Chinese infrastructure initiatives worth many billions of dollars seem to be paying dividends politically and economically. Honduras, one of the last nations to recognise Taiwan as a state, has made it known that it intends to sever diplomatic relations with the island.
As the US has historically supported Taiwan, switching allegiances would be a victory for China, which considers Taiwan to be under its control. Nevertheless, it would also signal a decline in American influence in South America. It looks as if China is influencing everything. China had mediated an agreement between Iran and Saudi Arabia days before Chinese president Xi Jinping travelled into Moscow to discuss the Ukrainian crisis with Russian President Vladimir Putin.
The high-profile agreement aimed to repair Saudi Arabia’s and Iran’s diplomatic, economic, and security ties in an attempt to reduce tensions and increase stability in the Middle East. With the signing of the deal, China’s participation in the area shifts from one primarily motivated by economic objectives to one that involves security cooperation to safeguard its expanding assets and expatriate population.
Commentators see the accord as a welcome move but are unsure of Iran and Saudi Arabia’s ability to reduce domestic strife in a number of close-by nations. This is especially true in countries like Lebanon, Syria, and Yemen where they support oppositional parties.
The agreement does serve to underscore China’s growing influence and the US’s declining control over the regional order in the Middle East. Studies have demonstrated that political unrest in a country’s neighbours has a detrimental impact on its economic performance by interfering with trade flows, boosting defence spending, and decreasing investment in things like education.
Economic incentives may be used to propel a peace-building process in certain circumstances. Conflicts that are peacefully resolved are advantageous to nations that are not directly involved. China has steadily surpassed Saudi Arabia as Saudi Arabia’s biggest trading partner during the 1990s, making it the largest trading partner in the whole Arab world. The average annual growth rate of China’s exports to Saudi Arabia has been 15.3%, from $905 million (£740 million) in 1995 to $31.8 billion in 2020.
China’s imports from Saudi Arabia increased from $393 million to $33.4 billion over the same time period, an average annual growth of 19.4%. China and Saudi Arabia inked 35 trade and investment agreements in 2019. Similar to how exports from China to Iran expanded from $276 million in 1995 to $8.51 billion in 2020, they did so at an average yearly pace of 14.7%. Moreover, from 1995 ($197 million) and 2020 ($5.85 billion), its imports from Iran increased by 14.5% yearly.
Exports reached $9.44 billion by 2022 and kept accelerating until early 2023. China used to be Iran’s top oil consumer, but Russia recently surpassed China as the country with the highest foreign investment. Radio and television equipment, automobiles, and air compressors are among China’s top exports to Saudi Arabia and Iran. Crude oil, ethylene polymers, and acrylic alcohols are its key imports.
Trade with China is anticipated to continue to increase in light of the rapprochement between Saudi Arabia and Iran. China might profit from its commercial ties with those nations as regional stability rises if advantages from the accord extend to other nations in the area.
Some evidence of such beneficial spillover already exists. Iran is prepared to increase collaboration after the deal with the Saudis, anticipates reconciliation with Bahrain, and is eager to enhance ties with Jordan and the United Arab Emirates. It’s important to note that some experts point out that earlier attempts at rapprochement between Iran and Saudi Arabia failed, while others wonder whether they would uphold the conditions of the deal.
