China reaps geopolitical dividend in Middle East exports

China’s exports in April surged towards the Global South while shrinking in developed markets, following a pattern of geographic divergence that began four years ago.

Overall, exports rose 1.5% in dollar terms and 5% in terms of RMB. But the salient fact about China’s trade performance during the first four months of 2024 is the jump in trade with developing countries.

North Africa and the Persian Gulf showed the strongest growth.

Evidently, China is earning a geopolitical dividend from its rising influence in Western Asia. In January 2023, China mediated a restoration of diplomatic relations between Saudi Arabia and Iran, positioning itself as a mediator in the most dangerous rivalry in the Islamic world.

China has positioned itself as an antipode to American influence in the region after Israel began its Gaza operation in October.

Exports to Algeria, Qatar, Oman, Morocco, Iraq, Tunisia and Egypt all registered year-on-year growth in excess of 25%. Algeria and Qatar more than doubled their purchases from China.

China’s major Asian and Latin American markets, including Vietnam, Singapore, Indonesia and Brazil, showed growth of about 20%.

Exports to the US were flat year-on-year in April, by contrast, while exports to the European Union and Japan fell. The biggest decline was in Chinese exports to Israel, down by 26% year-on-year.

The difference between China’s dollar and RMB export growth corresponds to the depreciation of the RMB versus the US dollar during the past year.

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