China and Arab states need to promote trade and economic cooperation

China and Arab states need to cope with challenges and seize opportunities to promote higher-level and better-quality trade and economic cooperation, according to a report unveiled on Thursday by the Chinese Academy of International Trade and Economic Cooperation.

China and Arab states have made progress in bilateral relations and political mutual trust and share the vision to seek common development. Yet as the international landscape becomes increasingly complex and volatile with emerging new uncertainties, there are both new opportunities and challenges for China-Arab trade and economic cooperation to develop, the report said.

China and Arab states share a time-honored friendship. Their continuously strengthened cooperation under the Belt and Road Initiative, strong complementarity in trade and economy, and the bright economic prospects of both sides all promise great opportunities for China-Arab economic and trade cooperation.

However, political and security risks in the Arab region remain a significant obstacle to investment cooperation between China and Arab states, while highly concentrated China-Arab trade and investment and lack of sufficient understanding of the Arab market on Chinese enterprises' side also pose challenges for China-Arab trade and economic cooperation, according to the report.

The report said trade between China and Saudi Arabia, the United Arab Emirates, Iraq and Oman, account for about 70 percent of the total China-Arab trade value, and oil imports account for over 80 percent of China's imports from Arab states.

China's investment in Arab states primarily concentrate in six countries: the UAE, Saudi Arabia, Iraq, Algeria, Egypt and Sudan. By the end of 2020, China's investment stock in the six countries accounted for more than 80 percent of that in the Arab region. Its investment stock in the UAE alone accounted for 43.6 percent of the regional total.

Highly concentrated, China-Arab trade and economic cooperation is easily subjected to influence from the international oil price fluctuations and the situation of some key cooperation countries.

China and Arab states need to explore more diversified areas of cooperation. Arab states should improve their investment environment to attract more investment from Chinese enterprises, while Chinese enterprises should make proactive preparations to improve cooperation with local partners, the report said.

It also said measures should be taken to advance the free trade agreement negotiations between China and the Gulf Cooperation Council, as the establishment of a China-GCC FTA and further trade liberalization and facilitation can create broader space for bilateral trade and investment.

The report suggested China and Arab states improve their trade structure, promote balanced trade, and foster cooperation in trade facilitation. China should speed up the inspection and quarantine of competitive agricultural products from Arab states and import more agricultural products from there and help with the economic diversification efforts of Arab states, it said.

It also suggested Chinese enterprises scale up investments in Arab states in key manufacturing areas, digital economy such as cross-border e-commerce and smart cities, and high-tech fields such as artificial intelligence and biopharmaceutical manufacturing.

Besides, China is a key partner of Arab states in infrastructure construction, and in the future, Chinese engineering contractors should seize market opportunities, foray deeper into local markets in Arab states, and tap cooperation in new energy fields such as solar energy, wind energy, and nuclear energy with Arab partners, it said.