Developing Economic/Commercial [Archives:1998/06/Business & Economy]

February 9 1998

Ties Between Yemen & China
By: Mr. Wang Zousheng, Economic & Commercial Counselor, Embassy of the Republic of China in Sanaa.
It has been 42 years since Yemen and China established diplomatic relations. In 1987, H.E. President Saleh paid a visit to China. Ten years later, he is paying another visit, aimed at further promoting the friendship and fruitful cooperation between the two governments and peoples. On this occasion, I decided to review the experience of economic and commercial ties between Yemen and China.
1. Trade between China and Yemen Trade relations between China and Yemen can be traced back to a long time ago. Silk products and chinaware from China, and frankincense and myrrh from Yemen were products exchanged by the two sides hundreds and thousands years ago. After the establishment of the People’s Republic of China, it established diplomatic relations with the former North Yemen (1956) and South Yemen (1968). Commercial and trade agreements were also signed.
In 1987, China and the former Democratic Republic of Yemen signed in Beijing ‘Agreement Between the Government of the People’s Republic of China and the Government of the Democratic Republic of Yemen on the Establishment of the Joint Committee for Economic, Technical and Trade Cooperation.’ Simultaneously, high-level official visits were exchanged between the two sides. In July of 1992, the Yemeni Minister of Supply and Trade visited China. In 1991 and 1992 respectively, two Chinese governmental economic delegations came  to Yemen, two loans, for 30 million RMB and 50 million RMB were provided to the Yemeni side.
In June 1996, the two governments signed in Sana’a ‘Agreement Between the Government of the People’s Republic of China and the Government of the Republic of Yemen on Economic, Technical and Trade Cooperation.’  Since then, four meetings of the joint economic and trade committees have taken place.
During the 1990’s, trade relations between the two countries saw rapid development. According to customs statistics by the Chinese side, the volume of trade between the two countries was 64.78 million USD in 1990. In 1996, the trade volume had risen more than tenfold, to  676.56 million USD. The trade volume in 1997 reached 751.1 million USD, yet another annual rise of 11%. The visit of President Ali Abdullah Saleh to China next week is expected to give a strong boost to further trade between the two sides. Today, Yemen is China’s largest trading partner among the 7 west Asian countries.
The trade flow shows a favorable balance for Yemen, because of the purchase of Yemeni crude oil in large quantities by the China. In May 1996, a visiting Chinese government delegation signed with the Ministry of Oil and Mineral Resources an MOU for the Purchase of Yemeni Crude Oil. In 1997, Chinese companies imported directly from Yemen about 260,000 tons of crude oil.
Major products from China to Yemen include: foodstuffs, light industrial products, building materials, hardware, machinery, electronic instruments, chemicals, medicines, textiles, etc. In 1997, Chinese electrical home appliances and vehicles entered the Yemeni market, for the first time. These  renowned brands for electrical home appliances,  color TV, air conditioners, refrigerators, washing machines, trucks, passenger cars, mini vans and mini buses. Chinese products are characterized by the competitive price with high quality, which make them popular in the Yemeni market.
2.  Bilateral Cooperation for Mutual Benefit a. Project Contracting: Since 1979, a number of Chinese companies, represented by China Road & Bridge Corp. and China Construction Corp., have been working in the Yemeni market. Their business include contracting, joint ventures, cooperative production, etc. At one stage, the number of Chinese engineering and technical corps working in Yemen reached 4,500. By the end of 1996, Chinese companies have executed about 800 contracts with a contract volume of over 800 million USD. Companies still in operation in Yemen now include: China National Road & Bridge Corp., China National Fishery Corp., Sichuan Road & Bridge Corp., the Oriental Geographical Corp. and  Shandong Corporation for Economic & Technical Cooperation. Their major activities cover road construction, water supply and sewage networks, buildings, welling and fishing.
The work of Chinese companies span the whole country as they are eager to go wherever the job is. Examples include the Medical Academy of Sana’a University, the Institute of Technology, the Sana’a-Hodeida Road, inner city streets and the Aden Ring Road, the Tihama and Hajjah roads and water/sewer systems, etc. Over the years, Chinese companies have contributed greatly to the development of the Yemeni economy and the enhancement of friendship between the two peoples.
b. Medical Cooperation Manpower cooperation between the two countries started in 1981, mainly in the field of consultancy, production technology and medical services. The most fruitful cooperation has been in medical field. Chinese medical staff work in many Yemeni hospitals all over the country. In the spirit of serving the Yemeni people, the Chinese medical personnel work conscientiously and professionally, and their costs are subsidized by the Chinese Government.
Chinese doctors carry out a lot of difficult surgical operations. They go out of their way to relieve Yemeni patients of their suffering. Such behavior has been highly praised by the people and government of Yemen. In 1987, when President Saleh visited China, he personally granted second-level medals to 8 Chinese medical workers for what they had done and their brave contribution during the ’70-day Siege’ in safeguarding Sana’a. On February 22, 1997, President Saleh approved to sponsor 15,000 USD to publish the “Atlas of Yemen Eye Diseases” written by Chinese Dr. Li Jun. On June 2, 1997, His Excellency received Dr. Li Jun. From 1996 to December 1997, altogether 2400 Chinese doctors have worked in Yemen. And in the past 30 years, Chinese doctors have seen 16 million Yemeni patients, and have performed more than 100,000 operations. Because Chinese professionals are highly qualified, skillful, well-disciplined and also because they respect the local laws and customs, they are very popular among the Yemeni people.  Presently, quite a lot of private clinics have hired Chinese doctors to work with them.
c. Joint Venture and Cooperative Production During the 1980’s, Chinese companies launched 5 joint ventures with a total investment of 6 million USD with Yemeni partners. In recent years, there has been a new surge in joint venture cooperation. In early 1997, the Chinese Metallurgical Equipment Corp. and the Yemeni Al-Mashdali Establishment started a steel-rolling plant. With the support of both governments, the Sino-Yemeni Iron & Steel Co. Ltd. was founded in May 1997, and production started in July. The screw thread steel produced by the factory has been selling very well, and the present output is barely able to meet the need of the market. Now the factory is considering expanding the production scale. Other projects now under discussion include cement factories, vehicle assembly lines, textile factories and alumnium smeltering.  Given economic viability, the projects are expected to succeed very well.
At present, the Chinese government is trying to speed up the use of its concessional loans. The Chinese Bank of Import and Export is willing to extend loans to specific projects, either to the governmental body, local central bank or its appointed commercial banks, or give the loans directly to Chinese companies or joint ventures established between China and the recipient country provided both sides agree. Companies from both sides could discuss the project first, when all things become ready, the two sides can sign a framework agreement for cooperation. We also welcome Yemeni entrepreneurs to take an active part in the discussion and implementation of developing projects, and to enhance the cooperation between our two countries.
3.  Economic Aid from China to Yemen Since 1958, the Chinese government has rendered to the Yemeni government about 69 sums of money, altogether added up to 1.15 billion RMB, 101.5 million RMB among which belonged to non-reimbursable assistance, the rest was interest-free loans. Under the above-mentioned aid, the Chinese side financed 67 projects, including 39 complete plants and projects such as road and bridge, textile factories, hospitals and schools, 12 technical cooperative programs, 4 projects of equipment supply, 12 investigation or survey projects. The accomplished projects are illustrated as follows:
In 1996, during the official visit to Yemen headed by Chinese vice premier Mr. Wu Banggou, the Chinese side granted 30 million RMB for building a friendship fly-over in Sana’a. ýWhen implementing all the projects, Chinese experts, technical and engineering staff worked hard and overcame many difficulties, ensuring the quality and quantity of those projects. They regard the construction for Yemen as the construction for their own motherland. They have made great contributions and even dedicated their lives. Up to now, nearly 100 Chinese comrades were sacrificed in Yemen. In Sana’a only, about 50 Chinese are resting forever in the Engineer Zhang’s Cemetery.
4.  Best Wishes In general, the commercial relationship between China and Yemen, the bilateral cooperation, and the Chinese economic assistance to Yemen are successful and satisfying, with a bright future.  However, there also exists some inharmonious phenomena, for example, certain Yemeni companies have been in arrears with a big sum of payment for goods to Chinese companies for 7-8 years.
Presently, both sides are actively under negotiation to enhance the existing cooperation and expand the future cooperation. As I understand it, 1. The bilateral trade relations between China and Yemen has great potential for further development. In 1997, the total foreign trade volume of China exceeded 300 billion USD. The trade volume between China and Yemen only occupied 2 per thousand of that. The trade volumes between China and countries like USA, Japan, the EU are all above 50 billion USD. These figures show that the quality and prices of Chinese export commodities have great competitiveness in the world market. I do hope that all friends and entrepreneurs accompanying H.E. the president to visit China will take the opportunity to investigate the Chinese market, making full use of the limited time to discuss and negotiate with their counterparts from commercial and industrial circles in China, trying to finalize some transaction contracts. The Economic and Commercial Counselor’s Office of the Chinese Embassy in Yemen will be willing to assist at any time. 2. The bilateral economic cooperation should be further promoted. It has been nearly 20 years since China adopted the policy of opening-up and reform. Now China possesses her own independent, comprehensive industrial system with great amount of technologies and experience suitable for developing countries. To set up joint ventures with China is an access for Yemen to develop industry of her own. It has been proved successful in many developing countries that China participates in the investment of technology, equipment and managerial experience. I wish that the Yemeni friends from industrial circles joining the visit to China could negotiate and sign with the Chinese side more cooperation intentions. I sincerely hope that the Yemen-Sino Iron and Steel Co. Ltd. could expand the cooperation scale as soon as possible. I wish that the cooperation for projects such as cement factory and vehicle assembly line could succeed in the near future.
At the time before the coming visit of H.E. the president to China, I sincerely wish that the economic and commercial relations between China and Yemen will develop healthily and steadily forward. I wish the friendship between the two peoples will last forever. I wish H.E. President Saleh a very successful visit to China.