China pledges $20 billion in loans to Middle East

Since taking office, Xi has overseen a concerted effort to expand Chinese influence in the Middle East.
Tuesday 10/07/2018
Kuwait's ruling emir, Sheikh Sabah Al Ahmad Al Sabah, left, and Chinese President Xi Jinping arrive for a welcome ceremony at the Great Hall of the People in Beijing, Monday, July 9, 2018. AP)
Kuwait's ruling emir, Sheikh Sabah Al Ahmad Al Sabah, left, and Chinese President Xi Jinping arrive for a welcome ceremony at the Great Hall of the People in Beijing, Monday, July 9, 2018. (AP)

LONDON - China pledged a package of $20 billion in loans and $1.6 billion in financial aid to countries in the Middle East, as part of what President Xi Jinping called an “oil and gas plus” model to revive economic growth in the region.

Beijing has ramped up engagement in the Middle East in recent years as Arab nations play an important role in Xi’s signature Belt and Road foreign policy plan for strong trade routes linking China with central and southeast Asia.

Development was key to resolving many security problems in the Middle East, Xi told a gathering with representatives of 21 Arab nations in the Chinese capital.

“We should treat each other frankly, not fear differences, not avoid problems, and have ample discussion on each aspect of foreign policy and development strategy,” he said.

China would offer aid worth 1 billion yuan ($150 million) to Palestine to support economic development, besides providing a further 600 million to Jordan, Syria, Lebanon and Yemen, he added.

A consortium of banks from China and Arab nations, with a dedicated fund of $3 billion will also be set up, he said.

It was unclear what the relationship between the bank consortium, financial aid and the overall loan package would be.

The loans will fund a plan of “economic reconstruction” and “industrial revival” that would include cooperation on oil and gas, nuclear and clean energy, Xi said.

He urged “relevant sides” to respect the international consensus in the Israel-Palestine dispute, and called for it to be handled in a just manner, so as to avoid regional disruption.

China, which traditionally played little role in the Middle East conflicts or diplomacy, despite its reliance on the region for energy supplies, has been trying to get more involved in resolving long-standing disputes.

China says it sticks to a policy of “non-interference” when offering financial aid and deals to developing countries, which, coupled with development, can help resolve political, religious and cultural tension.

It applies this pattern of economic support, as well as a strict security regime, to its restive western region of Xinjiang. But rights groups have criticised the approach, saying the clampdown has further stoked, not eased, tension between the Muslim Uighur minority and the ethnic Han majority. 

Since taking office, Xi has overseen a concerted effort to expand Chinese influence in the Middle East and Africa, including the construction of the country’s first military base in Arab League state Djibouti.

China has already provided vast sums to Arab countries, with Djibouti alone owing some $1.3 billion, according to estimates from the US-based China Africa Research Initiative.

The financial largesse has raised concerns both at home and abroad over the vulnerability of poor nations to such massive debt.

Last year Sri Lanka was forced to hand over majority control of its Hambantota port to China after being unable to repay its loans.

The Arab states’ position at the centre of the ancient trade route makes them “natural partners” in China’s new undertaking, Xi said, adding he expected the summit would end with an agreement on cooperation on the initiative.

“Chinese and Arab peoples, though far apart in distance, are as close as family,” he said, describing a romanticised history of trade along the Silk Road.

The project, which has already financed ports, roads and railways across the globe, has spurred both interest and anxiety in many countries, with some seeing it as an example of Chinese expansionism.

“China welcomes opportunities to participate in the development of ports and the construction of railway networks in Arab states” as part of a “logistics network connecting Central Asia with East Africa and the Indian Ocean with the Mediterranean,” said Xi.

China has expanded its influence among Arab states both for economic purposes and to counter the influence of Washington and Europe.

Saudi Arabia was China’s second-largest source of crude oil last year and Iraq was its third biggest supplier at the start of 2018. 

Politically, China has sought a role as an intermediary between Israel and the Palestinians and provided diplomatic cover for Syrian President Bashar Assad in the country’s seven-year civil war.

(The Arab Weekly staff and news agencies)