic aspect of US sanctions includes limiting Tehran’s role as a transit hub in the region, thereby increasing its international isolation while undermining its geopolitical ties in the region. Therefore, the study suggests that it is necessary for Iran to “regulate strategic and long-term economic relations with China based on the industrial development strategy and economic interests of the country.” In this sense, the Iran-China 25-year cooperation agreement is considered a pathway for the implementation of the Iranian part of the BRI. Moreover, it is also necessary to enhance economic cooperation with the neighboring countries (Iran’s trade with BRI countries amounted to 25 billion dollars in 2020, 37% of the country’s total trade volume).

Nevertheless, some considerations must be made in this regard. In an interview with Sharq, Majid-Reza Hariri, Head of the Iran-China Joint Chamber of Commerce, made it clear that no contract or project has been signed so far, and that US sanctions - and the political obstacles to their lifting - are the main problem. [5] Hariri, similarly to what the afore-mentioned study states, also affirms that a sensible economic strategy with Asian countries might be the way to neutralize partially the impact of sanctions. Although Tehran is now focusing almost solely on Beijing, Hariri suggests to pay particular attention also to other countries, such as South Korea, India, and Japan, with which Iran has good relations but that are traditional American allies, and give them “good reasons to turn a blind eye on sanctions.”

Iran is not the only actor that looks at China as a potentially important interlocutor to strengthen its position in the context of regional rivalries. During the first international conference “China and the Palestinian Question”, organized in Istanbul, the Deputy Chairman of Hamas Political Bureau, Musa Mohammed Abu Marzouk, stated that his movement is “looking forward to consolidating bilateral relations with the People's Republic of China, and enhancing political trust and cooperation between it and the forces of the Palestinian people.” [6] Abu Marzouk affirmed that, as “the Palestinian cause is the central issue in the Arab and Islamic regions and Western Asia,” any international player who wants to establish long-term relations in the Middle East should be active in this issue. Thus, he hopes that “China will take a larger space in addressing our cause.”

Beyond China’s role in thorny regional issues, economic relations with China remain one of the most important issues debated in the region.

The Egyptian writer and economist Ibrahim Nawar points out that, despite the positive relations between Egypt and China, especially in the infrastructure and health sectors, the trade deficit between the two countries (“79.7% of the value of bilateral trade during the first four months of this year”) is too tilted in China’s favor. [7] Nawar argues that this imbalance poses three threats for the Egyptian economy: it “increases of the pressure on the exchange rate and the weakening of the Egyptian pound”, it “increases of capital drain, through excessive debts”, and it “threatens the local production of goods”. To solve this situation, he suggests that the Intergovernmental Committee and the Federation of Industries should enhance the dialogue about China's participation in industrial projects in Egypt. Moreover, a number of problems, ranging from bureaucratic and administrative issues to discrimination against the private sector, have to be solved in order to change the patterns of Egypt’s domestic production into a highly specialized link in the productive chain of, for example, electric cars and solar panels components. Interestingly, the Al-Masry al-Youm website reported that, since the beginning of the year,  Egyptian exports of the engineering sector saw an increase of 43%. [8] According to May Helmy, Executive Director of the Export Council for Engineering Industries, this is also due to “the continuing crisis in China’s shipping sector, which gave Egyptian products a competitive advantage especially for Arab markets and some African and European markets.”

How to improve one’s position vis-à-vis China is a common issue discussed also in the northern part of the Mediterranean region. For example, the Italian newspaper Il Corriere della Sera analyzed if and how the liquidity crisis of the Chinese property developer Evergrande could benefit Italy. [9] Carlo Altomonte, professor of European economic integration at Bocconi University in Milan, explains that the Italian economy is directly linked to China through its exports, and, indirectly, through the value chains than bind Italy to Germany, for which China is the biggest target market. However, Germany’s post-pandemic recovery plan aims at shortening its value chains, thus relying more on Europe than on China. Therefore, if the German recovery plan will be fully implemented, Italian companies could have the opportunity to improve their position in those value chains.

On the contrary, the French businesses seem threatened by China’s increasing investment in the African continent. As reported by the economic newspaper Les Echos, “France’s trade positions […] have fell in less than ten years from 11% to 7% of what African countries import from the rest of the world,” and, while Paris is still Africa’s second supplier, with average sales of 30 billion euros in 2018-2020, it falls far behind China’s 111 billion euros exports. [10] According to Christophe Lecourtier, Director-general of Business France, the only way to challenge the Chinese is relying on French companies’ experience and superior services, although they are much more expensive than their Chinese competitors.

In this context, it is interesting to look at the public debate around the Chinese presence in Ethiopia. Officially, Addis Ababa presents China as a reliable partner, eager to help the African country in its development challenges. However, public opinion is far more critical of both the projects implemented within the BRI, and the controversial Grand Ethiopian Renaissance Dam (GERD).[11] In general, the Chinese engagement in the country is perceived as exploitative. On the one hand, it is believed that the investments in the extraction of natural resources will lead to a long-term financial dependency on China. Moreover, the Chinese are described as “self-interested,” and, as they bring their own manpower and materials, they are considered one of the causes of the sustained employment crisis in the Ethiopia. However, it seems there is a consensus on the necessity to move away from relying on cooperation with Western countries, and, in this sense, the partnership with Beijing appears to be the only way forward. For example, China’s supporters in Ethiopia point out that the Chinese construction of four off-grid photovoltaic wires power plants in 2020 has helped Addis Ababa ease its electricity shortage.

Greek media reports a situation that may be considered akin. As a matter of fact, there continues to be raging opposition to the Piraeus Port Authority (PPA) and the Cosco administration. The commercial section of the Cosco piers were in fact closed for days at the end of October for a strike in response to an accident that resulted in the death of a local worker.[12] The incident reignited the protests led by local unions and organizations, who accuse the PPA-Cosco administration of putting the company’s profits before the workers’ rights and safety. Also, the Attica regional council unanimously voted against the Strategic Environmental Impact Study of the projects in the port of Piraeus. [13] At the same time, the Greek government continues to strengthen ties with the People’s Republic of China. During a meeting between the Greek Foreign Minister, Nikos Dendias, with his Chinese counterpart, Wang Yi, the two sides discussed the prospect of further investments in the framework of the implementation of the Joint Declaration of Strategic Relationship Greece-China, and identified the Port of Piraeus as “a model of mutually beneficial cooperation, the starting point of the China-Europe land-sea expressway and the junction of the third major China-Europe trade route.” [14]