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Tuesday, August 3, 2021

Kuwait and China seek diversifying economy via Belt and Road Initiative

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On April 6, Kuwait and China discussed promoting the digital economy during a virtual forum, with the aim of enhancing cooperation in several fields to achieve the interests of the two countries and meet aspirations of their peoples. Based on the intent to diversify its economy, Kuwait sees a digital economy as one of the most important applications in which to further invest.

Based mainly on oil,  Kuwait economy is suffering due to the drastic decrease in oil prices that was witnessed during the past period, which led to a deficit in its budget. Diversification of the economy will reduce dependency on oil and contribute to enhance its economy and therefore increase its revenue through developing more projects providing more jobs for Kuwaitis. For China, the move will boost cooperation with Kuwait and expand its business in the Gulf countries 

During the forum, a number of senior officials from Kuwait and China focused on the Belt and Road Initiative (BRI) project based on international standards for globalization through economic development and artificial intelligence.

The BRI is a transcontinental, long-term policy and investment program aimed at developing infrastructure and accelerating economic integration among countries along the route of the historic Silk Road. The initiative, which was disclosed in 2013 by China’s president, Xi Jinping, targets boosting the connectivity of Asian, European and African continents and their adjacent seas, founding and strengthening partnerships among the countries along the Belt and Road.

Speaking at the forum, the deputy chairperson of the Kuwait Chamber of Commerce and Industry, Abdulwahab Al-Wazzan, said that in light of the digital economy and the era of global economic transformation, Kuwait has responded to China’s BRI as the first Gulf country to sign deals with the Chinese side on this matter. 

He said Kuwait believes that reviving the historic Silk Road would change the pattern and shape of international relations by offering great economic, political and cultural benefits to the Chinese and Kuwaiti nations and to all peoples of the entire region. 

He noted the initiative includes several vital sectors and fields that are compatible with Kuwait Vision 2035 and the country’s development priorities in terms of stimulating economic growth and industrialization, and increasing intra-trade and financial integration to achieve sustainable development. 

Wazzan elaborated that the objectives of this initiative are in line with Kuwait’s efforts aiming to launch a number of mega-development projects with high returns and various investment opportunities that include the projects of Silk City, the Kuwaiti Five Islands development and Mubarak al-Kabeer Port. 

Silk City is a wide free zone to be established north of Kuwait at a total cost of about $100 billion. It will offer services as a logistical center, create at least 200,000 jobs and employ up to 700,000 people. It will include entertainment facilities, workplaces, retail areas, an Olympic stadium, an international airport and the Mubarak Al-Kabeer Tower skyscraper.  

The project is located on an area of ​​250 square kilometers, and its construction is expected to take nearly 25 years. It will include the construction of a 1001-meter (250-story) tower with state-of-the-art technologies. 

It will be one of the tallest towers in the world and is expected to reach a value of seven complexes that include offices, facilities, hotels, restaurants and entertainment venues. The project gains a great importance as it will help the country diversify the economy rather than depending only on oil. 

A Kuwaiti professor of economics stressed the importance of the initiative for both China and Kuwait in terms of diversifying the economy.

“China has sought to launch the Belt and Road Initiative project so as to develop its economy to reach some big countries, mainly in the Middle East region and Europe. It is a big economic struggle between the United States and China. As we know, China has played a key role in manufacturing and had allies through getting into close commercial ties,” Youssef Al-Mutairi, professor of economics at Kuwait University, told Al-Monitor. 

“This is part of a system through which China seeks to expand its economic activities and enter economic agglomeration that enable the country to gain big economic benefits. The project is part of a global struggle for power and existence. Kuwait has strong ties with China, and the volume of Kuwaiti imports from China are very large,” Mutairi said.

“Several deals [were] signed between Kuwait and China during the era of the late Amir Sheikh Sabah Al-Ahmad Al-Sabah, who visited China in 2009 and discussed with Chinese officials promoting mutual cooperation on many fields like technology and trade,” he said.

“China began executing some large projects in Kuwait, particularly in Silk City, logistic services, commerce and the five islands. Such projects were agreed upon during the era of Sheikh Sabah Al-Ahmad in an attempt to find an economic coalition and expand activities with several countries. This helps Kuwait diversify and expand its economy with other partners like China — in addition to the United States and the European Union — and creates more competitiveness and an economic boom as well as gain varied capabilities and expertise,” Mutairi said.

When asked whether China’s BRI will serve Kuwait’s Vision 2035, Mutairi said, “The [BRI] is very important to Kuwait, as it will enter into an economic coalition with China, and Chinese companies will carry out such projects in Kuwait; this will enhance economic ties. China has oil deals with Kuwait. Opening several cooperative fields with many partners is very important to the economy to avoid being confined to a certain bloc in light of the economic variables.”

The Kuwaiti dinar is pegged to a basket of over 10 international currencies like the Japanese yen and the Chinese yuan, in addition to the US dollar, the EU euro and others, he stated.

“There are political blocs and struggle of poles, so it is important for Kuwait and the Gulf states to have links to varied blocs like China and others. Kuwait is keen on having balanced ties with all. It doesn’t get into a single trench and is promoting ties with the European markets and Asian countries,” he made clear.

“Kuwait is planning to find alternative sources to its national income with other partners. Trade exchange between Kuwait and China is expected to reach $20 billion in the coming years. There are some deals on technology, and the development of the five islands, logistic areas, north Kuwait, and oil as well as others will be executed during the next years,” he concluded.         

In statements given to Xinhua News Agency, China’s Ambassador to Kuwait Li Minggang said the cooperation between China and Kuwait has entered the fast lane under the guidance of joint construction of the BRI.

He added that Kuwait was the first country to ink a cooperation document on the joint construction of the BRI with China. He went on to say that the initiative is highly consistent with Kuwait Vision 2035 aiming to turn the country into a global financial and commercial hub, regarding the Silk City and the Five Islands projects as major docking projects.  

The initiative covers many sectors — developing infrastructure of transport, energy, information technology and utility connection projects — that are consistent with Kuwait Vision 2035.  

On March 22, while marking the 50th anniversary of establishing diplomatic ties between Kuwait and China, the ambassador said the volume of trade between the two countries hit $14.3 billion in 2020 and that Kuwait is an important oil partner for China. 

He pointed out that China imported more than 25 million tons of crude oil from Kuwait, an increase of 18%, indicating that the Chinese companies are currently participating in building a number of key Kuwaiti projects that will promote the strong recovery of the Kuwaiti economy. 



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