Strange Bedfellows: China’s Middle Eastern Inroads

In 2011, when Algeria’s Religious Affairs Minister Bouabdallah Ghlamallah awarded the contract to build the Grand Mosque of Algiers, the third-largest such structure in the world, it did not go to a homegrown Algerian bidder nor to one based in a fellow Muslim-majority Arab nation like Lebanon, nor even to one in a nearby non-Muslim nation like Spain, with long connections to the Islamic world. The February 2011 contract-signing ceremony officially granted the $1.3 billion mega-project to a farther away and far less likely competitor—a state-owned Chinese enterprise.

Beijing’s infrastructure giant, China State Construction Engineering Corp. (CSCE), is expected to complete the Algiers mosque project—a complex that will span more than fifty acres with room for as many as one hundred and twenty thousand congregants to bow down in prayer at one time—in just under four years. It would be a follow-up to another CSCE mega-project in Algeria—the country’s $11 billion East-West Highway, a seven-hundred-and-fifty-mile, six-lane freeway stretching between Algeria’s borders with Morocco and Tunisia, built with oil revenues and billed as the world’s largest public works project.

Ten thousand Algerians will eventually work on the mosque. So will seven thousand Chinese. These imported workers will find a thriving Chinatown in the suburbs of the capital of Algiers, filled with shops, restaurants, and population densities that will remind them of home. They will also find a robust Algerian police presence protecting them from outbursts of local hostility that have broken out over the last few years in response to what some Algerians regard as too much power by Beijing in the country’s economy and too little cultural sensitivity on the part of the workers it sends there.

The Chinese designed their mission in Algeria to be low profile, avoiding the pitfalls of Ugly Americanism. But many of the country’s domestic problems have followed its workers there. In 2009, when there were thirty-five thousand Chinese nationals already living in Algeria, al-Qaeda-linked groups threatened to target them because of Beijing’s brutal crackdown on its Uighur Muslims during riots back home. The hostility flared up again after the contracts were awarded for the Grand Mosque. And anger over its repeated vetoes of UN resolutions that could have countered ongoing atrocities in Syria has also put obstacles in the way of what China has billed as a “win-win” exercise in Algeria, and an exemplary exercise in soft power on its own part.

Through the 1990s, Chinese economic involvement in Islamic countries was modest and largely invisible. But Beijing saw an opportunity to dramatically increase business partnerships in the Muslim world in the aftermath of 9/11. China founded the Chinese-Arab Friendship Association, designed to promote economic and political ties with Arab states, soon after and began to play on rumors in the Arab world that a backlash against Muslims was taking place in the US as a result of the attacks.

“The kind of discrimination Muslims faced in the West after 9/11 will have no place in Chinese-Arab relations,” Li Ziran, an organizer of a China-Arab States Economic and Trade Forum event on the halal food industry that quickly sprang up in China, told me recently, still pushing the notion of widespread “Islamophobia” in the US. “Terrorism is irrational, but it is a means of weaker nations fighting against the power politics of stronger nations, so the United States should reflect on its own policies.”

In little over a decade since 9/11, China has surpassed the United States as the foremost buyer of Middle East oil. Its exports to the Middle East have grown exponentially, nearly doubling between 2005 and 2009, according to statistics from the International Monetary Fund, and in 2010 China also surpassed the US as the leading exporter to the Middle East, in what the Abu Dhabi–based daily the National reported as a shift in East-West trade dynamics. Chinese imports and exports with the Arab world hit nearly $200 billion in 2011, and are expected to reach $300 billion in two years, according to estimates cited in Beijing’s official press organ, Xinhua News Agency.

Beijing has approached what it has hoped would be an economic conquest of the Muslim world not only with reassurances that its business can be sensitive to Islamic principles, but also with precise planning combining religion, finance, statecraft, and a sharply honed sense of pragmatism.

I saw this multidimensional approach in action early in 2010, when I visited a construction site in the southern Chinese industrial city of Guangzhou where workers employed by the local government were scrambling from 6 a.m. until roughly midnight to build a Chinese-style mosque, a bright-red pagoda with green tile, crowned by Islam’s signature crescent, beside what is believed to be the musty, dimly lit crypt housing the tomb of the Prophet Muhammad’s uncle, Saad Ibn Abi Waqqas.

Local Chinese Muslim community leaders told me then that the mosque was being built in preparation for the holy month of Ramadan. Contributions from local Muslims—many of whom are blue-collar workers and migrant laborers from China’s landlocked provinces—amounted to roughly ten percent of the $2.7 million cost of the project. The remaining ninety percent was paid by local officials. But this was less a gesture to local Muslims’ religious sensibilities than, as one official at the Guangzhou Ethnic and Religious Affairs Bureau intimated in a phone conversation, to welcome China’s international Muslim neighbors, including major exporters of natural gas and oil, like Kazakhstan, to the Asian Games being held in the city that November.

The deal-making mentality that characterizes China’s approach to the Arab world has paid dividends. The same year that the Guangzhou mosque went up, state-owned China Railway Construction Company (CRCC), one of the enterprises behind Algeria’s East-West Highway project, also built Saudi Arabia’s Mecca Light Rail line between Mecca and Medina to allow international Muslims to perform their pilgrimage to the holy cities with every modern convenience.

Non-Muslim Chinese construction workers faced some logistical problems on these projects. Mecca and Medina are barred to non-Muslims. In a great show of China’s flexibility and respect for its host, Saudi officials reported triumphantly that roughly sixteen hundred Chinese CRCC employees converted to Islam in 2010.

Beijing has also sought to portray its Muslim minority as a public-relations asset. In the past three years, as part of an effort to consolidate its foothold in the Middle East, China has inaugurated a China-Arab States Economic and Trade Forum, which held an event, most recently, in September in China’s own predominantly Muslim Ningxia Hui Autonomous Region, where visitors from the Islamic world were greeted by exhibits showcasing traditional Chinese Muslim culture—ethnic Uighur traditional dancing and ethnic Hui halal cuisine.

But the reality, reports of which circulate freely in Algeria and elsewhere in the Middle East where the Chinese footprint shows, is less affirmative. During a visit to China’s far-western Uighur Autonomous Region of Xinjiang during Ramadan in 2010—just before the installation of closed-circuit cameras across Urumqi designed to help the government crack down on ethnic riots between Hans and Muslim Uighurs—I was told by a Uighur teacher that local authorities had instructed teachers to force-feed snacks to Uighur students to break their observance of the holy month of dawn-to-dusk fasts. And a closed mosque I entered on a day trip to rural Turpan featured a sign ominously titled, in Chinese, “Twenty-three instances of illegal religious practices.” I heard from representatives of various human rights organizations that Chinese officials were barring minors from entering mosques, essentially preventing parents from instructing them in the tenets of their religion in their formative years.

But the public relations effort proceeds oblivious to such contradictions. China’s Hong Kong Special Administrative Region has become a major passageway for Arab businessmen traveling to the mainland. With the help of the local tourism officials, the number of certified halal restaurants, compliant with Islamic dietary codes, has tripled since 2009 to nearly fifty.

Palestinian businessman Nader Ghanem, thirty, who studied Chinese in Nanjing, works with various companies producing low-cost goods for export to the Arab world. The businesses are based in burgeoning new mainland Chinese hubs of Arab commerce, like Yiwu, in the country’s eastern Zhejiang Province, and Guangzhou.

Ghanem says that the mainland’s growing halal food industry and Islam-compliant eateries like Hong Kong’s famous Wanchai Islamic Centre Canteen (where traditional dim sum is served without the pork), enable Muslim businessmen from the Arab world and Asian Muslim economic powers like Malaysia to operate businesses in the Greater China Region.

Hong Kong has a longer contemporary history of Muslims traveling to the region and cuisine catering to Muslim Hong Kongers, but since China’s opening in the 1980s, restaurants serving lamb kebabs and Lanzhou ramen, spiced to the tastes of Western Chinese palates, have become an institution in the big cities of the East Coast like Beijing and Shanghai.

At a gala dinner I attended in Beijing in early 2011 aimed at promoting Chinese business with Africa, with several diplomats and business interests from Muslim-majority African nations in attendance, hosts assured guests that all of the several courses served were in full compliance with Islamic dietary laws, from a mystery meat cold cut plate for openers to an ornate bouquet of chocolate and fruit for dessert—all served while African students from a local university danced for the predominantly Chinese audience to what the host announced was a “traditional African beat” in generically African robes over sweats, jeans, and sneakers.

In recent years, Hong Kong—traditionally the world’s gateway to the rest of the country—has attempted to position itself as a conduit for Muslim business with the mainland. The latest endeavor: setting up platforms for Islamic finance, which prohibits usury and investment in industries like pornography and liquor, all of which are forbidden in the Muslim world.

In 2008, Hong Kong’s Legislative Council (LegCo) first introduced the prospect of making Hong Kong a hub for Islamic finance—and international Muslim-owned businesses that prefer to deal in Islamic funds. Last year, several companies from Muslim-majority Kazakhstan posted initial public offerings on the Hong Kong Stock Exchange.

Establishing a strong Islamic capital market was one of the major topics of conversation among the mainland Chinese banks present at the 2012 China-Arab States Economic and Trade Forum, as nations like Kazakhstan begin to represent an economic boon for China, not only in natural resources but Muslim capital inflows.

Since 2008, Hong Kong’s leading institution for secondary learning, Hong Kong University, has started to establish a new degree program in Islamic Finance to prepare Hong Kong’s financial community for a Muslim world business hub resembling Dubai.

This year, Hong Kong’s Bureau of Financial Services and the Treasury pledged to push for legislative amendments to the region’s Inland Revenue Ordinance and Stamp Duty Ordinance “for the purpose of promoting the development of an Islamic bond (sukuk) market in Hong Kong.”

But this aggressive wooing of Islamic finance may for now be as symbolic as it is substantial. Hong Kong’s largest bank, the Hongkong and Shanghai Banking Corporation (HSBC)—a product of the territory’s colonization by Britain and currently headquartered in London—announced on October 4th that it would majorly downsize its Islamic finance offerings and dissolve its current Islamic finance platform, HSBC Amanah.

“We will no longer offer sharia (Islamic law) compliant [financial] products and services in the UK, the UAE, Bahrain, Bangladesh, Singapore and Mauritius, with the exception of wholesale Islamic financing [or] Sukuk products that will continue to be offered in these jurisdictions and globally through HSBC Saudi Arabia Limited,” I was told by an HSBC Middle East spokesman who requested anonymity.

HSBC representatives said more diplomatically that its Islamic finance program was being restructured as part of “a review of all our businesses” conducted in May 2011 and emphasized that this does not indicate a wholesale pullback from the Islamic finance industry.

The profitability of Hong Kong’s Islamic finance operation is not the only problematic part of China’s complex Muslim business equation. When the China National Offshore Oil Corporation (CNOOC) recently made a $15 billion bid for Nexen, a Canadian gas and oil company with vast international operations, it was widely taken as an acknowledgment that Beijing was increasingly wary of the perils of doing business with politically unstable countries such as those in North Africa hit first by the “Arab Spring” and then by its less temperate aftermath.

But Sino-Arab cooperation insiders remain optimistic about Beijing’s dealings with the Muslim world. Jiao Tong University’s Ye Luofu spoke for this consensus when he told me, “The problems that occurred last year in Arab countries will allow China to pay more attention to Middle Eastern politics and social changes. China has its interests in the Middle East, and will continue to cooperate with Arab countries.”

The China-Arab Trade Forum’s Li Ziran is hopeful that the revolutionary movements that swept the region will actually increase stability in the recipient countries and make them even more receptive to Chinese investments: “Although civil unrest has an impact on China’s international trade, it will not affect bilateral relations. It is our hope that the turbulence has established a higher degree of popular support for their governments, reducing risks in our exchanges with the Arab world.”

Yet China’s ability to win Muslim hearts and minds has been tempered not only by rapid swerves in Middle Eastern contemporary affairs but by a series of hitches in the projects it has promised to build for its Islamic clients.

The Chinese-built Algerian East-West Highway project might have been an infrastructural marvel, but the local Algerian press kept up a drumbeat of complaint that made China look as bad as the “imperialist oppressors” it has continued to denounce in the Muslim world. The media, especially in the digital world, cited allegations of Chinese corruption on the project and printed reports from local union leaders that CRCC failed to pay its Algerian workers and bounced checks to its subcontractors. Bloomberg reported in 2010 that CRCC would book a loss of $623 million on its Mecca Light Rail project after Saudi authorities allegedly failed to pay for adjustments it requested in its original project plan.

Allegations of corruption in the East-West Highway project only came out years into construction, souring Algerian perceptions of Chinese enterprise. There are still years to go before construction is completed on the Grand Mosque of Algiers. But Algeria’s independent El Watan newspaper has picked up a report from the Wall Street Journal that the World Bank barred the Chinese company heading up the project from receiving loans for three years in 2003, after investigations reportedly showed the enterprise had rigged bids for contracts.

And Beijing is already feeling blowback from Algerian discontent with the country’s president, Abdelaziz Bouteflika, already in office for fourteen years and returned to office last May in what was generally regarded as a farcical election. Many regard the Grand Mosque as one of Bouteflika’s many showy vanity projects designed to obscure his inability to address a failed education system, poor health care and housing, and widespread unemployment. El Watan has published a series of articles questioning the Mosque’s “pertinence and utility.”

It, like other critics, is very conscious that China is playing a fundamental role in a project that has directed public funds away from direly needed projects that would have bettered the socioeconomic lot of Algerians. And some of the words being directed at the Chinese show that merely defining itself as the anti–United States and insisting that it will wield only the softest of power has not pulled the wool over Arab eyes.

“Can we entrust an atheist enterprise from an atheist state that represses its own Uighur minority in Xinjiang [in China’s far West] to construct a mosque here in Algeria?” asks user Fares31, a reader of the El Watan online edition. “What glory and what blessing will we get from this project—constructing a mosque as an act of faith that will reinforce the oppression of our Uighur brothers at the cost of a billion dollars?”

For additional reading on this topic please see:

From Silk to Sanctions and Back Again

Dragon in the Great Sea

China and the Middle East: Rising Power and a Region in Turmoil