BEIJING: Slapping import bans on products like mangoes, coal and salmon has long been China’s way of punishing countries that refuse to toe its political line.
But Beijing has shown that it can also hurt others by cutting a lucrative Chinese export: tourists who normally flock to South Korea or Taiwan.
China’s recent boycott of South Korea over a US anti-missile shield on the Korean peninsula signals a growing aggression in the way it flexes its economic muscles, analysts say.
Beijing has banned Chinese tour groups from going to the South, hammering its tourist market and the duty-free shops of retail giant Lotte Group, which has been targeted for providing land for the controversial defense system.
Dozens of Lotte stores were closed in China and protests held across the country as Beijing ramped up pressure on Seoul to abandon the Terminal High-Altitude Area Defense (THAAD) system, which it sees as a threat to its own military capability.
Lotte also suffered setbacks in several of its Chinese ventures — from the government-ordered halt of a $2.6 billion theme park project to apparent cyberattacks on company websites.
“If you don’t do what Beijing’s political leaders want they will punish you economically,” said Shaun Rein, founder of Shanghai-based China Market Research Group.
“They put the economic vise on politicians around the world. They have been doing it for years and it works.”
Seoul-based tour operator Korea-China International Tourism has reported an 85 percent drop in tourists in recent months, which its founder attributes to China’s anger over THAAD.
The company usually receives 4,000 mostly Chinese visitors a month, but that has fallen to around 500 after Beijing warned tourists about the risks of traveling to the South, and ordered Chinese tour operators to stop sending groups there.
Economic embargo
As the world’s second-largest economy and biggest trader, China can also inflict pain by blocking certain imports.
Norway learned that lesson the hard way. After the Oslo-based Nobel Committee awarded the 2010 Peace Prize to jailed Chinese activist Liu Xiaobo, China halted Norwegian salmon exports.
Relations only returned to normal in April after Oslo pledged its commitment to the one-China policy and respect for China’s territorial integrity.
Mongolia also incurred Beijing’s wrath in November when it allowed the Tibetan spiritual leader the Dalai Lama, who China views as a devious separatist, to visit the impoverished landlocked country.
Following the exiled Buddhist monk’s visit, China reportedly took punitive measures against Mongolia, including stopping trucks carrying coal from crossing the Chinese border — a move with heavy repercussions for Mongolian mining concerns.
Tourism to Taiwan has also fallen sharply as relations across the strait worsen.
The Taipei Hotel Association reported decreases of up to 50 percent in Chinese visitors in recent months and warned “the situation could get worse.”
“I’ve been told by friends not to visit Taiwan since the cross-strait situation is tense but I am just a regular citizen so I am not too worried about that,” a 58-year-old Chinese man surnamed Liu said in a Taipei duty free shop.
Countries that submit to China’s demands, however, can find themselves rewarded.
A ban on 27 Philippine tropical fruit export companies was lifted after President Rodrigo Duterte declared his “separation” from the United States during a visit to Beijing in October, confirming his tilt toward China.
The sanctions had been intended to punish Manila for its South China Sea stance.
South Korea will be hoping for a similar outcome after its new President Moon Jae-In dispatched his envoy Lee Hae-Chan to China after his election victory last week, in an apparent effort to mend fences with Beijing.
“It’s a kind of carrot and stick policy. They (China) are doing it to show they have more leverage now and send a signal,” said Jean-Pierre Cabestan, a professor in political science at Hong Kong Baptist University.
“The irony is that China has criticized that way of doing things but now China is less hesitant to do the same thing because she’s stronger and feels she can do it.”
Analysts expect China to become even more assertive as it seeks to fill the vacuum created by the US retreat into “America First” policies promoted by President Donald Trump.
“Smaller nations (in Asia) don’t feel that Trump is going to support them,” said Rein.
But in the case of South Korea, Asia’s fourth-largest economy, Beijing has been careful to target specific sectors to avoid disruption that could backfire on Chinese companies.
“It has become a well-developed tool of diplomatic pressure,” said Andrew Gilholm, director of analysis of Greater China and North Asia at Control Risks.
Beijing’s new weapon in economic war: Chinese tourists
Beijing’s new weapon in economic war: Chinese tourists
Saudi Arabia’s NHC signs deal with Chinese company to boost building materials supply
RIYADH: Saudi Arabia’s building materials supply is set to get a boost with the signing of a deal between the National Housing Co. and a leading Chinese construction firm.
The agreement with China’s CITIC Construction Group seeks to establish an industrial city and logistic zones for building materials, comprising 12 factories, with the objective of securing supply chains for the NHC’s housing projects.
NHC CEO Mohammad Albuty finalized the deal during the official visit of Minister of Municipal and Rural Affairs and Housing Majid Al-Hogail to China.
In a statement, the NHC said the agreement with the Chinese construction group are part of its efforts to secure supply chains for its housing projects and ensure their timely completion and high quality.
The Saudi company said the deal entails the construction of 12 factories specializing in building materials, harnessing Chinese expertise, and involving local factories to uplift business standards.
It added that the deal also aims to draw top-tier service providers across various sectors of the company, its subsidiaries, and other projects.
The company pointed out that the agreement is expected to maximize the economic and developmental impact of the real estate sector in the Kingdom, develop housing projects, enhance their quality, and promote national transformation in the construction sector through these industrial cities and logistic zones.
The statement also highlighted that this collaboration will facilitate the expansion of small and medium factories in the Kingdom, establish direct production lines for the company’s projects, and foster the growth of the local industry. Additionally, it will create numerous job opportunities in the sector.
The company said the agreement strengthen the comprehensive strategic partnership between Saudi Arabia and China, established during the Chinese president’s visit to the Kingdom in December 2022.
IMF forecasts $14bn increase in Egypt’s foreign cash revenue
RIYADH: Egypt’s foreign cash revenue is projected to surge by $13.7 billion from five key sources this year, a 14.6 percent increase over last year, according to the International Monetary Fund.
This surge is largely due to investments in the Ras Al Hikma City development deal recently signed by the government with ADQ Holdings, as reported by CNBC Arabia.
The IMF projected that foreign cash inflows from these five sources for the fiscal year 2023-2024 will total around $107.3 billion, compared to about $93.6 billion in 2022-2023.
These sources encompass proceeds from commodity exports, tourism revenues, Suez Canal revenues, as well as private transfers and net foreign direct investment.
Despite expectations of an increase in foreign cash revenue from these sources this year, the IMF anticipates inflows to decrease again in the next fiscal year, dropping below the levels of the previous year to approximately $91.2 billion.
The fund forecasts foreign cash inflows from commodity exports to decline to $33.2 billion during the current fiscal year, compared to $39.6 billion last year, reflecting a decrease of about 16.2 percent, with an expected increase to $35.6 billion next year.
It also predicts a decline in Egypt’s tourism revenues during 2023-2024 to around $12 billion, compared to $13.6 billion in 2022-2023, reflecting a decrease of about 11.8 percent, with an increase to around $12.6 billion in 2024-2025.
Furthermore, the financial agency expects a decline in Suez Canal revenues during the current fiscal year to $6.8 billion, compared to $8.8 billion last year, marking a decrease of about 22.7 percent, with an anticipated increase to around $10 billion next year.
As for net private transfers from abroad, they are anticipated to increase to around $23.1 billion during 2023-2024, compared to about $21.9 billion during 2022-2023, reflecting a 5.5 percent increase, and continuing to rise to $24.6 billion in 2024-2025.
Similarly, net foreign direct investment inflows are projected to surge during the current year to around $32.2 billion, compared to $9.7 billion in the previous fiscal year, marking a 232 percent increase, and then decline next year to $8.4 billion.
SEC closes $3bn financing for 3.6GW capacity power stations
RIYADH: Saudi Arabia’s power generation is poised for a substantial boost following the successful closing of financing for two electricity projects, with a combined capacity of 3.6 gigawatts.
The deals involving the Taiba 1 and Qassim 1 independent power producer projects, with a combined financing value of SR11.4 billion ($3.04 billion), signify a major milestone in Saudi Arabia’s energy landscape, the Saudi Press Agency reported.
The two IPP projects, featuring combined cycle gas turbine technology, were awarded to the Saudi Electricity Co. by the Saudi Power Procurement Co. as part of an alliance with ACWA Power in October 2023.
Additionally, in November 2023, a 25-year power purchase agreement was signed with the SPPC for both projects, which are being developed on a build-own-operate basis.
Khalid Al-Qunun, CEO of SEC, commended the efforts of the company’s team in driving transformation in the electric energy sector in the Kingdom, the SPA report added.
He said: “These projects embody our ongoing ambitions to expand energy generation projects and adopt the latest technologies to ensure the provision of environmentally friendly energy solutions that contribute to achieving the company’s zero neutrality target by 2050, in line with the Kingdom’s ambitious aspirations in the field of energy sustainability.”
The financing agreements were signed by the two project companies: Sidra One for Electricity for the Taiba 1 station and Qudra Energy for the Qassim 1 station. The SEC holds a 40 percent share in both companies.
These modern stations represent a notable advancement in electric energy production in the Kingdom. They signify an important step toward a sustainable future by utilizing the latest energy production technologies, such as combined cycle gas turbines known for their high efficiency.
According to the SPA report, relying on these advanced technologies contributes to improving generation efficiency, reducing emissions, and reducing reliance on liquid fuels in the electricity production sector in the Kingdom.
These stations mark the beginning of a series of CCGT stations that will expedite the realization of Saudi Vision 2030 goals, including achieving an optimal energy mix and increasing local content.
This also sets the stage for achieving the goals of the Saudi Green Initiative, aiming for carbon neutrality by 2060. The engineering design of these stations allows for the future integration of carbon capture facilities, underscoring the SEC’s commitment to environmental, social, and governance responsibility, the SPA report added.
Qatar’s non-energy private sector records improvement in April
RIYADH: Qatar’s non-energy private sector witnesses improvement in business conditions in April as the Purchasing Managers’ Index hit 52, compared to 50.6 in March, according to the latest data.
The Qatar Financial Center PMI is a composite single-figure indicator of non-energy private sector performance that is derived from indicators for new orders, output, employment, suppliers’ delivery times and stocks of purchases. A reading above 50 signifies sectoral expansion, while below that mark indicates contraction.
The latest PMI survey data from the center compiled by US-based capital marker firm S&P Global showed that the 1.4-point increase between March and April in the headline figure was among the largest registered over the past two years, according to a statement.
Moreover, the data disclosed that while output, new orders, employment and purchasing activity all increased at faster rates than in March, price pressures turned slightly negative, as both input and output prices fell marginally.
Additionally, the volume of incoming new business in Qatar’s non-energy economy rose at the fastest rate in seven months in April. This is mainly attributed to new customers and high quality, competitive products.
Total activity also surged at the fastest rate since last September in April as new projects and firms continued to complete existing workloads.
Furthermore, non-energy private sector companies were increasingly optimistic on growth over the next 12 months in April. Companies residing in the Gulf country linked positive forecasts to marketing campaigns, business development plans and efficiency drives.
Consequently, stronger inflows of new work and increased confidence led to a sharper rate of hiring growth in April. Employment has risen for 14 months, and the rate of job creation was running above the long-run survey average in April.
The Qatar PMI indices are compiled from survey responses from a panel of around 450 private sector companies. The panel covers the manufacturing, construction, and wholesale as well as retail and services sectors, and reflects the structure of the non-energy economy according to official national accounts data.
Islamic banking
The total value of the assets of Islamic banks operating in Qatar during the month of March 2024 increased by 6.4 percent on an annual basis to reach about 563.9 billion Qatari riyals ($154.8 billion), according to newly released statistics.
The monetary bulletin issued by the Qatar Central Bank for the month of March showed that this recorded figure represents 28 percent of the total assets of banks in Qatar, amounting to approximately 1.99 trillion riyals.
The data also revealed that the total value of Islamic banks’ financing in Qatar increased to 389.9 billion riyals, an increase of 3 percent over the corresponding month of last year.
Saudi Arabia’s Ades secures $136.2m deals in Qatar, Egypt
RIYADH: Saudi Arabia’s Ades Holding Co. continues to expand its regional footprint as it seals two contracts worth SR511 million ($136.2 million), highlighting its growing influence in the oil and gas sector.
Ades, which specializes in providing drilling and intervention services, signed a contract valued at up to SR350 million with Total Energies to operate an offshore drilling platform in Qatar.
The agreement includes a mandatory one-year period with an option to extend it for up to an additional 18 months, according to a bourse filing.
Operations are slated to begin in the second half of 2024. The company emphasized that there are no related parties involved in this contract.
This contract comes on the heels of April’s announcement, where Ades was awarded the responsibility to operate another offshore drilling platform by Total Energies in Qatar.
This previous contract enables Ades to maintain its market presence robustly, as it will now operate three drilling platforms in the region.
This expansion comes after the company’s strategic move to transfer its Emerald Driller platform to Indonesia.
Moreover, Ades announced in a separate release that it was awarded a 21-month contract to operate an elevated platform in the Gulf of Suez.
The company received a direct award letter from the Suez Oil Co, also known as SUCO, in Egypt, with operations expected to commence in the coming weeks.
In a statement on Tadawul, the company disclosed that the contract is valued at SR161 million.
This new engagement in Egypt is part of Ades’s broader strategy to reactivate its operations regionally. It follows recent contracts in Thailand and Qatar, bringing the total number of reactivated platforms to three out of the five that were recently suspended in Saudi Arabia.
The publicly traded company saw a slight decrease in its stock price after its announcements.
