The surge in oil prices driven by Chinese demand has added $1 trillion to output in the Gulf Cooperation Council countries over 10 years, according to HSBC Holdings Plc.
The six-member bloc’s gross domestic product increased to $1.7 trillion between 2003 and 2013, bringing per capital GDP to an average of $35,000, HSBC said in a report on the effect of a “globalizing China” on the Middle East and Africa released today.
The wealth has helped countries such as Saudi Arabia and the United Arab Emirates spend hundreds of billions of dollars on infrastructure, and buy assets overseas including English soccer champion Manchester City. The Gulf’s non-oil economy is also growing 2 percentage points faster than it did before Chinese demand began to rise, HSBC said.
The region’s fiscal and current-account surpluses and economic growth “would have been unthinkable without surging energy demand from China,” Dubai-based economists Simon Williams and Razan Nasser wrote. “There would be no kilometer-tall towers in Dubai, no ski slopes in the shopping mall, no Gulf-owned football teams winning the English premier league, without the emergence of China as a global economic power.”
HSBC also said that Chinese banks and state-owned companies are set to play a growing role in the Middle East.
Four of the top Chinese banks have offices in the Dubai International Financial Centre, the emirate’s tax-free business park. The Dubai Jebel Ali Free Zone hosts 170 Chinese firms, more than double the number operating there in 2008, according to HSBC.-Bloomberg
