China comes to town

The Arab world should make the most of China's growing economy. How the times have changed. When Saudi Arabia’s King Abdullah visited China in January, it was his first foreign engagement since ascending to the throne. Such a visit would have been unthinkable a decade ago.

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By  Anil Bhoyrul Published  April 30, 2006

China comes to town|~||~||~|The Arab world should make the most of China's growing economy. How the times have changed. When Saudi Arabia’s King Abdullah visited China in January, it was his first foreign engagement since ascending to the throne. Such a visit would have been unthinkable a decade ago. But economics is a language that knows no barriers. In 1993, China became a net importer of oil. And as we reveal in our cover story this week, by 2010 it is expected to import 50% of all its oil needs. Last year, China imported 130 million tonnes of crude oil. That figure could more than treble by 2010. When you take into account the fact that the Chinese see their economy growing to US$4 trillion with an average per capita of US$3000 by 2020, it’s not difficult to see why the Saudis are courting the Chinese. And we can expect the same overtures soon being made by other leading GCC nations. But why the sudden interest in China? Sure, everyone loves a good deal. But in the past three months, diplomatic missions between China and the Middle East have been at an all time high. Trade missions are months away from leading to trade deals: some experts suggest that the Arab world could soon be doing US$100 billion of business with China. So why the sudden change? Could it be, that in the wake of the DP World fiasco, the Arab world now views trading with America somewhat suspiciously? Could it be that the DP World fiasco has left a bitter taste in Arab mouths? It probably has, and who better to fill the vacuum than the Chinese. And again, the astute Saudis are leading the way. Trade between China and the Kingdom has increased 59% in the last year to U$15 billion and while Saudi Arabia is Beijing’s 5th largest trading partner, China is the fourth largest trading partner of the kingdom. China’s president Jintao has already visited the headquarters of SABIC, Saudi Basic Industries Corporation, the petrochemical giant that is about to enter into a US$5.33 billion joint venture in China. He has been busy discussing plans to set up a US$9.3 billion refinery and petrochemical project in north-eastern China. There is, we are told, plenty more to come. The Chinese are coming. And when they do, they will be here to stay.||**||New PR for Alabbar|~||~||~|I feel a little sorry for Emaar chairman Mohammed Alabbar. Three years ago, his company’s share price was less than US$1. It had a 6% dividend yield and could find few optimistic forecasts. Thanks largely to his own brilliance and vision, Emaar is now the world’s biggest property company by market value. Not that Alabbar or any of his shareholders are celebrating. Now under US$4 a share, the price has fallen nearly 20% in just two weeks. Concerns about revenue streams have fuelled the fire sale of Emaar shares. The company may be forced to put more eggs into its overseas baskets to restore order. In the short term, what would help is a few words from Alabbar to calm investor nerves. Up to now, his PR people have hidden him from public viewing when it comes to Emaar. It is a strategy that has backfired spectacularly, only adding to the rumour mill. Alabbar must either change, or change his PR people.||**||People and profits|~||~||~|Once again, I take my hat off to the Emirates Group – though once again with a slight twist. Last week it announced another record performance with net profits of US$762 million for the financial year ended 31st March 2006 - up five per cent from the previous year’s record profits of U$726 million). And wherever you look in the group, more records are being broken. Group revenue increased by an impressive US$1.4 billion to US$6.6 billion, compared to US$5.2 billion last year. And there was a cash balance of US$3 billion at the end of March, an improvement of 28.6 per cent against a year earlier. That is a lot of cash. No wonder chairman Sheikh Ahmed is a happy man, telling us: “It has been another tough year with pressure from fuel costs continuously dampening our robust net income production. Emirates has returned its 18th consecutive annual profit.” Well, he could spread a little of that happiness around – by dropping the fuel surcharges that have been passed on to passengers over the past year. ||**||

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