In 2005 China’s Ministry for Commerce revealed that investments from the Gulf monarchies in China totalled $700 million,[435] most having come from Kuwait. Back in 1984 a subsidiary of the Kuwait Petroleum Company took a 15 per cent stake in China’s Yacheng offshore gasfield, while the following year KPC set up a joint venture — the Sino Arab Chemical Fertiliser Company to invest in the Qilu petrochemicals facility in China’s eastern Shandong province.[436] In the 1990s the Kuwait Investment Authority increased its portfolio share in Chinese investments from 10 to 20 per cent,[437] and it is now the largest foreign investor in the Industrial and Commercial Bank of China.[438] This has effectively made the Kuwaiti government the biggest investor in one of China’s first major public offerings. The relationship between the two countries was also strengthened greatly following the setting up of a $9 billion joint venture between the Kuwait Petroleum Corporation and Sinopec in 2005. Since then, the two companies have been jointly financing the construction of a massive 300,000 barrels per day capacity oil refinery and ethylene plant in China’s southern Guangdong province. When the project comes online in 2013 it will be China’s largest ever successful joint project.[439] But the most innovative and symbolic aspect of the investments between the two countries has been the establishment of the Kuwait-China Investment Company. Set up in 2005 and 15 per cent owned by KIA, the KCIC now has a capital base of about $350 million, about half of which is held in cash in order to facilitate rapid responses to strategic opportunities. It has specialised in investments in Chinese agribusinesses, particularly those producing crops with a high export value such as rice, wheat, corn, and sorghum. Meanwhile Saudi Aramco now has more offices in China than in any other country, and has taken a 25 per cent stake in a major joint venture with Sinopec and the China National Petroleum Corporation’s Petrochina subsidiary in 2001.[440] The venture, named the Fujian Refining and Petrochemical Company, has involved the two companies expanding an existing refinery in China’s southeastern Fujian province along with building a brand new ethylene plant. Moreover, Aramco is now the largest shareholder in the Thalin refinery project in China, and in the near future it may embark on another joint venture with the two Chinese companies to build a refinery in the Chinese coastal city of Qingdao, again with Aramco taking the majority stake.[441] This could lead to the building of one of the largest oil-refining facilities in the world and may require as much as $6 billion to complete.
Similarly to Aramco, SABIC has already helped to initiate three petrochemicals projects in China as part of its ‘China Plan’, which aims to facilitate mutual investments between the two countries by supporting China’s economic development and, as its premier supplier of petrochemicals, helping to satisfy its ever-increasing demand.[442] And in 2009 SABIC entered into an agreement to build a fourth petrochemical complex, costing $3 billion, in China’s northeastern Tianjin province.[443] The Qatari Investment Authority is also becoming active in China, and has recently followed Kuwait’s lead by signalling its intent to purchase $200 million worth of shares in subsequent public offerings from the Industrial and Commercial Bank of China.[444] It has also opened a permanent office in China with the intention of pursuing further sovereign wealth investment opportunities in the country, with QIA’s CEO having explained that ‘China and Asia are growth markets for Qatar — we are really serious about finding the right opportunities there’.[445] Most significantly perhaps, it was announced that Qatar Petroleum would enter into a joint venture with Petrochina worth $12 billion. This deal, if followed through, would eclipse even Kuwait’s investments in China and would lead to the construction of a new petrochemicals plant in China’s eastern Zhejiang province, along with an oil refinery, an ethylene plant, and a port for oil supertankers.[446]
Much like its neighbours, the UAE, and more specifically Dubai, is also investing in China, and has been since the late 1980s following the establishment of the Dubai Oriental Finance Company.[447] More recently Dubai Ports World has made significant investments in Chinese coastal cities, and now operates seven container terminals in the country, three of them in Hong Kong. Crucially DPW has faced none of the opposition it experienced in its 2006 bid to operate ports in the US, and its success has been attributed to its well developed partnership with China’s Tianjin Port Group Company.[448] In the near future the joint venture will also open a terminal in China’s northeastern Qingdao province and in 2009 it announced that it would also take an 80 per cent stake in a joint venture with both a Chinese company and Vietnam’s state-owned Tan Thuan Industrial Promotion Company in order to build yet another Asian container port outside Ho Chi Minh City.[449] Abu Dhabi has thus far been more cautious than Dubai with regard to investing in China, but there are nonetheless some proxy examples: IPIC has a 65 per cent controlling stake in Borealis[450]—a plastics company based in Austria that has links with the Abu Dhabi Polymers Company — and in turn Borealis is investing in a polypropylene plant in China, to help boost the supply of plastics for its booming automobile industry,[451] which now comprises more than forty-five car manufacturers, including Beijing Automobile Works and Chery Automobile.[452]
With regards to building non-economic soft power ties, a part of the strategy seems to have been regular and high level diplomatic visits from the Gulf monarchies to Pacific Asia. While economic and trade matters are certainly discussed at these carefully staged events, the meetings are nonetheless also valuable opportunities for rulers and their ministers to convene with their Pacific Asian counterparts and consider a range of other matters. Often substantial gifts or interest free loans are granted during these meetings — especially to China, in an effort to build more sturdy political and cultural understandings, and undoubtedly to generate further goodwill. The frequency of these visits has greatly intensified, but more important has been the increasing seniority of the visitors, which now eclipses that of those dispatched to Western capitals.[453] A report published by the US-based Middle East Institute in 2009 also identified the trend, stating that there has been a ‘steady, incremental process in the building of personal and institutional relations — the essential latticework of Gulf-Asia economic interdependence… [and the diplomatic visits] have been capped by a slew of ambitious cooperation programs and joint ventures’.[454]
435
127. Ghafour, Mahmoud, ‘China’s Policy in the Persian Gulf’,
436
128. See Calabrese, John, ‘China and the Persian Gulf: Energy and Security’,
440
132. Lee, Henry, and Shalmon, Dan, ‘Searching for Oiclass="underline" China’s Oil Initiatives in the Middle East’ discussion paper published by the Environment and Natural Resources Program, Belfer Center for Science and International Affairs Discussion Paper, Harvard University, January 2007, pp. 4–5.
442
134. Yetiv, Steve A. and Lu, Chunlong, ‘China, Global Energy, and the Middle East’ in
447
139. Ehteshami, Anoushivaran, ‘The Rise and Convergence of the “Middle” in the World Economy: The Case of the NICs and the Gulf States’ in Davies, Charles E. (ed.),