Xi's visit brings 'One Belt and One Road' cooperation to new level

Chinese president Xi Jinping started his visit to the Middle East on Jan 19th,2016. The night before his arrival, Xi stated on Al-Ahram newspaper that China and Arab countries should conjoin their development strategies through "One Belt and One Road",and expand cooperation on energy,trade investment,infrastructure construction,and high technology ."'One Belt and One Road' deepens regional cooperations and communication. China and Arab have mutual needs for each other, so cooperation helps achieve win-win situation",said Wang Baoyi, the former cultural counsellor from Chinese Embassy in Arab States, when he received the interview.

Initial visit to Middle East in new year stimulates capital exchange over One hundred billion dollars

In the Ministerial Conference of China-Arab Cooperation Forum(Beijing) held in June,2014, President Xi proposed that two countries should work together to implement "One Belt and One Road"strategy by building a new "1+2+3" cooperation with energy cooperation as the spindle, infrastructure construction,trade and investment facilitation as two wings,nuclear energy,space satellite and new energy as the breakthrough. Bases on this proposal, Asian Infrastructure Investment Bank(AIIB) receives positive response from Arab countries, among which seven countries become the founding members and six countries including Egypt,Saudi Arabia and Iran have signed "One Belt and One Road"agreement with China.

Achievements of the visit are gradually to be seen by the world. On Jan,19th, China signed 14 cooperation agreement and memorandum with the Saudi government on travel, renewable energy, industry,science and technology and aerospace; according to the media, Chinese president's visit to Iran 14 years later will bring more cooperations to the two sides, which would cover "One Belt and One Road"strategy ,energy,finance, high speed rail, free trade zone and quite a number of assignments will be signed;China and Egypt are ready to assign assignments concerning civil aviation, power project,and construction of Egypt's new administrative capital.

Moreover, China, together with Arab countries,will set up a specific loan of $15 billion for the industrialization in Middle East, and provide $10 billion commercial credit to Middle East countries. Besides, China will provide $10 billion concessional loan to Arab countries,and set up $20 billion mutual investment found with UAE and Qatar. In 2015, China announced $46 billion investment to China-Pakistan economic corridor. So together with the free assistances and humanitarian fund, the capital exchange between China and Arab countries is more than $100 billion.

The balance between returns and risks should be paid attention to when Chinese enterprises go out.

"From the development perspective, Saudi Arabia, Egypt and Iran, these three countries all have very large investment opportunities, especially in areas such as infrastructure construction, medical treatment and high-tech, investment is urgently requested", when interviewed, Wang Baoyi said that Chinese enterprises are quite competitive in the above-mentioned areas, however, they need to be well prepared to face the risk of sudden changes as situation in the Middle East is rather complicated. ?

Chinese enterprises invest quite frequently in the Middle East. PetroChina, State Grid Corporation of China, China Communications Construction Company Ltd., China Railway Construction Corporation Ltd., China Harbor Engineering Company Ltd, Sany Heavy Industry, Huawei Technologies Co.Ltd. and so on, all have massive investments in Arab countries. It is reported that many leaders of state-owned enterprises have accompanied President Xi to pay this visit, and China is expecting to strengthen the cooperation with Arab countries in various areas such as ports, airports, high-speed rail, pipeline construction and so on.

However, investment from Chinese enterprises in the Middle East is not always going smoothly. Wang Baoyi said, "As far as I know, projects involving labor contract dispute, credit default and investment loss are not few in number. On the one hand, this is caused by long-term complicated contradiction in the Middle East; on the other hand, factors of Chinese enterprises themselves should also be considered". In 2009, the amount of net deficiency in projects of China Railway Construction Corporation Ltd. in Saudi Arabia was 1.3 billion. It was until July 2015 that China Railway Construction transfered the Mecca light rail that it has been given the contract to build to the Saudi government, which finally put a satisfactory full stop to the whole project.

"When looking at the overall situation, it will be an inevitable trend for Chinese enterprises to go out to make investments, which will do more good that harm on the whole. Chinese enterprises need to learn from experience and lessons in the past and pay attention to the balance between the investment returns and risks" , Wang Baoyi told the reporter.