by Adam Gonn
The United Arab Emirates’ shift towards the east continues with a planned $100 billion boost to trade by 2015.
Trade between China and the United Arab Emirates is likely to grow from $21 billion in 2010 to $100 billion in 2015, global banking giant Standard Chartered Bank has predicted.
“We see a huge potential for growth in this trade link and we think that the trade between the two countries could hit $100 billion by 2015,” Philippe Dauba-Pantanacce, Senior Economist of the Middle East & North Africa at Standard Chartered Bank told The Media Line
Dauba-Pantanacce said that China’s demand for oil is a principal factor behind the bank’s predictions.
“China’s appetite for hydrocarbon will continue to increase as it develops further,” he said, “while the United Arab Emirate’s consumption and need for foreign investment and infrastructure has certainly nurtured a lot of the growing involvement of China in the Emirates”
China is the world’s seconds largest oil consumer as rapid economic growth has prompted more Chinese residents to move away from bicycles and public transport to private cars.
Chinese oil imports are expected to rise 7.5 percent per year, some seven times more than the United States. Currently 58 percent of Chinese oil imports comes from the Middle East, a figure that is expected to rise to 70 percent by 2015.
“China is becoming a very important trade partner for the United Arab Emirates and is now the second country in terms of import to the United Arab Emirates,” Dauba-Pantanacce said. “Total trade amounted to $28 billion in 2008 with a dip to $21 billion in 2009, following the global crisis.”
In 2009 the United Arab Emirates’ exports to the United States reached $1.49 billion while American exports in the other direction were valued at $12 billion.
David Butter, Regional Director for the Middle East and North Africa with the Economist Intelligence Unit, told The Media Line that he was skeptical of the Standard Chartered predictions.
“China United Arab Emirates trade is a lot about re-export that goes to Iran,” Butter told The Media Line, citing tensions over Iran’s nuclear program, which Tehran claims is for peaceful purposes while Washington argues that Iran is producing materials for nuclear weapons.
“This will not grow that quickly,” Butter said. “It could shrink as access to the Iranian market is becoming harder as a result of sanctions.”
Regarding oil exports, Butter said that while being important exports do not make up a major component of the trade between the two countries.
“United Arab Emirates is by regional standards a middle level,” he said.
Trade between China and the Middle East is sometimes referred to as the ‘new Silk Road’ a reference to the ancient trade route that connected Europe and China via the Middle East.
According to some estimates, oil exporting countries in the Gulf have made over $2 trillion on oil exports to China. This trade flow is now being leveled out by Gulf investments in China of around $250 billion.