Commercial ties between China and the Middle East are experiencing a resurgence, driven by evolving geopolitics, energy transitions, and supply-chain disruptions, reports consultancy firm Oliver Wyman.
Ben Simpfendorfer, a partner at Oliver Wyman, notes that China's strained trade relations with the West have catalyzed stronger diplomatic and commercial bonds with the Middle East. He describes this period as a "renaissance" in their relationship, emphasizing its transformation beyond traditional sectors like oil and consumer goods.
Trade data from customs sources reveals a significant uptick in bilateral trade, with China and the Middle East recording a trade volume of US$507.2 billion in 2022, nearly doubling the figures from 2017. Notably, trade between the two regions outpaced growth with other key partners such as Southeast Asian nations, the European Union, and the US.
Simpfendorfer highlights the expanding investment of Chinese electric vehicle (EV) manufacturers in global markets as a notable trend. This diversification, including the establishment of factories in emerging markets and exploration of opportunities in Europe and the US, contributes to alleviating trade tensions and stimulating employment growth elsewhere.
However, Simpfendorfer cautions that trade tensions between China and the West are likely to persist and could escalate following the US presidential election. Concerns over excess production, particularly in the EV sector, have prompted policymakers in the US and Europe to engage in discussions with China. Despite these challenges, Simpfendorfer asserts that China will remain a manufacturing powerhouse and a leading exporter due to its scale, efficiency, and innovation.
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