The Chinese Government is considering ways to protect its business
interests in the Middle East as escalating conflicts between Israel
and Palestine show no immediate signs of easing.
"We would not adopt any immediate action yet, but necessary
measures to safeguard Chinese engineering projects and workers
there have been studied," Li Hongwei, an official with the Ministry
of Foreign Trade and Economic Cooperation (MOFTEC),
told Business Weekly.
Declining to reveal details of the measures, Li said they would be
put into effect in accordance with the situation development.
Experts worried that Chinese engineering firms doing business in
the Middle East could be impacted by the heated conflict.
China plays a significant role in the contracted engineering market
in the Middle East, with constructed projects valued at more than
US$1 billion, and more than 10,000 Chinese holding work permits in
Israel's construction and agricultural sector.
Trade volume between China and Israel kept two-digit growth in
recent years, and hit US$1.3 billion last year, rising 24.8 per
cent from the year before.
The rising volume has further increased the concern that China's
strong censure against Israel's recent military incursions in
Palestinian territory could impact the bilateral trade
relationship.
But Wei Min, an expert with the China International Contractors
Association, said the recent turbulence in Palestine does not
extend to other Middle Eastern countries, thus its direct impact
upon Chinese engineering projects in the region is not as great as
might be expected.
"We have not received any report from our member enterprises that
their business in the region has been influenced, but we will keep
a close eye upon the development of the situation in the region,"
said Wei during an interview with Business Weekly.
The expert also said that as Palestine has long been a focus of
conflicts, Middle Eastern countries, especially the affluent Gulf
countries which are home to a number of Chinese overseas
engineering projects, have developed a system to keep stability
within their borders.
Ilan Mor, minister of the Israeli Embassy in Beijing, agreed,
saying the conflict is unrelated to bilateral trade and economic
exchanges.
"The trade and economic relationship between the two countries is
complementary, and leaders of both sides are highly pragmatic on
trade issues," Mor told Business Weekly. "I do not see any impact
of the conflict upon the trade relationship."
Hundreds of Chinese workers hired in Israel had to abandon their
jobs early this year as a result of the Israeli Government's new
policy to limit foreign workers in the country.
The current disturbance in Israel could further impact its
recession-hit economy, thus further reducing job opportunities for
Chinese workers there.
Mor, though, argued that Chinese workers are highly competitive in
terms of their quality and wages, thus the impact of the policy
might not be as great as expected.
It
is estimated that 300,000 foreign labourers work in Israel, legally
or illegally, with a substantial number coming from China. The
Israeli Government will reduce the number of foreign workers
granted temporary work permits to 48,000, excluding those caring
for the elderly.
Although the Chinese businesses in Israel and other Middle Eastern
countries are not feeling pains from the ongoing conflict, experts
said the fluctuating oil price and foreign currency rate caused by
the conflict could pose a challenge to them.
The benchmark US light crude traded in Asia at US$26.8 a barrel
yesterday, down from its high of US$28 last Thursday, when US
President George W. Bush called on Israel to halt incursions into
Palestinian territory.
But this could still lead to the rising prices of raw materials,
increasing costs of Chinese engineering projects in the region,
said Huang Hong, an official with China Railway Engineering Corp's
overseas branch, which is building a US$200 million man-made island
for the United Arab Emirates.
"The fluctuation in the currency exchange rate is a bigger threat
to our costs," Huang told Business Weekly, adding his company has
considered adjusting aspects of the project to avoid risks.
But Li from the MOFTEC said the changing oil price should not
become a big problem.
"When signing contracts for the projects, engineering firms should
fully take the possible fluctuation of oil price and currency
exchange rate into account," the trade official said.
(China
Daily April 10, 2002)