Growing Economic Interdependence of China and the Gulf Cooperation Council

Michael Thorpe and Sumit Mitra

China & World Economy, 2008, vol. 16, issue 2, 109-124

Abstract: The six nations of the Gulf Cooperation Council (GCC) have approximately 40 percent of total proven oil reserves as well as 23 percent of the world's gas reserves. Although rising oil revenues have led to greater outward investment flows, there is also a growing need for significant expansion of the domestic energy sector's capacity. Meanwhile, China's sustained economic boom has resulted in China emerging as the world's second largest consumer and importer of oil, with close to 40 percent of its import demand presently sourced from the GCC. This share will grow significantly in the future. Commercial relations between the GCC and China have to date been dominated by energy‐related bilateral investment flows and China's oil imports. Although this will continue to be a central feature, trade and investment links in non‐energy areas will further broaden and deepen the relationship. China's relationship with the USA in terms of energy is also emerging as a major issue. Rather than being competitors, a mutual dependence on stable and secure supplies from the GCC highlights the need for a cooperative relationship.

Date: 2008
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