Report: China to become GCC's largest export market in 2020

China is expected to become the largest export market for the Gulf Cooperation Council (GCC) by 2020, a new report revealed yesterday.

According to the report, released by the Economist Intelligence Unit (EIU) in conjunction with Falcon and Associates, GCC trade with China witnessed unprecedented growth during the period between 2010 and 2013 while the size of the Gulf investment returns in China have doubled since 2007.

The study entitled “GCC Trade and Investment Flow” reviews the GCC trade and investment ties across the world and identifies the most important growth drivers.

It concluded that the GCC has increased its trade ties in Asia, mainly in China and India.

Chinese investment in the Gulf has also increased, mainly in the fields of construction, wholesale trade and retail.

The report pointed out that the number of Chinese companies registered in Dubai exceeded 3,000 compared to 18 in 2005. This reflects the emirate’s increasing role as a gateway for Asian business opportunities in the Middle East, Africa, Europe and the world.

Senior editor at EIA’s EMEA office, Adam Green said: “Back in 2011, when we conducted our last study on the Gulf’s external economic relationships, it was clear that emerging markets were surging ahead as economic partners for the GCC.”

“Since then, emerging Asia has continued on trend, especially China, despite the emerging markets slowdown. And while oil continues to be a major trade driver, we are seeing greater commercial diversity, from China-built malls and markets in the Gulf, to Gulf investments in Asian mobile telecoms, real estate and financial services,” he continued.

Hongbin Cong, Managing Director of Invest Dubai, Falcon and Associates, said: “We are seeing a new era of Asian growth as countries revisit and reinvest in the New Silk Road. Dubai is at the very centre of this. The emirate has a key role to play in driving the upward trajectory of GCC-Asia trade facilitated by the strength of its location, infrastructure and connectivity and as is evident by its links with China and India. In 2013, China was Dubai’s second largest trading partner and is on course to overtake India after $21.9 billion of trade was recorded in the first six months of this year.”

The report pointed out that India remains an important economic partner for the GCC.

According to the report, GCC exports to India have increased at an annual rate of 43 per cent over the past decade making up 11 per cent of total GCC exports.

Green said: “Perhaps the most important signal of growth in commercial ties is just not the flow of goods or money, but people, with an increasing number of Indians working in the Gulf. The numbers of new Indian businesses is also on the up, especially in the UAE. There is a lot of excitement at the moment about India finding its feet again and returning to its high growth path. If that happens, the Gulf region will be a clear beneficiary.”

The report also points to the growth of new trading ties between the GCC and other markets in the east, west and South Africa from the telecommunications sector in West Africa to energy projects in South Africa and Mozambique.

According to the report, the Gulf investment flows in those countries are characterised by diversity despite its focus on small and medium-sized deals.