First silk, now steel

The red (silk) carpet treatment for China's leader, Hu Jintao

Ferdinand von Richthofen, an uncle of the illustrious Red Baron (the First World War fighter pilot), has his own claim to fame. In 1877 he introduced the Seidenstrasse or Silk Road to the modern lexicon. In doing so he inadvertently consolidated the many trade routes that once linked China and the Mediterranean Sea into the more singular image of the popular imagination.

Most of the Silk Routes skirted the north of the empty landscape that constitutes modern day Saudi Arabia. But this has not stopped China and its Arabic trading partner drawing down on their shared history in trade and commerce. And they are collaborating again, according to the Chinese media. Last week China Railway Construction Corporation announced that it will build a $1.8 billion railway network in the Saudi kingdom, including a link between Medina and Mecca. The 360km an hour express will carry pilgrims between Islam’s two holiest cities in less than half an hour. It would have taken a camel train a little under a week to make the same journey.

Hu Jintao made his second trip to Riyadh in three years to ink the preliminary deal. Trade links between China and Saudi Arabia have been growing, reaching almost $42 billion in value last year. The two economies are complementary ones. China has too many people but lacks mineral resources; the Saudis are short of human capital but flush with oil and gas. So China delivers manpower, machinery and big infrastructure projects. The Saudis reciprocate with energy supply. But Beijing has broader ambitions: it wants to sell the Middle East more consumer goods too. Hu used his time in Riyadh to call for the setting up of a “strategic” dialogue process with the states of the Gulf Cooperation Council (Saudi Arabia, Kuwait, Oman, Qatar, Bahrain and the UAE). Some analysts think this is supposed to pave the way for a wider free trade debate. Commitments made at the 2006 China-Arab Cooperation Forum already sought to expand trade between China and Arab countries beyond $100 billion by 2013. Approximately 40% of current business is oil-related.

Beyond trade and into politics; Arab leaders regard China as a natural check on American influence in the region. The Chinese model of political and economic development appeals, especially its emphasis on state-directed economic growth and limited political representation. In return, Arab governments say the right things. In 2006, Amr Moussa – then Secretary General of the Arab League – noted: “The world has but one China, and we only visit a China with Beijing as its capital.”

So the appreciation seems to be mutual. Arab commentators also raise the antiquity of their respective civilizations. The ancestors of both cultures are remembered as leading scientists, mathematicians and inventors, at a time when European notions of discovery were confined to dunking women in ponds to figure out if they were witches.

Added together, Arab public opinion sees China in a far move positive light than (an often suspicious) West. An Arab opinion poll conducted by the Brookings Institution in 2006 saw China come in second as the country most respondents wanted to see emerge as a superpower.

Oddly, France was first – but few believe that a return to the days of la gloire Francaise is imminent. It’s far more likely to be Beijing’s time in the Middle Eastern sun.

© ChinTell Ltd. All rights reserved.

Sponsored by HSBC.

The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.