Tuesday, July 5, 2011

Cobwebs Of Rising Red Dragon: Beijing

In Middle East key partners of China - Saudi Arabia, Turkey, Iran and Pakistan. They appreciate that China, unlike the West does not seek to change their lifestyle and political system.China in the region - a potential counterweight to U.S. and EU competitors. Beijing in Magribe and Sakhele, Mashrike Iran, Pakistan and Afghanistan, Turkey and Israel; plays only according to its own rules, it does not enter into the alliances, it pursues pragmatic interests, conducts the open economic and concealed military-political expansion with the long-range goal.


Chinese projects combine strategy and tactics. Large-scale government programs, many times greater than the possibility of rivals, are complemented by the business of private firms, most of whom work at the micro level, but many features are comparable with European countries. China avoids a collision with the U.S., EU, ​​India, Japan, South Korea, Brazil and other players, but can not be put into any pressure, the tools that may impact its position.


Business is conducted in large

Trade and economic partnership between the Kingdom of Saudi Arabia (KSA) and China formally initiated in 1988. After another eight years, was founded the Saudi-Chinese commission on trade-economic, investment and technical cooperation. And then on the rise:

  • 1999. KSA and China declared the establishment of strategic relationships in the energy sector;
  • 2004. At the initiative of Beijing established the China-Arab Cooperation Forum, in which since part of Saudi Arabia;
  • 2006. Memorandum of Understanding on Political Consultations;
  • 2007. Signed a memorandum on cooperation in oil, gas and minerals.

From this list one can see how tempting the Saudis resources are for Beijing. In addition, a treaty on avoidance of double taxation and preventing tax evasion, cooperation in education, religion, health and training. Saudi firm to elevate China's infrastructure, refining and petrochemical enterprises. More than 40 Chinese companies operating in the market for construction work of KSA, the investment of China in this segment of the economy in 2008 reached $ 6 billion. China's largest investment project in KSA - the creation of an industrial city in an aluminum plant in the province of Jizan.

In 2008, China ranked third in the Saudi exports and imports in the second place in the trade, equal to 41.8 billion dollars. KSA - China's largest trading partner in the Arab world. Since 2010, Celestial - the main consumer of Saudi "black gold" (a quarter of its imports to China accounted for KSA). Beijing offered to Riyadh to create the southeast of China's strategic oil reserves at the expense of additional supplies of the kingdom is investing in oil and petrochemicals Saudis, engaged in the exploration of natural gas, building a complex of enterprises in Jubayl (Eastern Province). Great prospects for cooperation in desalination of sea water and the nuclear field.

Military-technical cooperation of KSA and China is weak, because the Saudis in this area are guided by the United States and other Western countries. However, in 2006, the KSA and China signed an agreement on security issues and a private contract for the Defense Systems, and after a further two years have agreed on the purchase of Riyadh 54 155-mm self-propelled howitzers PLZ-54.


Everything would have been quite good…but Uygur

In 2010, the leaders of Turkey and China announced their intention to bring the relationship between the two countries to the level of strategic partnership and establish a new mechanism for the joint fight against terrorism. It was concluded a framework agreement on expanding economic and trade cooperation, and signed documents:

  • the preparation of medium and long term plans for its development;
  • on joint infrastructure projects in third countries;
  • of forming a working group on the project "Silk Road".

Turkish-Chinese partnership in energy, construction of bridges and railways includes participation of China in building a high-speed rail Ankara - Istanbul. We discuss the attraction of China to build nuclear power plants in Turkey.

China became the third country after Russia and Iran, with which Turkey has signed an agreement on bilateral trade in the transition to payments in national currencies. Ankara and Beijing plan to increase trade with $ 17 billion in 2009 to 50 billion by 2015 and to 100 billion by 2020 (in 2009, Chinese imports to Turkey exceeded more than $ 12 billion Turkish exports to China) .

In the framework of the armed forces of both countries at the center of air tactics in Konya have been joint exercises and the Turkish Air Force of China (Chinese aircraft arrived in Turkey via Iran, where they refueled).

True, the suppression of unrest in the Xinjiang Uygur Autonomous Region of China in 2009 has complicated relations between Ankara and Beijing. In resolving the issue of cultural integration of East Turkestan Uighur Turkic world are planned opening of the Turkish Consulate in the administrative center of Xinjiang Urumqi, the establishment of direct air links between him and Istanbul.


Long-time friend of Pakistan

Islamabad considers China as a partner and ally, from the Indo-Chinese border conflict in 1959 and 1962. In 1963 an agreement was signed between the Chinese border demarcation Xinjiang and part of Kashmir controlled by Pakistan. Three years later, China began to supply the Islamic Republic Chinese tanks and planes.

Pakistan supported China in 1971, when it was a question about the status of the UN, opposing the U.S. formulation of "two Chinas." In 70 years, Beijing helped Islamabad to develop the industry and energy of the PRI, the construction of the Karakorum Highway and 1,300 kilometers long, linking the town of Gilgit in Pakistan's Kashmir to the Chinese border (completed in the 80s).

In the 70-80s, China was the main supplier of arms and military equipment to Pakistan. The two leaders coordinated their positions on the Afghan problem. Islamabad allied with China's position on the Cambodian issue. After 1998, when because of Pakistan's nuclear bomb tests stopped Washington economic aid and arms of the Islamic Republic, the Chinese were again the main supply agents to its army.

China persistently permeates all sectors of the economy, has been steadily increasing expansion. For example, in 2002, an agreement was reached on the construction of China in Pakistan, 2015-2016 to four years in nuclear power plants with total capacity of 2,100 MW, $ 3.3 billion. At the same time to organize the exit China to the Arabian Sea and Indian Ocean port of Gwadar has begun construction. In 2002-2003, at the expense of the Chinese loan of 1.16 billion dollars were raised three multifunctional dock for berthing of ships with the infrastructure for crude oil. In the second stage of the project in 2007, commissioned nine sea berths and installed equipment for night navigation, worth 600 million dollars.

In 2004, China provided a loan to Pakistan to $ 750 million to build four modern destroyers in 2008-2013.At the same time Beijing has expressed interest in developing coal deposits in Thar area and construction of thermal power plants based on their capacity of 600 MW. In 2005 a treaty was signed on cooperation between the two countries in economy, defense and use of nuclear energy for peaceful purposes, nuclear power lies "Chashma-2", coordinated project to modernize the Karakorum Highway and bring it to the port of Gwadar, laying parallel to the railroad and pipeline as well as fiber optic cable. In 2006 it was confirmed by the Sino-Pakistani cooperation in the development of copper deposits "Saindak" oil and gas reserves (more than 100 projects) in the drafting of the dam Goma Deputy, agreed on joint production of JF-17 fighter aircraft to Pakistan Air Force based in the aviation complex City of CIDA.

2008 marked the conclusion of an agreement on the construction of the Chinese in Pakistan, six nuclear power plants with total capacity of 8800 MW, Beijing's intentions to invest in the Pakistan five billion dollars, including the joint development and delivery of AWACS & new tanks.

At the same time account for Chinese investments in Special Economic Zone of Pakistan amounting to $ 35 million, an increase in investment of China in Balochistan, the increase of imports from the PRI in China agricultural products, cotton yarn and fabrics, has agreed to support China reconstruction of 700 kilometers of the Pakistani roads.

Maintains contacts in the field of education and health. In 2009, China and Pakistan signed an agreement on joint exploration of outer space and Metallurgical Corporation of China expressed its intention to participate in the modernization of the steel plant in Karachi worth $ 2.2 billion. In 2010 Beijing announced plans to invest in the economy of Balochistan and Punjab, to continue construction of the Gwadar port.

Due to strengthening US-Indian relations, Pakistan made a bid to develop strategic partnership with China. In 2010, among them were signed 13 agreements and memoranda of 14 billion dollars. In Islamabad, Karachi and plans to open branches of the largest banks in China. Identified 36 projects to be implemented with the support of China. Pakistan - second only to India's trading partner of China in the region with the foreign trade turnover of 10 billion dollars, the growth potential by 2012 is 15 billion dollars.However, trade between India and China for 25 years has grown from 150 million to $ 50 billion.

China has had a humanitarian aid to Pakistan after the earthquake in 2005, has allocated $ 30 million for accommodation of refugees from Swat in 2009. And after a flood in 2010 provided 229 million dollars for the reconstruction of the affected facilities, 10 million - to rebuild houses and a soft loan of $ 400 million - to recreate the infrastructure.


"Silk Road" for the expansion of the rigid

Tehran - one of the leading trading partner in Beijing. In 2009, Iran has delivered 12 percent of China  "black gold", occupy third place among the largest energy supplier to China after Angola and the KSA. Since 2001 the Chinese "Sinopec" is developing an oil field "Zavareh-kanshane." The state oil trading company of China Zhuhai Zhenrong Corp. entered into an agreement for 25 years on the import of natural gas worth $ 20 billion. State Oil Company of SINOPEC Engineering Inc. in 2007 signed with the Ministry of Petroleum of Iran for 25 years a contract to import 385 billion cubic meters of "blue fuel", and 150 thousand barrels of "black gold" on the day of deposit "Yadavaran", which included two billion dollars of investment in China for four years.

In 2008, Iran announced its intention to participate in the formation of strategic oil reserves in China. In 2009, the parties entered into a contract to develop the field, "North Azadegan" two billion dollars. As part of the annual sale to China of 20 million tons of liquefied natural gas (about 31 billion cubic meters) from the field, "North Pars," Iran has signed an agreement Minnefti, but the document has not approved the Higher Economic Council of Iran. Instead, in 2009 the National Iranian Oil Company signed a contract for $ 4.7 billion c Chinese national oil company China National Petroleum Corporation (CNPC). The purpose of its implementation - field development, "South Pars".

It is not excluded that the pipeline "Mir" (Iran - Pakistan - India) will extend to China. A consortium of Chinese companies signed a contract for $ 2.2 billion, under which Shanghai Zhenhua Heavy Industry Co.Ltd. (ZPMC) has committed to build by 2010, ten and seven marine land rigs and make two cranes.China invested 1.5 billion dollars in the construction of the plant for the production of gas condensate in the SEZ "Kiss." "Sinopec" entered into an agreement with National Iranian Oil Company for $ 150 million of the Conversion of Tabriz and Isfahan refineries, pipeline construction of the neck - Tehran (336 km), and after the Chinese state-owned corporation of the Consortium for the reconstruction works have begun private Chinese company.

However, that does not depend on the problematic relationship of Iran with the international community and the situation in the Arab world, China develops oil reserves in Africa, Central Asia and Latin America.In 2009, oil supplies from Iran to China declined nearly by half amid rising procurement in Angola. In the future level of oil imports of China from Iran was stable. In 2006-2010, China has signed contracts to upgrade refineries Arak (956 million), development of the Azadegan oil field North (1.75 billion dollars), Yadavaran ($ 2 billion), Garmsar ($ 20 million) and 11 of Unit gas field "South Pars" (4.7 billion dollars).

In 2009, Iran turned to China with the package of investment proposals by 48.2 billion dollars in the energy sector, including the creation of seven new refineries. At the same time China agreed to the participation in projects worth three billion dollars to modernize Iranian oil refinery (including in Abadan), and Sinopec signed an agreement to provide $ 6.5 billion petrochemical industry of Iran and the contract with CNPC for $ 4 billion to increase productivity Iranian oil fields.

China did not support unilateral action anti-Iranian U.S. and EU imposed in 2010. China and Turkey - one of the major suppliers of gasoline Iran. Since September 2009, Beijing provides at least a third of Iranian import requirements. Moreover - 30 to 40 thousand barrels per day of gasoline supplied by the Chinese in Iran through third countries. In 2009, Chinese companies have expanded market share in Iran, including through government structures such as the China National Petroleum Corporation and the Zhen Hua Oil - formally a private company. A side result was the growth of business activity in the UAE of small trading firms, including transport companies from Japan, Singapore, India and China.

U.S. and EU accuse China of trying to undermine the international sanctions regime against Iran, and supplies him dual-use goods. Americans used national legislation against Chinese companies that exported to Iran's chemical materials that could be used in the MIC. In preparing the resolution number 1929 in the UN Security Council, China has made every effort to ensure that its text were only those relating to the NPT regime.

Military-technical cooperation of China and Iran has developed to the late 90's, but arms from China supplied to Iran by extremist groups in the Middle East. Under pressure from Washington and Beijing because of the interest in cooperation with the United States and Israel since 1997, its projects with Iran in the nuclear area were dismantled and the PTS is minimized.

In 2004, signed a memorandum of Iran and China on cooperation in space technology and research, which culminated in the launch in 2008 by a Chinese rocket Iranian Sputnik Environment-1. In 2005, Iran joined as an observer in the Shanghai Cooperation Organization. In 2006-2008, Beijing supported the introduction of UN sanctions against him, in 2008, Chinese banks have a four-month suspended contacts with Iranian financiers. China opposes full membership for Iran in the SCO, but negatively related to the introduction of new anti-Iran sanctions, believing that they will provoke the Iranian uranium enrichment to 20 percent, but closer to Iran nuclear status.

In terms of sanctions against Iran, China for her - the main source of investment and technology. Using this, the Celestial Empire expands economic expansion in Iran, including in the transport sector on the basis of the "Protocol on Cooperation in the field of transportation" of 2003, which included issues concerning the construction of Iran's airports, ports, roads and railways. A special theme is the construction of new oil and gas pipelines. Investing in China's transportation infrastructure of Iran made $ 400 million, including construction of a highway "Iran - North" (260 million) and the subway in Tehran, Isfahan, Mashhad, Tabriz.

The concept of "Greater China" involves the creation of a new "Silk Road" - Asia-Europe transcontinental corridor through Turkey, Iran, Central Asia and the Celestial Empire, part of which should be a railway of China - Kazakhstan - Uzbekistan - Turkmenistan - Iran. China sells Iran a contract to supply 60 metro cars in Mashhad and a project to produce "national" car worth up to six thousand dollars. China National Heavy Truck Corporation in 2006, set in Iran 10 000 heavy truck and signed a contract with Iran Khodro Diesel to build them in Iran, China and South East (Fujian) Motor Co. Ltd. Iran set to 8000 vans Soueast Delica.

China since 2006, has a strong presence in the investment market of Iran, which employs more than 1,200 Chinese companies. In 2008 in Iran were implemented about 200 projects with Chinese participation, two-thirds - at international level. In 2005-2010, Iran and China signed investment contracts in the $ 120 billion in construction, petrochemicals, shipbuilding, cement, water and agriculture, development of ports Chabahar and Bandar Khomeini, energy (including the construction of five dams - to 800 million dollars). Chinese built hydropower plant in Iran, "Talegan" and "Mulla Sadra", will be built hydropower plant "Rudbar" (at the expense of Chinese credit lines to one billion dollars). In 2009, contracts were signed at $ 17 billion to lay railways and the development of the construction sector. China is ready to participate in the development of titanium deposits of Iran, and Iran - to build trade infrastructure in Xinjiang Uygur Autonomous Region.

Turnover of China and Iran increased from 14.4 billion dollars in 2006 to 21.2 billion in 2009, when the share of Chinese goods in Iranian imports was 13 percent (7.9 billion dollars). In addition to oil Iran exported to China goods to 3.12 billion dollars, making China second only to the UAE market for their sales. A substantial part of Iranian exports are metals (iron ore, pig iron, aluminum, copper, chromium, lead), propane, sulfur and marble, one of the largest consumers of which is China. Part of Chinese goods imported into Iran through third countries (mainly from the UAE), bringing the volume of Iran-China trade is equal to 30-36 billion dollars, making China the leading partner in Tehran.

Yevgeny Satanovsky ,
president of the Middle East Institute


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