March 26, 2003	Wednesday	Muharram 22, 1424

BEIJING: A less vociferous than expected response to the war on Iraq from Beijing reveals that in weighing the consequences of the conflict, China is torn between its fundamental strategic policies and economic benefits.

As part of a permanent strategy to oppose “US hegemonism”, Beijing consistently sides with any country punished by Washington and time and again has tried to thwart any US efforts to pull together a coalition in the United Nations against any other state.

As much as China fears it could easily become a future victim of such punishment, for more than 20 years it has also sought a peaceful international environment to pursue its economic reforms.

Ironically, China stands to be among the economic winners from the current conflict.

“There is a silver lining to the war,” admits He Maochun, professor of foreign trade relations at the People’s University in Beijing. “We should set our sights on winning contracts for Iraqi reconstruction after the war. Our model is South Korea in the 1980s — they built a highway from Baghdad to Amman and after the Gulf war in 1991. They undertook its reconstruction.”

Professor Maochun says the 1991 Gulf war resulted in a loss of 33 per cent of China’s labour and engineering contracts in Iraq. But the years since the partial lifting of UN sanctions in 1996 have boosted the resumption of bilateral trade and commerce.

“This time, we need to be even more pro-active and seize the business opportunities that will arise after the war,” he says.

Hopes to win handsome deals when the oil-rich country begins to rebuild its civilian infrastructure are just part of many gains China could get from the war in the Gulf region. Acceleration and concentration of foreign investment is another one.

“As the Iraq situation may have a bigger impact over a relatively longer period than most people expect, international investors are likely to transfer more of their money to safe investment destinations such as China,” says Wang Jian, an economist from the Institute of Macroeconomy under the State Development and Reform Commission.

The trend is already visible from the official figures released by the Chinese government this year. Foreign direct investment jumped nearly 54 per cent in the first two months of 2003. Pledged foreign investment rose 59 per cent during the same period. This marked increase comes on the heels of a record $52 billion of foreign investment China attracted in 2002.

More than anything else in the aftermath of the war, China is concerned with securing low oil prices when or if Iraq’s oil exports come under US control.

Since China became a net oil importer in 1993, its imports have risen steeply and are now essential to sustaining its high economic growth rate. In 2002, imports rose 15 per cent on the year. Last year China imported 71 million tons of oil, half of which came from the Middle East.

To avoid becoming over-reliant on Gulf oil, it is pushing ahead with long-term plans to contract oil and gas from Russia, Indonesia, Central Asia and Australia.

Meanwhile, Beijing has taken a series of measures to guarantee that the war does not disrupt the steady supply of oil and does not cause huge price fluctuations in the market.

China’s three leading oil companies will import oil from Indonesia, Sudan and Venezuela, Yang Wencai, deputy secretary-general of the China Petroleum and Chemical Industry Association, told the ‘People’s Daily’ on the weekend. China is also reopening oil wells sealed previously because of their relative high production cost.

Economic worries and calculations have dominated the state-controlled Chinese media ever since the first bombs began falling over Baghdad last week. But nothing of the climate of indignation whipped up after the US-led bombings of Iraq in 1998 is visible nowadays.

Indeed, the first Gulf war helped Chinese military discover a lot about the US way of fighting a modern, digitalized war, says Liu Dingping, a researcher with the Strategic Research Centre of the People’s Liberation Army Military Affairs Statistical Institute.

“This is the fourth war the United States has waged since the end of the Cold War, but there is no reason for the Chinese military to feel any inferior,” Liu said in an interview with Guangzhou-based ‘Southern Weekend’ newspaper. “With each new conflict, we draw our lessons. The bigger the number of military actions with US involvement, the smaller the gap between the US and China military.”—Dawn/InterPress News Service.