Exploring the China and Oman Relationship

 
 

China’s relations with the countries of the Persian Gulf have expanded considerably over recent years. Although ties between China and some of these countries have been well reported, China’s relationship with the Sultanate of Oman, the first country to deliver oil to China, has yet to be fully documented. Yet the two countries have ties that go well beyond oil cooperation.

Early Years

Although Chinese-Omani contact has been dated back to ancient times, it was only in May 1978 that their two countries established official diplomatic ties. In the early years, the relationship between Muscat and Beijing reflected China’s overall foreign policy in the region. Beijing’s fear of Moscow, particularly following the latter’s invasion of Afghanistan, had prompted it to strengthen diplomatic ties with the countries of the Gulf.

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By the early 1980s, China began to view Oman not only in terms of its strategic significance but also as a country with abundant oil resources. The need to secure long-term energy supplies led the Chinese to revamp its foreign policy towards the region, and in 1983, Oman became the first Arab nation to export oil to China.

Over the years, energy cooperation has been the primary axis around which Sino-Oman relations revolve. According to a report published by Oman’s Ministry of National Economy, oil exports accounts for more than 89.6 percent of the country’s total exports to China, which is the world’s largest customer for Oman’s oil, accounting for more than half of its petroleum exports. China has invested approximately 600 million dollars in several sectors in Oman, including oil and petrochemicals, and has spent money to train Omani engineers and upgrade the efficiency of petroleum extraction. The Oman Oil Company (OOC) has reportedly signed a number of agreements with several Chinese enterprises including CNBC, Senok and China Petroleum and Chemical Corporation (SINOPEC) to develop bilateral projects on industrial estates and construct two storage facilities in Xingang port.

Beyond Oil Politics

The oil business unquestionably dominates China-Oman relations, but ties between the two countries have expanded well beyond hydrocarbons. Although little has been made public, companies from Oman and China have signed a number of construction deals, encompassing a power plant, roads, port, water management, and shipbuilding.

Last year, it was reported that bilateral trade volume between the two countries has reached $23 billion, making Oman China’s fourth largest trading partner in the Middle East. Oman’s Ministry of Economy also reported that Oman’s exports to China, mainly oil, methanol, paraxylene and polypropylene, represented nearly 30 percent of its total exports. Meanwhile, China’s exports to the Sultanate account for more than 4.5 percent of Oman’s imports.

The two countries have also organized several business delegations and signed a number of trade deals. More than forty Chinese enterprises operate businesses in the Sultanate, and the Omani-Chinese Friendship Association was formed in 2010.

Cultural exchange is also on the rise. In 2007, for example, the two countries inked an agreement to establish a chair of Arabic Studies at China’s Peking University. Oman also ran a successful pavilion at the 2010 Shanghai Expo in China, receiving more than three million visitors. Meanwhile, several Chinese artists have taken part in the annual Muscat Arts Festival.

When the devastating Sichuan earthquake struck China in May 2008, Oman offered assistance that included the construction of 350 units of residential housing as well as medical and education facilities, which were completed in 2010.

Looking Ahead

As China’s Ambassador to Oman Wu Jiuhong suggested during the 35th anniversary of Sino-Oman relations last year, Muscat-Beijing ties will likely strengthen in the coming years. The two countries have economic, political and strategic reasons for this to happen.

It is worth noting that the suitability of Oman’s crude oil to China’s existing refining technology and ability implies that Oman will remain an important trading partner for the Chinese. If Beijing wanted to import oil from other sources, it would have to allocate significant resources to upgrade its refining facilities. That makes continued reliance on Omani oil a safe bet.

Oman is also attractive to China for its consumer market and its lucrative investment opportunities. Besides Oman’s free trade zones, its relatively flexible investment policies and its strategic geographic location appeal to Chinese investors. Moreover, ties with Oman give China a platform from which it can extend its influence in the wider Middle East. China’s unprecedented economic growth has made trade with the Gulf central to its foreign policy. Accordingly, Beijing has plans to boost its investment in the region with the recent signing of the 2014-2017 China-GCC Strategic Action Plan, which Oman fully supports.

There is also scope for strengthening the China-Oman strategic partnership. Since 2005, the two countries have held an annual Strategic Consultation round to discuss international and regional security issues. Reflecting Oman’s strategic location, the two countries have also pledged to enhance military cooperation, including a joint effort to combat piracy at the Gulf of Aden and Somalia.

Overall, maintaining strong ties with China not only offers Oman access to much-needed foreign investment capital and technology, it has also gives it a relationship with a major power that holds a permanent seat on the UN Security Council, giving Muscat a useful offset to Western pressure.

Muhammad Zulfikar Rakhmat has lived in the Middle East for seven years. He holds a B.A. in International Affairs from Qatar University and is currently a research assistant at the same university.

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