China Pledges Humanitarian Aid to Middle East

Xi Jinping. Photo by Antilong

Xi Jinping. Photo by Antilong

As the crisis in Syria and elsewhere in the Middle East continues, the plight of refugees and others worsens. China, whose president, Xi Jinping is scheduled to visit in Britain next week, promised additional humanitarian assistance to the embattled Middle East.
The Chinese Deputy Foreign Minister Wang Chao announced that China is carefully following the developments in the region, and is ready to add significantly to the 375 million yuan ($54.9 million) it has already given to the region.

Wang explained that the aid will help the refugees flowing out of the countries in conflict as well as reduce their numbers. He also said that President Xi will discuss with his British counterparts a variety of issues of concern to both sides. In the past the countries have cooperated on critical issues such as the Ebola epidemic, the Iran nuclear threat and the trouble in the South Sudan.

“China-Britain relations have surpassed the bilateral scope and adopted strategic significance and global influence,” Wang said.

Wang added that China and Britain will continue to cooperate on issues like world economic growth, global security, and the reform of global governance.

China Surpassing Japan in Economic Outlook

While all eyes have been on Japan’s economic outlook for years, it’s time to turn that perspective towards China.  As many investors such as ARC Investment Partners understand, China is actually expected to surpass Japan as the world’s top consumer of luxury goods by 2012, and this is just one example of their economic momentum.  According to the World Luxury Association, there is growing demand in China for such goods, and a decreased consumption in Japan.

In a survey they released in Beijing, the WLA predicted that luxury goods in the Chinese market (not including private jets, yachts, and luxury cars) will get to $14.6 billion in 2012.  In the 13 month period from February 2010 to March of 2011, it was $10.7 billion.

As Michael Ouyang, the Chief of World Luxury Association China office said, “China has been rising with the fastest annual growth.”

In important news for investment groups like ARC Investment Partners with Adam Roseman, Mr. Ouyang also said that companies that have opened stores in China’s first-tier cities will have even more opportunities in the second and third-tier cities.

Certainly, the economic problems in Japan with luxury sale items can be partly explained by the devastating earthquake in March.  49% of brand stores had to stop business for one month following the earthquake, as the survey pointed out. Not only does the World Luxury Association expect this slump in the Japan market to continue for a year, but it predicts that 70% of brands will move their commercial plans to China as a result.

What If the Oil Stops Flowing from Oman Too?

china oil supply

China Imports Oil From Oman

As tensions in the Middle East continue to rise, concern about the political stability in Oman is mounting. Unrest in the sultanate has not yet reached the levels seen in countries such as Libya or even Bahrain, with only 2 deaths which can be attributed to clashes between demonstrators and security forces, but there are fears that the situation in Oman will worsen.

China and Asia Worried

The majority of oil exports from the Middle East go to China and Asia who are especially worried that Oman will join in the general grassroots uprising spreading like wildfire throughout northern Africa and the Middle East, breeding fear in the east that the supply of oil from Oman may be disrupted.

Oman is not a member of OPEC (Organization of Petroleum Exporting Countries) but it does have the largest supply of oil reserves of any country in the Middle East which is not a member.  In 2010 Oman produced 863,000 barrels per day of total petroleum liquids, almost all of which was crude oil. Over the past three years oil production there has increase by more than 20%.

Can Saudi Arabia Fill In for Libya?

At the moment there is nothing but uncertainty about how much the flow of oil from Libya will be disrupted due to the war raging there. Saudi Arabia has said that it can increase output to cover the Libyan deficit of oil deliveries, but to what extent it can do this is a big question.

West Looking East with Concern

The main importers for the oil from the Middle East and North Africa are Asia and China, who are watching the developments in the region with growing concern. Most likely, if the situation worsens and oil supplies are severely  disrupted, China and Asia will turn to Mexico for their oil, leaving countries such as the US, Great Britain and Europe to fend for themselves.

ARC China: Middle East Meets China

In my previous post I detailed the linkage between China’s rise in economic stature and its positive implications for our region.  Well ARC China, a respected investment firm based in China concurs:

Middle Eastern sovereign wealth funds Qatar Investment Authority (QIA) and Kuwait Investment Authority (KIA) are poised to become the largest investors in the Hong Kong portion of the Agriculture Bank of China IPO next month after signing agreements to invest $2.8 billion and $800 million respectively. This is an important development as China’s largest lender by number of customers, the Agricultural Bank is seeking to raise as much as $15 billion for the Hong Kong portion of what may become the world’s largest IPO to date.

Its clear that this natural partnership will only grow and benefit regions.