Jul 22 2013
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KSA major trade partner of China in Gulf
He said the trade between China and Saudi Arabia reached the highest level of $73.4 billion in 2012. The UAE is China's largest export market in the Gulf - the bilateral trade between the two countries has reached more than $40 billion in 2012.
Seetharaman gave insights on major bilateral developments between GCC and China.
He said "Aramco and Sinopec Group signed the deal to develop the 400,000-bpd refinery, known as Yasref, in January 2013. Chinese bought properties worth nearly AED550 million in 2010. China and UAE signed a $5.5 billion currency swap deal in January 2012."
He further forecast that GCC projects worth more than $350 billion are expected to be launched in 2013.
Moreover, Chinese can further invest in UAE infrastructure construction projects of transportation, telecommunication and electricity. Kuwait Investment Authority (KIA) and Qatar holding are qualified foreign institutional investors (QFII) in China.
China is one of the major importers of crude oil export from Oman. In March 2010 Bank Muscat and Bank of China signed a deal to set up a China Desk at Bank Muscat . In Feb 2011, Bank Muscat signed a Yuan settlement agreement with Bank of China. GCC- China bilateral trade and development is witnessing an upward trend."
Seetharaman highlighted the bilateral developments between Qatar and China. He said "Qatar - China bilateral has touched $8.45 billion in 2012. In June 2010 Qatar Investment Authority (QIA) invested $2.8 billion in the IPO of the Agricultural Bank of China and has further raised it stakes to $6 billion. In March 2011 Qatar signed an $879 million contract with China Harbor Engineering Co (CHEC) for the construction of the first phase of Qatar's New Doha Port.
In January 2012, China National Petroleum Corp (CNPC) and its partners Qatar Petroleum and Royal Dutch Shell agreed to push ahead with plans for a $12.6 billion refinery and petrochemical complex in East China. In May 2012, Petro China, Asia's largest oil and gas producer, signed an agreement to acquire 40 percent of exploration and production rights for Qatar's Block 4 from GDF Suez Qatar.
In August 2012 Qatar Sovereign fund bought 22 percent stake in China's CITIC Capital. "China is planning to import more LNG in coming years in order to meet huge demand in its domestic market," he added.
Seetharaman moreover said "China's GDP for second quarter of 2013 slowed to 7.5 percent year on year from 7.7 percent in first quarter of 2013 however was in line with the expectations. China still continues to be the second largest economy in the world terms of GDP at current prices and with the current growth rate still remains the engine for global growth.
China's foreign trade neared $2 trillion in the first half year, up 8.6 percent year on year, with exports at $1.05 trillion, up 10.4 percent, and imports at $944.87 billion, up 6.7 percent.
Drop in exports is mainly to weak global demand, a rising yuan and higher labor costs. China's banks were caught in a credit squeeze that began in late May 2013 due to factors such as lower capital inflows from abroad, seasonal tax payments and a mismatch of banks' shorter term funding with their longer term lending. Concern over bad loans in the economy led to a spike in interbank rates in May-June 2013 and also sent the Chinese capital markets down."
Chinese exports to the GCC have recently been growing at an estimated 30 percent annually, according to a recent document from the Kuwait China Investment Company entitled "The New Silk Road: Asia and the Middle East rediscover Trade and Investment Opportunities". Counterbalancing this, Beijing remains Saudi Arabia's biggest customer in the all-important petrochemicals sector. Overall, 40 per cent of the GCC's non-oil exports now go to Asia.
Increased trade comes at a cost though, as rising demand requires that GCC ports make the necessary infrastructure investments to boost capacities. Moreover, as world-class ports such as Jebel Ali in Dubai and Abu Dhabi's Khalifa Port look to reinforce or establish their positions as regional hubs, they need to ensure they can act as enablers for companies looking to improve their own logistics and supply chains.
Regional governments have long realized this, of course.
Saudi Arabia and the United Arab Emirates are ranked sixth and tenth respectively for anticipated infrastructure development in 2013, according to the "Top 100 Global Infrastructure Projects for 2013" report by US-based consultants CG/LA Infrastructure.
Project cargo continues to be an important and evolving market for many Asian and international logistics providers serving the Middle East. Coupled with increased vessel sizes and associated operational costs, this means that fast tracking cargo movement whilst in port is a priority for international shipping companies. This, in turn, will drive a new level of terminal activity requiring capacity and operational maximization.
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