Win-win Sino-Arab ties in game-changer mode(3)

According to a report jointly released by the Chinese Academy of International Trade and Economic Cooperation and the Commerce Department of Ningxia, cooperation between China and the Arab world is deepening or growing on all fronts, including in established sectors like energy and infrastructure. Partnerships in new avenues like green low-carbon projects, healthcare, aerospace and the digital economy have also gained momentum.

For instance, Saudi Aramco, a petroleum and natural gas company, is proactively seeking cooperation in technology, R&D and innovation with its Chinese counterparts. Another goal is to harness the renewable energy potential of blue hydrogen, ammonia and synthetic fuels in the Arab world and reduce dependence on traditional fossil fuels, said Mutib Harby, Asia president of Saudi Aramco.

The company has set up an R&D center in China and established R&D partnerships with relevant institutes, said Harby. The Chinese government's strong commitment to industrial transformation and future industrial development has fostered an enabling environment for foreign businesses such as Aramco to invest in China and grow their business in the vibrant market.

China's technologically advanced power generation technologies and related equipment in the sectors of wind power and photovoltaics are now ready to help Arab countries shift to a more sustainable energy system, said Xu Hongcai, deputy director of the China Association of Policy Science's Economic Policy Committee.

The Arab region is especially suited for the development of clean and renewable energy since it has some of the best solar and wind energy resources across the globe. China, on the other hand, has sophisticated technology and extensive experience in these areas, and can work with Arab nations to attain integrated development in the area of clean and renewable energy by complementing each other's capabilities, Xu said.

That will also contribute to global efforts for combating climate change, unlock economic opportunities and enhance energy security, he said.

Another area set to shine is digital cooperation, as highlighted by e-commerce, digital payments and supply chain digitalization, said Yan Lijin, chairman of China Silk Road Group.

Digitalization and local currency settlements are big themes now on the back of technological advances, higher trade volume, mutual trust and changes in the global economic system, Yan said.

Countries such as Egypt and the UAE have an urgent need for digital development, so helping Arab nations build their digital technology infrastructure will substantially facilitate Sino-Arab relations at governmental as well as business levels, besides bringing lifestyle conveniences like digital payments to consumers, Yan said.

That said, there are certain challenges in cross-border cooperation due to rising geopolitical tensions and sharper exchange rate fluctuations.

Since China and Arab nations are cooperating in commerce, investment and infrastructure, among others, there is an imperative to push ahead local currency settlements in both trade in goods and trade in services to minimize potential risks, officials and experts said.

The existing monetary system has been oriented to trade in goods. Although Chinese exports currently make up 30 percent to 40 percent of the global share, only 3.25 percent of international trade settlements are made in the Chinese renminbi, Yan said.

So, China is willing to work with Arab states to explore renminbi settlements for oil and gas trade, so as to safeguard the security and stability of global energy supply chain, said Zheng Jianbang, vice-chairman of the Standing Committee of the 14th National People's Congress, the country's top legislature.

Instead of avoiding a single currency, the first step should be to diversify the currencies with trading partners and attempt to settle in local currencies that are accepted by both parties, said Zou Jianglei, China chief executive officer of First Abu Dhabi Bank.

Trading partners can gradually adjust to currency diversification without significantly affecting their own currencies. With the expansion of trade and the growth of a particular currency usage between the two sides, they can arrive at the convergence of major currencies for trade settlement. It would be a new path worth trying for both sides, Zou said.

An Ming, governor of the Shanghai branch of Bank of Africa, said trading in local currencies helps create a better economic and trade environment conducive to sustainable growth by lowering currency exchange costs and reducing the risk of exchange rate fluctuations. This improves the stability and predictability of cross-border trade while encouraging two-way investment.

A close working relationship between Chinese and Arab banks would help promote financial stability, lessen dependence on intermediary currencies and boost bilateral economic connections, An said, adding robust infrastructure and systems are required to simplify transactions and offer safe and effective clearing services.

The China-Arab States Expo, held in Yinchuan for six straight times, has emerged as an important platform for China's opening-up. A pilot zone based in Ningxia could be a practical and effective way to explore local currency settlements between China and the Arab world, An said.