China-GCC Free Trade Agreement? 22, September 2009
Posted by thegulfblog.com in China and the ME.Tags: China, China and the GCC, China and the Midd, China and the Middle East, New Silk Road blog, Oil, String of pearls
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China’s integration into Middle East’s markets continues apace. Plans have been announced to form a free-trade zone between the GCC and China. According to Qatar’s daily newspaper, The Peninsula, the first round of talks were held in Riyadh and were successful.
Key to the GCC’s thoughts are the removal of custom tariffs. As for China, they will welcome any kind of increased or deepened relationship with the GCC. China’s thirst for energy is increasing at seemingly inexorable rates whilst their domestic supplies are in their twilight years. The confluence of these factors (discussed here) rightly has the Chinese leadership searching for better links with oil producing areas of the world to bolster their energy security (discussed here). Indeed, it is thought that China’s so-called ‘string of pearls’ – naval bases strung around the Indian Ocean including a key one in Gwadar in Pakistan right at the Straits of Hormuz – are aimed first and foremost at guarding the life-line of oil and gas from the GCC to their mainland (more here and here).
However, not all of China’s best made plans are coming to fruition. Ben Simpfendorfer’s excellent New Silk Road blog mentions two setbacks recently for the red state.
Libya has rejected a $417 million bid by China National Petroleum Company (CNPC) for Verenex, a Canadian oil-exploration company with Libyan oil leases. Libya’s national company has since purchased Verenex at 30% less than CNPC’s offer price. I’m [sic] not sure if Libya’s response was specific to China itself, or a de-facto attempt to nationalize some of its oil assets. But the response is interesting given that Libya, alongside Algeria, is one of few countries in the Middle East to receive large numbers of Chinese workers. In fact, I heard from a Libyan central bank official in June that 6,000 Chinese workers had applied for visas in the previous month alone. And I wouldn’t be surprised if this has caused some friction.
Iraq may blacklist China’s Sinopec for its purchase of the Geneva-based oil-exploration company Addax, which owns several licenses directly issued by the Kurdish Regional Government. The licenses are in breach of an Iraqi law requiring all oil deals are made in Baghdad.
India: catching up to China’s string of pearls 8, September 2009
Posted by thegulfblog.com in China, The Sub Continent.Tags: blue water navy, China's navy, India's navy, Indian Ocean, String of pearls
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(Red crosses – China’s bases: Black boxes – India’s bases)
There’s an interesting article in the Asia Times Online discussing India’s establishment of a port in the Maldives. This come in large part as a reaction to China’s string of pearls i.e. their naval bases around the Indian Ocean that have the Indians somewhat perturbed. The map is a crude representation of where their respective naval bases are in the region (based on open-source information). In addition, India have the use of a base in Madagascar whilst China have the use of a base in Kenya and Tanzania.
Hat tip: Andrew Bishop
China’s string of pearls 7, May 2009
Posted by thegulfblog.com in China, China and the ME.Tags: America, China, military bases, myanmar, pakistan, Sri Lanka, String of pearls, Taiwan, Vietnam
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This (somewhat amateurish) map shows China’s string of pearls. This refers to ports that China has invested in to refurbish and use at their discretion. Those of a more alarmist nature see these moves akin to the establishment of Chinese naval bases by stealth. The map below highlights the reasoning behind these moves.
China’s desire to secure the route for their ever expanding dependence on Middle Eastern oil and gas is understandable. No country in the world would want such a vital supply line out of their guaranteed control. Whilst China has frosty but reasonable relations with India and America, the only countries with the navy to challenge China in that part of the world, China can not count on these relations for ever. Indeed, with the ever increasing race for the Gulf’s oil and gas resources with India and the always-fractious issue of Taiwan with America, there are without doubt issues that can potentially arise.
Despite how understandable one may think China’s actions are, for India they must be arousing serious concerns. Having China’s potential military bases to close to their mainland, not to mention encircling them, is not something that the Indian government can take lightly. It is, therefore, no surprise that India are the second largest weapons importers in the world presently. As for America, they will not be overly pleased to see China’s reach extending towards the straits of Hormuz. Moreover, their preeminence in blue water is now coming under more and more of a threat. The military and the US Administration need to be aware, however, that these Chinese ports – despite what they might signify – are not, in and of themselves, a threat. America needs to keep any bellicose language to itself at this stage and save it for when it really matters.
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