Khaleej Times reported that GCC countries plan to invest about USD 3 trillion on infrastructure, leisure and tourism sector by 2020 to diversify their economies and exports as well to get the advantage of growing trade and investment ties with China and India.
An in depth research report issued by Al Masah Capital Limited said that "Having realized the urgent need for economic diversification since the past few years, focus on growing and investing in services trade has been one of the core development strategies in some MENA countries. Resource rich countries, such as Saudi Arabia and the UAE, have significantly invested in services to further diversify their economy and exports while Saudi Arabia, Morocco and Egypt are also emerging among the favored tourist destinations."
The report entitled ''China and India''s Growing Influence in the MENA Region: Their Legacy and Future Footprint'' further said countries are also diversifying service exports.
The report said that "Dubai is promoting exports of ICT and media services in its Media city and Internet city. Morocco is becoming an important off shoring centre, with the opening of a new off-shoring park in December 2007."
The report said that "MENA, benefiting from its geographical position, is expected to become a major services hub and trade link between Asia, Europe and Africa. In order to enhance ties with China, MENA companies could team with Chinese counterparts to supplement respective skill sets and offer closer proximity to the European, and African markets. Alternatively, Chinese companies can establish a regional base in MENA through FDI or joint ventures to secure easy access to neighboring countries and Europe."
The report further said increasing importance of the China-MENA trade conglomeration on energy as well as on trade, investment, and political alliances is setting the stage for MENA''s need for greater economic diversification and emergence as a knowledge enterprise.
It added that "Rapid economic development in China and India over the past decade has contributed to the significant rise in their energy requirements. MENA, with its abundant oil and gas reserves, has been a key energy supplier for the two countries. The historical trade relationship between India, China and the MENA has been predominantly based on oil imports. However, the picture is changing rapidly with growing trade diversification and expanding economic, trade and investment ties."
The report said that "With China and India continuing their economic uptrend, their dependence on the MENA for energy supplies is expected to increase. However, besides oil, MENA''s competitive advantage in other sectors such as petrochemicals, basic materials and fertilizers is yet to be explored. On the other hand, MENA’s drive to achieve greater economic diversification and become a knowledge enterprise is complemented by China’s and India’s expertise in the technology and services sector."
The report said that "China is currently the second largest oil consumer in the world as the oil demand is expanding rapidly, keeping pace with the fast economic development. The country''s GDP has risen 9.5% per year on an average during the past 30 years and is expected to grow 10% and 8.7% in 2010 and 2011, respectively. Hence, oil is expected to be the key trading commodity between China and MENA, going forward."
Considering China''s huge energy requirements, energy security features among the top priorities under the country’s energy policy in the Middle East. However, China’s energy policy for the MENA region has undergone a major shift in recent years. Historically, the country utilized its arms for oil formula to bolster its relationship with MENA countries. However, in recent years China has adopted an active policy in the MENA region driven by energy supply concerns and commercial interests of its national oil companies. Chinese NOCs are under threat owing to the rapidly depleting domestic resources and increasing competition from foreign and domestic players. With regard to this, China’s government has allowed Middle East countries to invest in China’s downstream sector. Resultantly, Chinese NOCs are actively participating in the oil and gas projects in Kuwait, Oman, Qatar, Syria, the UAE and Yemen.