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As China seeks to supercharge energy deals in Middle East, Qatar eyes benefits of a free-trade agreement

South China Morning Post | 6 October 2023

As China seeks to supercharge energy deals in Middle East, Qatar eyes benefits of a free-trade agreement

by Ralph Jennings

Qatar is looking to play a role in the long-discussed China-Persian Gulf free-trade agreement, on the back of this year’s US$28.8 billion deal to sell natural gas and a surge in Chinese help to harvest solar energy in the sun-drenched desert, according to the Middle Eastern country’s consul general in Hong Kong.

The wealthy nation of 3 million people is negotiating a China trade pact alongside five other Middle Eastern countries as the Gulf Cooperation Council bloc. The council’s trade talks with China began in 2004.

“We’re still discussing it [as a council], so it will take some time, but I think the outcome will be beneficial,” Consul General Ali Saad Al-Hajri told the Post on Thursday. “We are happy we are participating in the negotiations.”

China and the council have held 10 rounds of talks on a free-trade deal, including “in-depth” discussions on goods, services, investment, and customs procedures, the Minister of Commerce said on its website last year. It also noted that the two sides had “made positive progress”.

State-owned QatarEnergy reached a deal in June to sell China 4 million metric tonnes of liquefied natural gas over 27 years – one of the largest China-Middle East deals ever, Al-Hajri said, adding that China liked Qatar’s ability to deliver gas on time to the client, China National Petroleum Corporation.

Qatar is getting China’s help as a nine-year participant in Beijing’s Belt and Road Initiative, Al-Hajri added. The strategy was undertaken in 2013 to link economies into a China-centred trading network, largely through infrastructure projects.

A China-designed solar station that was inaugurated in Qatar in November should lead to more such cooperation, the consul general said. The 800-megawatt photovoltaic station, Qatar’s first non-fossil fuel power plant, was built by PowerChina Guizhou Engineering, the Chinese State Council says on its website.

China has “advanced” solar-cell technology, which Chinese companies can “customise” for Qatar’s desert environment, he said.

Qatar wants to raise solar energy’s contribution from 10 to 25 per cent of all peak-time power, Al-Hajri said.

“China is one of the biggest partners that is capable of achieving those kinds of goals,” he said.

Chinese firms are advancing their solar energy work in Central Asia and the Middle East to meet new demand in those countries, the Beijing-based Economic Observer reported on Tuesday. Jordan and the United Arab Emirates (UAE), it notes, plan to increase renewable energy output.

“China certainly has put a lot of money for a long time into alternative energy, and their battery technology is quite advanced,” said Andrew Collier, a China economist at Global Source Partners in Hong Kong. In terms of exports, he said, “solar cell production benefits from economies of scale”.

Qatar-China energy relations will never feel “geopolitical shocks”, said Zha Daojiong, a professor with Peking University’s School of International Studies. Stronger ties overall mean “Qatar can expect to see more and more Chinese companies partaking in the country’s industrial diversification”, he said.

In the year ending in June, China’s exports to Qatar totalled US$329 million and imports reached US$1.39 billion.

Belt and road participation helps Qatar position itself as an “economic hub” in the Persian Gulf, and particularly as a transport centre, Al-Hajri said.

The China-Gulf council trade agreement would shorten future trade discussions and facilitate “direct” cooperation, he said.

China has made diplomatic overtures in the Middle East over the past year amid tense US relations with Beijing and some Arab states.

In 2018, President Xi Jinping visited the UAE to solidify bilateral relations. During a visit to Saudi Arabia in December, Xi pledged to work towards expanding use of the yuan for settlements of Middle Eastern oil and gas purchases.

A free-trade deal makes sense now because the Middle East is “going through a very, very interesting time” with increased investment and the nurturing of new economic sectors such as tourism, Al Hajri said.

“It’s like the best time to have this kind of agreement,” he said. “The region now is waking up. From my side, I don’t think we have a problem [with a trade agreement] except that we work with our partners in the Gulf Cooperation Council for what’s suitable for all of us.”

 source: South China Morning Post