Arab countries along the Maritime Silk Road - Costs and Benefits analysis

Stanojević, Nataša (2020) Arab countries along the Maritime Silk Road - Costs and Benefits analysis. The Review of International Affairs, LXXI (1177). pp. 5-24. ISSN 0486-6096

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Abstract

This article explores the potential effects of Chinese economic presence in the countries along the routes of the so-called Maritime Silk Road. Four Arab countries on the Maritime Silk Road were selected for analysis: Egypt, Saudi Arabia, oman and Yemen. Potential and realized costs and benefits are being explored for both China and Arab countries. Two hypotheses are tested. The first is that investments of Chinese companies make it possible for the selected countries to join international trade flows, to diversify income and increase production and expand the range of products at reasonable costs. This is proved by an analysis of the sectoral distribution of current Chinese investment and the trend of investing in certain segments of Arab economies, mostly outside the energy sector. The second one is that some or all Arab countries along the Maritime Silk Road can increase exports to China, despite their low competitiveness, limited volume and range of products and high competitiveness of Chinese products on the other side. The application of the coefficient of conformity between Arab exports and China imports has shown that Arab countries have a chance to increase only exports of oil and organic chemicals to China. However, an analysis of trade statistics shows a dramatic increase in exports of many products that China itself exports at significantly more competitive prices, which is beyond any trade reason. oriented towards broader and long-term national interests, China makes compromises in certain sectors for greater benefit in another sector or for higher-order benefits, such as geostrategic positions.

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