Kuwait plans a future megalopolis – a $100 billion project known as Silk City. The new development is set to transform the oil-rich country but also to hardwire Kuwait into the regional architecture of a rising global power: China (asiatimes.com/).
Since January of 2018, Madinat Al Hareer (translated to Silk City), Kuwait’s future city has been under construction. Conceptualized as a solution to Kuwait’s growing overpopulation and overloaded infrastructure issues, Madinat Al Hareer is also expected to boost Kuwait’s already strong economy.
The city will be connected to Kuwait City via the Jaber Causeway which is still under construction and is highly anticipated due to the numerous attractions it is going encompass upon its completion. With the capability of housing up to 700,000 people, Madinat Al Hareer is going to incorporate multiple other attractions like an Olympic Stadium, nature reservation area over a 2 square kilometers area, and a new airport. A duty-free area in addition to multiple amenities will include business, leisure, athletic and environmental areas, and conventions (weetas.com/madinat-al-hareer-next-big-thing/).
The city also aims to cement Kuwait into a larger, global picture. The selection of the northern area aims at transforming Kuwait into an international hub for huge foreign investments (asiatimes.com/article/a-bridge-to-china-kuwaits-silk-city/).
According to 2008 estimates, Kuwait’s exports, totaling $95.46 billion, consisted of oil, oil products, and fertilizer. Their destinations included: Japan 19.9%, South Korea 17%, Taiwan 11.2%, Singapore 9.9%, the US 8.4%, Netherlands 4.8%, and China 4.4% (2007). Kuwait, with only 130 square km of irrigated land (2003 estimate), less than 1% of arable land, and with an almost non-existent industrial base, depends entirely on imports for almost every necessity and luxury of life. According to 2008 estimates, it imported food, construction materials, vehicles and spare parts, and clothing worth $26.54 billion (f.o.b.). Which came from: US 12.7%, Japan 8.5%, Germany 7.3%, China 6.8%, South Korea 6.6%, Saudi Arabia 6.2%, Italy 5.8%, and the UK 4.6% (2007) (mei.edu/publications/kuwait-looks-towards-east-relations-china).
China is already the largest investor in the Gulf and the Gulf’s number two trading partner. The new transport, logistics and financial hub in the northern Gulf are set to join the People’s Republic’s ambitious Belt and Road Initiative (BRI). Kuwait has already become one of the most active partners in the BRI, too, with it looking east for economic development, while China looks west (asiatimes.com/article/a-bridge-to-china-kuwaits-silk-city/).
Kuwait and China have long enjoyed cordial and friendly bilateral relations. Both sides have been working steadily to broaden and deepen cooperation in the political, economic, and social fields.
The Chinese fondly recall that Kuwait was the first Gulf state to establish diplomatic relations with them 38 years ago, on March 22, 1971. Beijing also appreciate[s] Kuwait’s valuable support on such issues as Taiwan, human rights, and others. Kuwait continues to firmly adhere” to the one-China policy, opposes any attempt to forge two Chinas or one China, one Taiwan” and supports China’s any efforts in safeguarding national sovereignty and territorial integrity.
High-level contacts and bilateral visits reflect the state of relations between countries. The members of the Kuwaiti ruling family holding important positions in the government visited China even before the establishment of diplomatic relations in 1971. The late Amir Shaykh Jabir al-Ahmad Al Sabah visited Beijing in February 1965 when he was Minister of Finance, Industry, and Commerce. Again, in his capacity as Amir of Iraqi-occupied Kuwait, he visited China for three days, beginning on December 26, 1990, to canvass support for ending the Iraqi occupation of his shaykhdom. Following the liberation of Kuwait in February 1991, the late Amir again paid a three-day visit to China to convey his country’s gratitude to the government and people of China for their invaluable support during the darkest days of Kuwait’s history (mei.edu/kuwait-looks-towards-east-relations-china).
The selection of the northern area aims at transforming Kuwait into an international hub for huge foreign investments and will enable us to reach out to far places like the Red Sea and the Mediterranean, Turkey, and Eastern Europe.
In this wider strategy, China plays a key role. Soon after meeting a major delegation from the People’s Republic and signing several key Memorandums of Understanding – including one to begin the first phase of Silk City’s construction. China is involved in Khalifa port in Abu Dhabi, Duqm port in Oman, Jizan in Saudi Arabia, Djibouti and Port Said in Egypt. Kuwait can be part of this, while also connecting to the overland routes of the New Silk Road through Asia and down into Iran and Iraq.
China’s participation in the project – and particularly in the port – is also likely to prove an astute move by Kuwait, as the People’s Republic is often seen as a neutral party in this part of the Gulf. China has good relations with everyone. Countries in the region may have conflicts with each other, but not with China.
For Kuwait, it’s in their interest that both of its neighbors, Iraq and Iran, see the port as a friendly facility. The potential for Kuwait to play a much bigger role in the region lies in its being a conduit to these other markets.
Far from just economic gain, developing the region presents Kuwait with a needed security measure. Silk City’s planners see a future in which this region and the adjacent Al Bubiyan island – opposite Iraq’s Al Faw peninsula and a short distance from the Iraqi port of Um Qasr – will be transformed. A major population right on the border with Iraq will also help assert Kuwaiti rule over this largely empty region.
After Iraq invaded through this area in in the first Gulf War, Kuwait realized that population is a good stabilizer of territory – a first line of defense. Silk City is a way of consolidating sovereignty over this area.
Iraq and Kuwait have several contentious issues between them – such as still-missing Kuwaiti POWs from the 1990-1991 war and Iraqi war reparations, which Baghdad still pays (asiatimes.com/article/a-bridge-to-china-kuwaits-silk-city/).
China’s developing partnership is not solely relegated to Kuwait. Last February, Qatar-China Business Forum was organized by China’s Ministry of Commerce in Beijing. The conference aimed to strengthen joint cooperation, promote bilateral trade, investment and industrial relations. Also discussed were prospects for new partnerships between the two countries. The forum, which was attended by Qatari and Chinese officials and businessmen, decision-makers, investors, and executives from major companies, resulted in the agreement between the two countries to boost their ties.
Another crucial institution is the China-GCC Strategic Dialogue, which was founded in 2010 to upgrade Sino-Gulf ties by upgrading the relationship to the level of strategic. To date, the China-GCC Strategic Dialogue has established strategic partnerships with Qatar, Saudi Arabia, Oman, Kuwait, and the UAE, and has engaged in negotiations with Bahrain.
A number of other institutions have also been established to support China-Gulf interactions, such as the China-GCC Cooperation Forum, China-GCC Trade and Economic Joint Committee, China-Arab States Economic and Trade Forum, and China-GCC Countries Forum on Economic Trade Cooperation (mei.edu/kuwait-looks-towards-east-relations-china).
Former President Hu Jintao twice made that point during his visits to Saudi Arabia to express his support and interest in the organization. I noticed in my meetings with Hu during his official visits to Saudi Arabia in April 2006 and February 2009, how much he knew about the GCC and how keen he was to cement that relationship. His knowledge of the minute details of GCC-China relations was unusual and duly impressive. China has for some time made it clear that it considered the GCC, as an organization, one of its top priorities, in addition to its interest in GCC member states individually. With its keen advocacy of Third World capabilities, it considers the GCC an effective regional organization composed and run by developing nations, like China itself. (arabnews.com/news/511401).
These institutions have served as an important platform for China’s soft-power efforts. For example, various meetings, summits, and agreements organized by these institutions have been utilized to raise awareness about each other and to universalize each other’s interests. In addition, these institutions have also served as platforms to propagate Chinese political views on regional issues and to present China as an alternative to Western powers.
China’s dependence on Gulf oil has been increasing gradually since 1993 when it became a net importer of oil. Last year, it overtook Japan as the second largest importer of oil after the US. Today, it imports 32% of its energy needs. It is estimated that by 2030, China will need to import more than ten million barrels per day (b/d; i.e., more than three-quarters of its domestic consumption). In 2008, China’s oil imports of about 3.6 million b/d were estimated to have cost it around $130 billion. Presently, more than half of China’s oil imports come from the Gulf, with Iran and Saudi Arabia claiming the lion’s share. Within a decade, the Gulf’s overall share is expected to rise to over 70%. Obviously, China’s ever-growing reliance on imported oil will increase its dependency on the Gulf.
Trade between the Gulf states and China is not a one-way affair. During the years 2003-2007, Gulf imports from China more than quadrupled, from around $7 billion in 2003 to $30 billion in 2007. Likewise, total two-way trade also grew almost four times over the same period, from $15 billion to $58 billion. Bilateral trade during 2008 is estimated to have topped the $80 billion mark.
The Gulf states are also increasingly sending significant sums of portfolio investments into China. Bitten by American protectionism, such as the Dubai Ports debacle in 2006, and impressed by a higher growth rate and attracted by better returns in Asia, Gulf investors are gradually turning from West to East — mainly China. All the major sovereign wealth funds of the Gulf have already made significant investments in China; the Kuwait Investment Authority has doubled its investments in Asia over the past two years. The GCC’s “look towards the East” policy and China’s “Go Outward” policy are converging on a win-win position for both sides, with far-reaching consequences for the future of the global economy (mei.edu/kuwait-looks-towards-east-relations-china).
China is the second largest consumer of oil in the world, and this consumption is only likely to grow as is continues building the industrial sector of its economy. It is imperative that it has steady access to a large abundance of oil and that means having strong ties to oil-rich nations to ensure a steady supply. At the same time having a strong influence in the Middle East with the same countries that supply the United States would give China tremendous influence in the world.
China is seeking to accomplish two goals: ensure a large amount of oil on a steady basis to reliably power its economy and secure relations with wealthy trading partners that Chinese businesses can export goods and services to. By investing in many projects such as Silk City, China seeks to avoid the complications the U.S has had with the Arab world’s difficult political culture. Controlling several businesses and having partial ownership of essential projects would give China a great deal of entrenched power in the region that would make it more influential in regional politics.
At the same time, many of the Gulf counties have been steadily growing their economies, diversifying their economic interests outside of petroleum, and becoming some of the richest nations in the world. China wants to tap into this economy and ensure their businesses have an open window to sell into this market.
Another facet that needs to be recognized is the security issue. The US relies heavily on the oil supply from the Middle East to support its economy. Eventually, China hopes to supersede the US not only as the Arab world’s trading partner but as a security ally.
Having an entrenched position within these countries assumes that eventually, China may actually arrive at a place where it could influence the balance of power between it and the US by being able to influence the direction of oil supplies and Arab-US relations in general.
Inevitably, China will become a significant power in the Middle East. From this, one of two scenarios is likely. The first scenario is through massive investments in infrastructure and business development in many of the sheikdoms. China will gain enough soft power to force the Arab world away from dealings with the US. The second consideration is that the Arab nations will use the situation to their advantage by leveraging the power balance between the US and China to gain more beneficial terms in future dealings with either.