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Hearing the thunder of guns: investors from the Persian Gulf are shifting from the United States to China
Against the background of the escalation between Israel and Iran, investors from the Persian Gulf countries, who previously actively invested in American assets, are now reorienting to China. In May, capital inflows totaled $33.3 billion, which is almost twice as much as a month earlier. Recently, this has become a new trend: many major players are now paying attention to Asia, as markets there are considered more stable and fast-growing. Details can be found in the Izvestia article.
Record capital inflows
"In May, the Chinese economy received $33 billion, a record capital inflow, as investors seek a safe haven and reduce their investments in the United States amid growing global instability. In April, the inflow of foreign investments into Chinese stocks amounted to $17.3 billion," The South China Morning Post newspaper reports.
A specific list of countries is not provided, but the authors of the publication, citing sources, claim that they are talking about investors from the Persian Gulf countries. They "seek to diversify their portfolios, which are dominated by assets in the United States," as well as refocus on stable, fast-growing Asian markets in the face of increasing global uncertainty.
To maintain this positive trend, Beijing will need to continue opening up its financial markets, the newspaper writes.
Sun Lijian, director of the Financial Research Center at Fudan University in Shanghai, suggested that some funds were probably withdrawn from the American market "and redirected to large trading countries and states with significant foreign assets, such as China."
According to the British edition of The Sun, due to the fact that the United States sided with Israel in the confrontation with Iran, investors from the Persian Gulf countries simply "do not want to put all their eggs in one basket."
Diversification of contacts
Recently, China has been actively seeking to increase the share of the yuan in the calculations of participants in international trade, so Beijing plans to create a center where transactions will be concluded in digital yuan.
As for the escalation between Israel and Iran, the PRC expressed support for Tehran, stressing that it thus protects its legitimate rights and interests. Beijing considered that Israel's actions seriously violated the purposes and principles of the UN Charter and the basic norms of international law.
In particular, the attack on Iranian nuclear facilities has set a dangerous precedent and could have disastrous consequences, the Chinese Foreign Ministry said.
Chinese President Xi Jinping said that "the conflict in the Middle East has once again confirmed that the world has entered a period of instability and serious changes." He added that if the confrontation between the parties worsens, other countries in the region will be seriously affected.
An atypical direction
Andrey Ontikov, an orientalist, publicist, and author of the Eastern Gate Telegram channel, noted in an interview with Izvestia that some countries, primarily Saudi Arabia, are switching to settlements with China for yuan.
— Indeed, diversification is underway, but it seems to me that such behavior, primarily by the Arab monarchies of the Persian Gulf, is primarily motivated not even by economic, but by political motives, — said the political scientist.
In his opinion, it is premature to say that "there is a full—fledged flow of Arab money from America to China."
—But at the same time, the rich monarchies of the Gulf have a clear understanding that their excessive dependence on the United States in all areas — economic, military, security, and technology — can be dangerous for their established political systems," the expert explained.
The expert added that Washington has been changing regimes since the so-called Arab Spring, even those that are considered its allies. This circumstance is of serious concern to the oil-producing states of the region.
Ontikov believes that these countries feel a certain danger and rely on alternative centers of power.
— First of all, China. After all, it was Beijing that reconciled Riyadh with Tehran. This reconciliation reflected Saudi Arabia's understanding of the threats posed by the United States. Therefore, the gradual political and economic drift towards China will continue unless there is some excessive activity on the part of the United States in relation to the monarchies of the Persian Gulf," Ontikov said.
The latter, in his opinion, have an understanding that it is necessary to "rebalance the system of international relations and integrate into a kind of intermediate position between the Americans and the Chinese."
Vasily Kashin, Director of the Center for Comprehensive European and International Studies at the Higher School of Economics, emphasized in a conversation with Izvestia that relations between the Middle East and China are currently on the rise.
According to him, this direction has always been atypical for the Middle East.
— Unprecedented events that are taking place in the Middle East, unprecedented escalation in the long term will push the countries of the region towards Beijing. China has always been more of a destination for manufacturing investments, which were carried out by companies, or investments in projects related to retail sales and others," the Sinologist noted. — But now, perhaps, we will see growth due to the current geopolitical background.
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