CHINA: It is where Arabic leaders go if they want to do business in China, and where the Chinese go as well, if they want to do business in the Middle East.
Billions of dollars of Arab-Chinese investment flow through the Ningxia region, the first stop along the New Silk Road connecting China to the Middle East.
Its Islamic heritage is what has earned Ningxia, in northwest China, that honour. It has more than 400 mosques, and its state-run Islamic schools have produced some 7,000 imams.
It is home to the highest concentration of the 11 million Hui people in China, who are the largest group of Muslims in the country and the second largest of China’s 55 officially recognised ethnic minorities.
They are descendants of Arab and Persian merchants who travelled to China in the seventh century, married local Chinese women and planted the roots of Islam in the heart of the country.
Their numbers in Ningxia – they form about one-third of its population – have made for extensive links to Muslim nations, whether through faith, food or finance.
Now, their close connection to the history of the old Silk Road has placed them at the heart of a rebalancing of global relations at work, one that may also reshape the Middle East and its important energy sector.
China’s revitalisation of its ancient trade routes to the Middle East is bringing oil refineries, mines, factories, shops and educational institutions to countries in that region, as part of the trillion-dollar Belt and Road trade initiative.
But more, it is also seeing China extend tendrils of soft power – from language and culture, to martial arts and romance – across the region, from Tehran to Islamabad. Season three of The Silk Road journeys into parts of China and the Arab world to explore the extent of that courtship. (Watch the series here.)
WOOING THE ARAB WORLD
In the first episode, this wooing of the Arab world begins in Ningxia – particularly during its China-Arab States Expo, attended by Middle Eastern heads of state, high-level Chinese government officials and hordes of businessmen and journalists.
The Arab states have no equivalent expo with the United States or Europe, which gives Chinese enterprises an unparalleled platform to reach out to the Middle East. Many deals are inked – and it has been a staggering amount.
In September, more than 250 deals worth at least RMB186 billion (S$38 billion) were signed with countries such as Jordan and Egypt, as more than 1,000 companies from 47 countries gathered to pitch partnerships and services.
Even before that, 876 contracts worth RMB436 billion in total had been inked in Ningxia since 2010.
For instance, at the recent expo, Egypt’s investment authority told the programme that the country hoped to attract “the biggest companies in power stations, in energy, in industry and in all infrastructure activities”.
China is building high-speed trains in Egypt – a hot favourite among other countries too – industrial parks and even a new administrative capital, as yet unnamed, to replace Cairo. These agreements are worth US$15 billion (S$20 billion).
Arab businesses are also eager to enter the Chinese market. Lebanese businessman Elie Kazzi, the export manager of Al Kazzi Nuts, said:
If one per cent of the Chinese people will eat our nuts, we won’t be able to sell anywhere else.
“They’ll take all our production capacity, and we’ll be growing for sure.”
IMPACT ON REGIONAL STABILITY?
It’s not just good for businesses. In theory, the Belt and Road investments could even contribute to stability in the Middle East, political analyst Einar Tangen noted.
If you look at the list of countries that have signed on to Belt and Road, many of them are hard-core enemies. You have Iran and Saudi Arabia, and Israel and Palestine.
He cited China’s moves to secure its energy security through investments in oil companies in both Saudi Arabia and Iran in particular, which he described as “unusual, given that they’re supposedly implacable enemies”.
He added: “China is trying to stabilise the situation by having a foot in every camp and not … playing politics but simply trade. If they stay on the trade links, they have some hope of dealing with it.”
Chinese academic Li Goufu agrees. But the director of the Centre for Middle East Studies at the China Institute of International Studies noted that regional stability will also take time.
He said: “What China is going to do is … to help economic development and, in this way, to provide hope for the young people.
When people have hopes (and) jobs, they believe that they can have a decent life. That kind of belief or hope will keep them from radicalism.
CHINA’S LITTLE ARAB: WORLD’S LARGEST SMALL-GOODS MARKET
Within China, the New Silk Road is not only about big business, governments and the energy sector – it is also about the little guys: The traders, merchants and manufacturers.
And thousands of them from the Arab world, and elsewhere, also travel to another part of the country that has earned a reputation as the Little Arab of China: Yiwu, along the southern coast in Zhejiang province.
The Yiwu International Trade City, the world’s largest small commodities market, is where many $1 shops round the world get their products, from soft toys to balloons to imitation jewellery.
It has over 200,000 shops catering for an equal number of visitors daily. Its floor space is equivalent to more than 1,000 football fields, and it is said that it could take more than a year to check out all the shops.
WATCH: Explore the market (3:54)
Thousands of shopping agents bring clients here from the Middle East to source for goods, such as clothes, art, decoration and hardware.
Some Middle Eastern vendors even buy goods such as Islamic art from Yiwu and “pass them off as something made in those countries”, said shopping agent Su Xiaobing, adding with a shrug: “It happens.”
Explaining why Iranian buyers have turned to Yiwu for headscarves, for example, Iranian businessman Hamid Dehghani said: “We can’t produce this in Iran because the machinery and facilities aren’t there.
“And the second factor is that costs there – labour, overtime, et cetera – would be very high … It’s more cost-efficient in China.”
In May 2014, the city exported US$77 million worth of small plastic decorations, US$44 million worth of plastic manufactured products and US$36 million of imitation jewellery. For the whole of 2016, it exported more than US$17 billion worth of products – more than the annual gross domestic product of countries like Laos and Brunei.
SILK ROAD OF LOVE
In the process of business, the sparks of romance have also been ignited.
Jordanian businessman Mohanad Ali Mohd Shalabi and wife Liu Fang, who run a restaurant – one of dozens of Middle Eastern restaurants set up in the city – are seeing more cross-cultural marriages like theirs.
Said Mdm Liu: “The New Silk Road has brought many youths from the Middle East to China, to Yiwu. They find they have a high happiness index here, so many of them are choosing Chinese wives.”
According to Mr Tangen, these love stories have been going on “for a long time”.
It might be love, but it’s also very practical because now you have a web of connections and understanding. You have somebody whom you can trust, who can tell you what the situation is.
And with more mixed marriages and a growing Middle Eastern diaspora comes a new generation of Silk Road ambassadors.
These include the international students in local public schools. Yiwu Special Economic Zone Primary School head of curriculum Chen Hua Yen said: “When we first started taking in foreign students, there were only two or three students applying every year.
“Now, there are 11 foreign students enrolled in this year alone – eight are in Primary One.” To help them adjust, the school has a support programme with specialist teachers.
SOFT POWER, HARD CASH
Across China, thousands of scholarships have been offered to people from the Middle East and other Silk Road regions to study in Chinese universities; while Chinese-language institutes funded by Beijing have also sprouted in countries like Afghanistan, Iran and Lebanon, as part of China’s soft power push.
The New Silk Road programme explores these facets of soft power that come along with hard economic investments. Said Mr Tangen: “China is a world power, but it doesn’t necessarily have a lot of people who are very versed in this area and vice versa, from these other countries.
“China looms large on the headlines, but the details can be sometimes overlooked in terms of how many people speak Chinese.
They’re trying to pursue it in terms of people-to-people exchanges, education and things like that – but it’s a very aggressive kind of initiative.
The team of producers explores, for instance, the role of Confucius Institutes and martial arts like wushu in places like Tehran.
The episodes also take viewers across Pakistan, to discover the roads, railways, dams and pipelines that China has funded, to the tune of US$65 billion so far – the flagship project of Chinese President Xi Jinping’s One Belt, One Road policy.
Another strategic partner is Iran, with Beijing capitalising quickly on the lifting of sanctions against Iran. Both countries have agreed to increase bilateral trade to more than US$600 billion by 2026, and the programme looks at what the deal involves.
Also crucial to Beijing’s master plan is its transformation of the Suez Canal into a new economic zone and springboard for infiltrating the African market. The show’s producers investigate China’s strategic objectives in Egypt and the challenges involved.
The Belt and Road is a high-stakes game. Chinese companies may lose billions of dollars if investments go sour. But if successful, opportunities abound.
There are implications not only for those in the Middle East but also everywhere else who depend on the region for oil, whose lives are impacted by the refugee crisis and whose homes could be destroyed by radical Arab groups.
Watch the third season of The New Silk Road on Tuesdays, from Jan 16, at 11pm (SG/HK); or online here.