Explained: How China’s Going Out Policy Brings Iran and Saudi Arabia Closer?

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China’s going-out policy is no doubt part of its overall more activist foreign policy. But China’s domestic political economy has also been a major driving force. In particular, the growing problems with the old growth model, the changing relationship between the government and state-owned enterprises and banks, and the public dissatisfaction with the government’s management of its foreign reserves have all contributed to the increase in outgoing FDI and aid programs.

Chandigarh (ABC Live): China brokered an agreement between two rivals in the Middle East, Iran, and Saudi Arabia on 10/03/2023.

The Joint statement issued by the Chinese Foreign Ministry says, “The three countries announce that an agreement has been reached between the Kingdom of Saudi Arabia and the Islamic Republic of Iran, that includes an agreement to resume diplomatic relations between them and re-open their embassies and missions within a period not exceeding two months, and the agreement includes their affirmation of the respect for the sovereignty of states and the non-interference in internal affairs of states. They also agreed that the ministers of foreign affairs of both countries shall meet to implement this, arrange for the return of their ambassadors, and discuss means of enhancing bilateral relations. They also agreed to implement the Security Cooperation Agreement between them, which was signed on 22/1/22 (H), corresponding to 17/4/2001, and the General Agreement for Cooperation in the Fields of Economy, Trade, Investment, Technology, Science, Culture, Sports, and Youth, which was signed on 2/2/1419 (H), corresponding to 27/5/1998.”

The ABC research team keeping a close watch on China’s “Going Out” Policy refers to an article written by Hongying Wang  in the year 2016 and published by Canada based Centre for International Governance Innovation for our Readers with the sole aim of enabling them to understand China’s geopolitical moves in the backdrop of this policy.  

Hongying Wang writes on China’s “Going Out” Policy as under;

“In recent years, the world has seen rapid growth in China’s financial reach beyond its borders. Following the announcement of a “going out” strategy at the turn of the century, many Chinese enterprises have ventured to invest and operate abroad. After three decades as primarily a recipient of foreign direct investment (FDI), China has now emerged as a major FDI-originating country as well. Much of China’s foreign aid is closely entangled with its outgoing FDI, and it has also been rising. Since 2013, the Chinese government has been pushing for a new One Belt, One Road (OBOR) initiative, aiming to connect China with countries along the ancient Silk Road and a new Maritime Silk Road via infrastructure investment. In addition, since 2009, China has actively promoted the internationalization of its currency, the renminbi (RMB).”

Further, its says that “There has been a great deal of anxiety about the motivations behind China’s going out policy and its possible international consequences. Many view it as an expression of China’s international ambition and a strategy that threatens the existing international order; however, that is not the whole story. An equally important but often less understood issue is the role of China’s domestic politics and political economy in shaping its new activism in foreign financial policy.”

Domestic Political Economy and China’s Going Out Policy

China’s going-out policy is no doubt part of its overall more activist foreign policy. But China’s domestic political economy has also been a major driving force. In particular, the growing problems with the old growth model, the changing relationship between the government and state-owned enterprises and banks, and the public dissatisfaction with the government’s management of its foreign reserves have all contributed to the increase in outgoing FDI and aid programs.

The conclusion drawn by the writer says, “To summarize, China’s going out policy is driven and shaped by complex domestic and international factors. It is important to consider both sets of dynamics in trying to understand the trajectory of its course. There is a tendency to underestimate the obstacles for China’s OBOR initiative both inside and outside of China, which has led to excessive optimism on the part of its supporters and exaggerated concern on the part of those fearing a more powerful China.” 

To read the Complete report authored by Hongying Wang and published by Canada based Centre for International Governance Innovation Click on Link

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