China is the World's Largest Exporter to the Middle East

In early 2009, China overtook the United States as the world's largest exporter to the Middle East, having already raced passed the United Kingdom and Germany. It was the first time in over 60-years that the number one ranking had changed. The event marked an important milestone in what is a rapidly strengthening relationship between China and the Middle East.

But it is not Arab-style Wal-Marts who are responsible for the flood of "made-in-China" imports. It is instead individual Arab traders. Many of the traders can be found in Yiwu, a small Chinese city four-hours south of Shanghai. The city claims the world's largest wholesale consumer goods market selling the type of cheap gifts and household goods that sell in low-cost retail stores across the world.

The number of Arab visitors to China surged as a result, filling up flights between Dubai and the main Chinese cities of Guangzhou, Shanghai, and Beijing.

The economic crisis has only intensified the trend. It's no wonder. The Middle East's imports from

China are still growing, albeit in low single-digit figures, even as the United States imports from China collapse at near twenty percent rates relative to last year's levels. And Chinese manufactures are searching for new markets in the Middle East as a result. It is just one more sign of the change in demand.

There are other signs of the growing strength in trade relations. Wang Weishang, a local entrepreneur, also from the coastal province of Zhejiang, has set up Asia Business TV, a cable television channel. The channel broadcasts throughout the Middle East via Nilesat. It runs regular English-language promotional spots for Chinese products and services to the Middle East's traders.

But there is hope. Production costs in China are rising. Land and labor are all increasingly expensive. The Chinese currency is also appreciating in value. Nearly 10,000 factories have closed down in the southern Guangdong province, neighboring Hong Kong, during the past year. More factories will close as the government is no longer willing to prop up low-value added manufacturers.

Syria will never replace China. But it only has to capture a small share of China's trade with Europe to benefit. Consider this. China's exports to Europe have risen $225bn in the past decade. If Syria had captured just 1% of this trade it would have added 0.5 percentage points to the country's GDP growth annually, not to mention reduced chronic unemployment rates.

The upshot is that relations between China and the Middle East might be flourishing. Yet they are also delicately poised. The fact China has pushed the United States aside as the Middle East's largest supplier will rattle doors in Washington. But it is important to look beyond the trade figures to the social and political implications of this increasingly complex relationship.

By Ben Simpfendorfer