China seeks to mediate in W Asia

Chinese President Xi Jinping’s extended West Asian tour demonstrates that Beijing is keen to bolster its lucrative trade with the region with foreign policy initiatives that would project his country’s potential as a mediator, even as the West and its Arab allies are waging proxy wars against Iran and Russia. During his tour he visited Saudi Arabia, Iran and Egypt, key players in the region.

His visit, the first of a Chinese leader in seven years, was well-timed. The tour was preceded with the publication of China’s “Arab Policy Paper,” the first effort to define Beijing’s engagement with West Asia in politics, economics, energy and security. This paper signals China’s determination to broaden relations with the Arabs and Iran, expanding ties beyond Chinese exports of consumer goods and imports of crude oil.

Riyadh’s regional rivalry with Tehran is a major concern to China, particularly in the wake of the ratcheting up of tensions following Saudi Arabia’s execution of Saudi Shia cleric Nimr al-Nimr, leading to an attack on Riyadh’s embassy in Tehran and severing of diplomatic relations.

Xi, reportedly, sought commitments from Riyadh and Tehran that they will pursue regional stability. Disruption of oil and gas shipments to China could cripple its already troubled economy. Even during the current downturn, China increased crude imports from Saudi Arabia, China’s number one supplier.

Xi and Saudi King Salman inaugurated an energy research centre in Riyadh and a refinery at the port of Yanbu on the Red Sea, a joint venture between Sinopec and  Saudi Aramco. Xi also held discussions with Deputy Crown Prince Muhammad bin Salman, the king’s favourite son, defence minister and economic czar and foreign policy overlord, and signed 14 agreements and a memorandum of understanding meant to strengthen bilateral ties.

Xi arrived just days after sanctions on Tehran were eased following its implementation of the agreement to dismantle its nuclear programme reached with the five permanent Security Council members  – China, Russia, the US, France and Britain – plus Germany.

As Iran’s largest oil client in spite of sanctions, Beijing may expect to secure discounts on future purchases, reducing costs at a time of economic  slowdown. Iran may be prepared to provide cheap oil to loyal customers like China (and India), as Tehran gives priority to winning back market share which was dramatically reduced by sanctions.

The partial lifting of sancti-ons will also allow the China National Petroleum Corporation and Chinese firms to proceed with plans to invest in the mode-rnisation of Iran’s oil and gas se-ctor and drill wells in new fields.

Saudi Arabia and Iran provided China with a quarter of its oil imports during the first 11 months of 2015; Chinese oil imports are expected to grow by 3 per cent this year compared to 5 per cent last year.

No more proxies
At his final destination, Cairo, Xi addressed the Arab League, announcing $55 billion in loans and investments for the Arab world and promising not to set up “proxies or (build) a sphere of influence in (a) region,” already torn by proxy wars.

During meetings with Egyptian President Abdel-Fattah El-Sisi, Xi signed agreements for electricity, transportation, and infrastructure projects. China has pledged to lend the Central Bank of Egypt $1 billion to support the country’s shrinking foreign currency reserves.

The National Bank of Egypt is to receive a $700 million loan and Banque Misr, a $100 million loan, to fund medium and small-sized development projects. Xi attended the opening of the second phase of a project to create an industrial area with the aim of attracting investments of $30 billion.

The visit to Egypt, ahead of the fifth anniversary of the uprising that toppled the 30-year rule of President Hosni Muba-rak, was seen in Cairo as a vote of confidence in Sisi who has been heavily criticised in the West for his harsh crackdown on leftists and liberals as well as outlawed Muslim Brothers.

Although China boasts the world’s largest economy, Beijing had previously avoided involvement in West Asian affairs. However, the rivalry between Saudi Arabia and Iran, the wars in Syria, Iraq and Yemen, and the rise of Islamic State (IS) has forced China to reconsider the wisdom of remaining aloof because of the threat to regional stability posed by confrontation and conflict.

China has serious concerns over the drawing power of IS which is conducting operations throughout the region, in Africa, and the Indian Subcontinent. This radical movement has recruited rebellious Muslim Uighurs, who seek to establish a Turkistan Islamic Republic in Xinjiang, an autonomous region in northwestern China.  Several hundred Uighurs have travelled to Syria and received training and gained experience in warfare: China fears their return to their home region.

China could use its considerable economic leverage to pressure Saudi Arabia and Iran to end their rift and join forces against IS and other extremist groups, and to urge Egypt to play an active, moderating role in regional affairs.