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The New
Silk Road
Ben Simpfendorfer is the man of the hour. Since the Royal Bank of Scotland’s
Chief China Economist’s new book; The New Silk Road: How a Rising Arab World
is Turning Away From the West and Rediscovering China came out, he’s been
interviewed by the New Yorker, the International Herald Tribune, and drawn favor-
able reviews of his book from opinion leaders like the Wall Street Journal. Russel
Beron sat down with him in Shanghai to discuss his new book.
What compelled you to write the book? Are there any other contributing factors?
I feel that we’ve stopped asking the right questions about Chi- Islam is important to this phenomenon as well. There are rough-
na. There are so many academics and economists talking about ly 1,000 Chinese Arabic translators in Yi Wu, and most of them
China’s relationship with Europe or the United States, and there is learned Arabic for religious purposes. But they now see it as a
limited set of questions that we can ask. I thought if I could ask way to lift themselves out of poverty and make a better life.
what the Arab world thinks of China and vice versa, we would ar-
rive at a new set of answers. Of course we think of oil when we
think of the Middle East. How impor-
Why the Arab World in particular? tant is that to this story?
Central to the book is the fact that Chi- Oil is actually not that important. Obvi-
na has now overtaken the United States ously China imports more oil than it sells
as the world’s biggest exporter to the consumer goods to the Middle East, but
Middle East. It did so earlier this year. it has very little ability to invest in the oil
This is quite impressive when you real- sector there. Big Middle Eastern oil com-
ize that what the United States exports panies have invested in only two oil refiner-
to the Middle East is SUVs and aircraft; ies in China.
you don’t have to sell many to reach a
60 billion dollar figure. The Chinese sell What effect has this development had
DVD players and pajamas! That is to say: on Middle Eastern countries them-
low value added goods. So these exports selves?
constitute huge volumes. Even more in- China has provided a new growth model
triguing is that there is no Arab Wal-Mart. for Middle Eastern countries like Syria.
Nobody is placing bulk orders of these It’s not all that different from the growth
goods, only individual traders. This book model recommended by the IMF, but China
talks a lot about those individuals: this is not just a work of facts has shown that you can pursue economic reform without regime
and figures. change. That gives countries like Syria enormous confidence.
Syria just opened up its first stock market, because they’ve seen
How did those Arab traders end up in China in the first what’s happened in China and they realize they can open up a
place? stock market and cut trade barriers without the world ending.
Arab traders first started arriving in China in 2002, after visa
restrictions were imposed on them in the United States. In con- So it seems like a net positive for both sides?
junction with the U.S. clampdown on Arab visas, China relaxed There are multiple trajectories here. Let me give an illustration:
requirements, so there was a surge in the Arab presence in China. China’s exports to the Middle East have surged, particularly in the
There is a town 4 hours drive from Shanghai called Yiwu which is last six months! This comes at the risk of factory closures in the
now a virtual Arab market town. 200,000 Arab nationals visit Yiwu Middle East. There are no ways to cushion the effects of factory
each year: the main street has over a dozen Arab restaurants. closures in the Middle East. Closures mean unemployed young
Most come to the town to buy cheap consumer goods. Yiwu has men who contribute to social instability. We know this is a huge
now built a mosque and an Islamic kindergarten to invite Arab trad- problem in the Middle East. So it’s possible that rising Chinese
ers. China’s entry into the WTO and its relaxation of visa restric- exports contribute to social unrest in the Middle East! If only, say,
tions have allowed this to happen, and, in turn, reshaped global 1 percent of Chinese manufacturing was moved to the Middle East
trade patterns. that could have a hugely positive effect.
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