Qatar Crisis Poses Test for China’s Belt & Road Project

The diplomatic crisis between Qatar and its Gulf neighbors is putting China’s political clout in the Middle East to the test as Beijing strives to flex its economic muscle there with its trillion-dollar Belt and Road trade Initiative (BRI).

But analysts say many of China’s belt and road projects are often more aspirational than reality, including those involving Gulf nations, which gives the world’s second-largest economy less-than-expected leverage to play a bigger role in a region plagued by domestic unrest, intra-regional conflicts and superpower competition.

On top of that, they add, China’s own diplomatic policy of non-interference also limits Beijing’s ability to engage with the region.

Simmering Gulf crisis

On Monday, Saudi Arabia and its allies including United Arab Emirates (UAE), Bahrain and Egypt led a regional effort to cut diplomatic ties and possibly air and sea traffic with Qatar, accusing it of funding terrorism � charges that Doha has denied.

Despite efforts by the U.S. and Kuwait to prevent a further escalation, the Gulf crisis is showing no signs of abating after the UAE threatened to impose an economic embargo against Doha and Bahrain added all options were on the table.

Given China’s increasing economic interests in the region, there have been calls from some for Beijing to adjust its no-interference policy and take up a more active role.

Or the spat, observers fear, may disrupt part of President Xi Jinping’s ambitious BRI, which stretches across 65 countries and encompasses Asia, Africa and Europe.

In no hurry to mediate

But Li Quofu, a senior research fellow at China Institute of International Affairs, said China is in no hurry to mediate conflicts in the Middle East.

He said China believes Gulf nations remain committed to iron out their differences while Xi’s trade initiatives provide a solution for them to work together.

We’ve proposed the BRI � a great platform, which we hope Middle Eastern countries would utilize to co-develop their economies instead of fighting each other. In this regard, I think China is already playing an active role there, Li told VOA.

According to Wu Sike, formerly China’s Special Envoy on the Middle East issue, China’s cooperation with the region has deepened, partly due to the BRI. For example, Kuwait plans to invest $130 billion to build a northern Silk City, which will help connect Europe and Asia as part of the Silk Road.

China is also switching its earlier focus on energy in the region, which accounts for half of its imported oil, to investment with trade in manufactured goods having risen substantially, Wu said in May.

As such, China will place its vested interests in the region before its political role despite the BRI showcasing its ambition to expand its geopolitical influence globally, said Wang Tofar, an economics professors from National Taipei University.

The BRI actually carries a strategic implication, in which China is poised to challenge the U.S.’s economic [or political] power, Wang told VOA.

China First

But whether China will rise to mediate in the Middle East, it depends on whether it is within China’s interests as China will prioritize its economic interests there, the professor added.

Given its dependence on the region for energy, China will be required to play some kind of role, although its involvement there will be highly circumscribed, said Kerry Brown, associate fellow with the Asia Program at London-based Chatham House.

It has direct, tangible interests in the region. But it also is desperate to avoid being sucked into the intractable problems that exist there. So in the end it has to perform a balancing act, Brown wrote in an emailed reply to VOA, adding that China’s non-interference principle will also cause a constant brake on its desires to be more involved in the region.

Insufficient economic clout

Chang Liu, China economist at Capital Economics, has doubts China even has the required economic clout to influence in the region.

In the case of BRI projects, it is often the case that rhetoric is more ambitious than reality, Liu said in an emailed reply to VOA.

For example, it remains unclear whether Kuawit’s Silk City project will be completed or where the financing would come from.

China’s latest commerce data shows its foreign domestic investments (FDIs) to Kuwait declined from $162 million in 2014 to $144 million in 2015.

China’s combined FDIs to Kuwait, Omen and Saudi Arabia totaled $560 million in 2015, which the economist said wasn’t insignificant, but only equivalent to 5 percent of what China invested in Singapore and 0.4 percent of its total outbound investments in 2015.

There’s little evidence that China has been investing significantly more in countries that are part of the BRI since it kicked off in 2014 than before, he concluded.

Source: Voice of America

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