Interview: China's approach to Middle East positive, necessary: Crescent Petroleum CEO

China's approach to the Middle East is positive and necessary, and will benefit the region with stability and development, Majid Jafar, chief executive officer of Crescent Petroleum has said.

In an interview conducted by Xinhua during this year's World Economic Forum (WEF) meeting at Davos, Jafar said, "I think everybody in the Middle East sees Chinese engagement as positive and necessary."

He said the region was looking more east right now. "And that is completely natural, because the balance of the world economy since last year is now more than 50 percent in the developing world. And what's driving energy prices and economic growth is no longer the OECD, actually. It's in emerging markets. And China of course is a leader amongst them."

At the same time, "China's brand is not sullied by invading other countries, like some Western countries," he stressed. "So there isn't that negative reaction. It's generally seen very positively."

China and Middle Eastern countries have a traditional friendship and practical cooperation, and their economic interdependence has been on the rise, Jafar said.

"From the point of view of oil prices, which is the biggest driver of what's going on economically in the Middle East today, Chinese demand and what's happening with the Chinese economy is much more important than what's happening in OPEC meetings," the CEO of the regional, privately-owned Middle Eastern petroleum company said.

"Demand is the most important," he said, "the changing nature of the Chinese economy, becoming less about manufacturing and more about demand-driven, service economy, and so on, is going to impact the energy demand, and have an important effect on my region as well."

Though the plunge in oil prices dragged down China's trade with the region, huge potential remains to be exploited.

He said Middle Eastern countries will benefit from the China-proposed Belt and Road Initiative, adding that the Asian Infrastructure Investment Bank "could play a very important role in our region."

"That's not just economic, that's actually and directly political and social," he stressed, "because the investments made in infrastructure create jobs, and improve productivity and competitiveness in our economies."

He said the number one challenge for the region politically, socially and economically, was youth unemployment. "We have 30 percent youth unemployment. So unless we can tackle that with good, concrete, long-term investments in infrastructure, we will have more problems in the Middle East," he said.

In terms of infrastructure cooperation sectors, Jafar said the Middle East needed massive upgrading in all the key infrastructure sectors.

"Power is a big part of that. Not just traditional power, but also renewable. So I think all the key sectors -- telecoms, transportation, even in health care and education infrastructure -- need upgrading," he said.

Many countries in the Middle East found themselves at a similar juncture on their paths to development as China reached decades ago. So the region is looking east to learn from China's success.

"We need, in our region, to learn from how China has achieved such success tackling poverty with good infrastructure investments," Jafar said, noting that the proportion of investment in infrastructure in the region was only five percent.

"We need wider economic reforms," he said. "Unfortunately, my region only does economic reform when the oil price is low. The last time it did it was in the 1990s. And in the last few years, we got used to 120-dollar oil, and governments were spending a lot. They can't sustain that now."

He said the Middle Eastern countries were now realizing the necessity of reforms.

"We are seeing Saudi, Iran and Egypt. They don't agree politically on conflicts like Syria and Yemen, but they all agree that they need to reform and they need to privatize, that they need to reduce the government budgets, because at the moment, there are too many state workers, too much going toward energy subsidies," he added.

As the chairman of the Oil & Gas Independents Community at the WEF, Jafar has been championing for actionable policy reform initiatives, which will improve the business environment in the region.

To that end, "China, who has been through fantastic economic changes in just the last 20 years, can teach us a lot," he said.

"For example, making a credit bureau, reforming the banking system, making investments in infrastructure, changing the education system, these are all, I think, areas where we can learn from China," he said.

Asked why he chose China to emulate, he said, "It is hard to learn from a Western economy who, hundreds of years ago, already had these institutions in their economy, whereas in our part of the world, we need to learn from countries that have done it more recently and tackle these things."

Meanwhile, Jafar mentioned that the educational exchanges between China and the Middle Eastern countries had increased of late.

"Abu Dhabi in the UAE is now sending scholars to China every year to study in China and learn Mandarin, because it is as important or more important than just sending them to Western universities," he said.

Jafar said China's approach to the region would have far-reaching effects and contributions.

"Like the Arab world, China takes a long-term prospective," he said, "I think the criticism of some Western governments is they are very short-term. They look one year, two years, whatever. With our cultures, we measure time in longer horizons, and having partners to share that is very important for us." Endit