JEDDAH, 27 February 2007 -- After the landmark visit of Custodian of the Two Holy Mosques King Abdullah to China, subsequent visit by Chinese President Hu Jintao to Saudi Arabia early last year gave a major boost to economic relations between the two countries.

Ren Yuling, member of the Standing Committee of Chinese People's Political Consultative Conference (CPPCC), who is attending the Jeddah Economic Forum 2007, told Arab News in an exclusive interview yesterday that he had a fruitful discussion with Jeddah Chamber of Commerce & Industry Chairman Saleh Al-Turki during this visit. They discussed various economic and historical issues and prospects for further improvement in the areas of economy and trade.

Yuling said: "After China and Saudi Arabia established diplomatic relations formally in July 1990, the two countries have got more frequent contacts and the trade has been developed rapidly. The trade between the two countries has increased 100-fold. The figure shows how much there is an emphasis on trade between the two countries."

Yu Xingzhi, adviser for the Chinese delegation to JEF and council member of the Association of Former Diplomats of China and former ambassador of China to Saudi Arabia and Yemen, said trade between the two countries had reached $20 billion in 2006 and expected to increase to $22 billion at the end of this year.

"I am optimistic that in the coming few years trade between the two countries will reach $50 billion mark," Xingzhi said.

When asked about the reasons for inferior quality of Chinese products, Yuling admitted that "in the beginning the quality was low, no doubt about it, but gradually it is improving because the government is implementing strict quality controls in every stages of production and export process."

He added: "The government has put much attention and is trying to import high standard equipment and upgrade management skills to improve quality of products."

Xingzhi, ambassador to Saudi Arabia from 1997 to 2000, said: "Due to warm business relationship, many Chinese businessmen and companies are coming to Saudi Arabia and more and more companies from the Kingdom are visiting China." He said: "I am confident the relations between China and the Kingdom will develop much quicker than before."

It should not go unnoticed that China and Saudi Arabia have started cooperation in joint investment projects in a big way. Chinese and Saudi companies have 26 joint venture projects.

"The total investment from both sides has reached SR1.799 billion in joint venture projects in Saudi Arabia," Xingzhi said. He also said "China is the second-largest oil consumer in the world after the United States."

Yuling said China imports every year 160 million tons of petrol from oil producing countries, including the Kingdom. About 16 percent of China's petroleum imports are from Saudi Arabia. "After 28 years of economic reforms, China's growth has averaged 9.6 percent. In the first 10 years, the growth rate fluctuated around 9 percent rate and after that it is stable at around 8 percent to 10 percent," Yuling said.

He added: "because of high growth rate, the standard of living is also increasing in China. So the government has to make sure to provide necessary provision to high standard of living." Yuling added, "to avoid overheating of economy, the Chinese government is trying to restrict loans and control transfer of land for converting into industries."

At the beginning of reforms and opening up in China in 1978, GDP of China was $147.3 billion and import and export value was only $20.6 billion. In 2005, Chinese GDP reached $2.28 trillion, which is 15.5 times more that in 1978 -- now China's GDP stands at about $2.6 trillion.

"As Saudi Arabia has started the process of building mega-economic cities in the coming years, I believe there will be tremendous opportunities available for business with Saudi Arabia," he said.

In order to further boost bilateral trade, Yuling suggested that "first, both the countries need to further promote friendly contacts at governmental and nongovernmental levels to find more business opportunities for cooperation, secondly, both the countries need to extend the level of opening up, as well as provide more opportunities for commodities of the other countries to enter into the domestic market. Thirdly, both the countries need to, through joint efforts, clear up and adjust the policies and taxation standard unfavorable for the development of trade and investment in order to further lower the admittance threshold for commodities of the other side and, finally, both countries need to organize more forums and communications in order to promote the contact and conversation between ministries, local governments, enterprises between both countries and enhance understanding and cooperation."

By Khalil Hanware

© Arab News 2007