Tuesday 7 February 2012
Wen Jiabao began 2012 by becoming the first Chinese Premier to visit the UAE or Qatar, and the first in 21 years to visit Saudi Arabia. In so doing he provided the strongest indication yet as to how the financial crisis has altered the dynamics of the global economy, and what the implications might be (see Comment & analysis: Middle East). As the cover of this edition conveys, it appears to be clearer than ever that the locus of power is moving ineluctably eastwards.
America and European states continue to struggle with crippling debt. As the Chairman of White & Case, Hugh Verrier, puts it on a recent live webcast interview with the IBA (see feature Global leaders), ‘If there’s a double dip, I missed the upward part of the “W”…we’re in year four of a protracted recession and it’s going to be a long climb back to a vibrant economy.’ The UK’s former Chancellor of the Exchequer, Ken Clarke, is another key decision maker wrestling with the consequences. As he told IBA Global Insight in an exclusive interview, ‘Recovery and growth is getting very, very difficult to start off, because of a huge burden of debt that has to be resolved…The whole point of reducing public spending on a scale which no democratic government has attempted in modern times in most Western countries, certainly not in Britain, is to do so in such a way so that you don’t damage the vulnerable.’ Clarke’s final point being the major bone of contention (see feature Access denied).
Meanwhile, the wealthiest Middle Eastern and Asian economies are accumulating ever more influential sovereign wealth (see feature Shifting sands) and it is in their shared interests to develop increasingly sophisticated trade and investment ties. Saudi Arabia is already China’s biggest source of imported oil, but China’s growing ties with Middle Eastern states aim to guarantee the uninterrupted supply of energy essential for continuing its impressive growth. Bilateral trade between China and Saudi Arabia alone was approximately $58.5bn in the first 11 months of 2011. This is set to soar as the locus of power shifts eastwards.