If China haunts India’s ‘Look East’ policy, so does it the ‘Look West’ outreach to the Gulf.
Some worry about a “string of pearls”, others about railway lines and highways across mountains, and yet others look with unease at anchors being dropped all around. China’s growing economic and strategic presence in South and South-east Asia as well as the Indian Ocean region has been the subject of public and policy attention in India. What has secured less attention is the phenomenal increase in China’s presence and influence in the Arab/Persian Gulf.
China has not only overtaken the United States as the principal importer of West Asian oil, but it has also become the biggest exporter of manufactured goods to the region. In 2009 it overtook the US as the largest trade partner of the Gulf Co-operation Council (GCC) countries. Equally important, China has become the principal destination for foreign investment by West Asian sovereign wealth funds (SWFs) and corporations, and an increasing number of West Asian exporters are holding their reserves in the renminbi rather than the US dollar.
With rising interest in West Asian oil and markets, China has started to invest in regional security. Chinese ships regularly sail into the Arabian Sea, along the Somali coast and the Gulf. Not to put all its eggs in the maritime basket, as it were, China is building a road and rail link through Pakistan occupied Kashmir (PoK) to the port of Gwadar, from where it plans to project its power in the Gulf region.
All this is the subject of two exhaustive studies by China watchers in the US and the Gulf. “China and the Persian Gulf: Implications for the United States” is a new report put together by Bryce Wakefield and Susan Levenstein under the auspices of the Woodrow Wilson International Centre for Scholars, Washington, DC, including essays by a Chinese scholar, Wu BingBing, a professor at the department of Arabic Language and Culture, Peking University, and two scholars from the Gulf region.
An earlier study by Jon B Alterman and John W Garver, “The Vital Triangle: China, the United States and the Middle East” (Centre for Strategic and International Studies, Washington, DC, 2008) was written in the wake of the historic and significant fact that the first-ever state visit of the newly crowned King of Saudi Arabia, King Abdullah bin Abdul-Aziz Al Saud, The Keeper of the Two Holy Mosques, was to Beijing in January 2006. His next stop was New Delhi, where he was chief guest at India’s Republic Day parade. Alterman and Garver conclude that “China’s interests in the Middle East are significant and growing.”
While both studies have, understandably, an American perspective and focus on US-China rivalry in West Asia, for an Indian reader two facts stand out. First, the virtual absence of any discussion about India’s interests in or relevance to the region. For most Indians, who think of the Gulf as part of their “neighbourhood”, historically, economically and culturally, this would come as a rude shock. Second, the envy of western analysts with China’s rising influence in Iran, Saudi Arabia and the Gulf states, especially given the declining US influence in the region.
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Studies estimate that by 2020, the annual trade between China and the Gulf countries would be over $350 billion, with the United Arab Emirates alone accounting for a third of that trade. With rising trade and Chinese companies bidding for major construction projects in the region, the flow of people from China to the Gulf is rising rapidly. The Chinese trading city of Yiwu, home to literally tens of thousands of retailers selling consumer goods to the Gulf region, attracts more “tourists” from the Gulf than the whole of the US!
Though China’s relations with West Asia are not as old as India’s, which has been a maritime neighbour since the beginning of history, the rapid industrialisation of China; its land link to the region, through Central Asia and Pakistan; and China’s own trade links with the Arab world have enabled it to build enduring bridges to the Gulf.
China’s policy of non-interference in domestic politics of other countries suits the present ruling regimes in many Gulf countries that remain wary of the West’s “democracy” project in the region. India has, therefore, adopted a more nuanced stance on the politics underlying the so-called Arab Spring, fully aware that China has an edge in the pursuit of a non-ideological foreign policy in the region. Indian Prime Minister Manmohan Singh’s recent outreach to and comments on the region will have to be seen in this light.
To be sure, the going is not all smooth for China, given the divisions within West Asia. China’s relations with Iran and Israel worry not only both these countries but also the Arabs.
While these studies ignore the present and potential role of India in the region, a more recent report of The Economist Intelligence Unit (EIU), “GCC trade and investment flows: The emerging-market surge (2011)”, ends on a slightly more hopeful note: “Most of our interviewees expressed certainty that China would be the GCC’s most important economic partner by 2020, although India’s historical and cultural links with the region will also stand it in good stead.”
The EIU report sums up the relative status of China and India in the Gulf region quite correctly and pithily when it says: “Although India’s cultural ties are stronger with the GCC, India’s economic growth faces some key risks, which, unless addressed, will hinder growth in trade and investment with the GCC. Chief among these are infrastructure bottlenecks and a less friendly business environment.”
That about sums up the barriers to the success of India’s “Look East” policy as to India’s “Look West” policy”!