The Shifting Sands of the New Silk Road: An Insight from Yiwu and its Arab Traders
I first visited Yiwu in 2017 after a Syrian businessman in Shanghai encouraged me to speak to those who, in his opinion, could give me an insight into the true nature of China-Middle East trade. Until that point, I had relied on data from “official” and supposedly more “reliable” sources such as the UN Comtrade database or the various figures offered by different Middle Eastern chambers of commerce or trade associations. But as I heard the above-mentioned phrase uttered by a group of Arab traders while sipping mint tea and smoking Shisha in one of Yiwu’s many Arab cafes, it became abundantly clear that any effort to study China’s burgeoning commerce with the region could neither be a study based on official ‘numbers’ nor one that overlooked the key role of those who mediate this trade and the sites of economic activity where they operate. In this case, Yiwu and its Arab traders provided a departure point to an alternative and more nuanced perspective of China-Middle East relations.
Time spent in this multifaceted city offers a glimpse into the equally multidimensional forms of economic, social, and political interactions that take place between China and the Arab world. It is such forms of China-Middle East relations that are shaping the day-to-day reality of contemporary ties quite differently to what is presented when limiting analysis to the role of state level exchange.
From an economic viewpoint, Yiwu offers an entry point to the complex web of actors and practices that sit behind the official statistics of China-Middle East trade. The Arab merchants who mediate this commerce from their offices in Yiwu, or those who have visited the city from as early as the 1990s, are the unseen cogs that hold it together – even in these times of Covid-19.
This blog offers the reader an introduction to this unique centre of commerce, but particularly the Arab trader community that today calls it home. I close with some questions that command attention as China continues to navigate its pandemic responses, in so doing, potentially altering years of norms that have characterised China-Middle East economic activity in cities such as Yiwu.
The Yiwu Model: The World’s Supermarket for ‘Made in China’
Thirty years ago, Yiwu, a county level city in East China’s Zhejiang Province, was a non-assuming locale compared to its neighbouring commercial centres. It took over six hours to reach by train from Shanghai; an airport was only opened in the early 1990s.
More attention had been given to manufacturing and trading centres in the south of China, such as Guangzhou (home to the famous Canton Fair) or the city of Dongguan, often referred to as the ‘factory of the world’. Yet today, bolstered by the economic rise of the Yangtze River Delta region, Yiwu, a city now scarcely an hour and a half away from Shanghai by high-speed rail, has consolidated itself as an epicentre of globalised commerce.
As the idea of re-paving the ‘Silk Road’ dominates Chinese state policy and forms the basis of a wave of new scholarly literature that focuses on China-Middle East relations -especially since Beijing’s launch of the ambitious Belt and Road Initiative (BRI)- cities such as Yiwu have become particularly relevant. This is because while it is China’s interest in natural resources that has consumed the thinking behind its ‘New Silk Road’ plans, the world’s oldest trading route is equally paved with Chinese consumer products ranging from zippers to iPhone chargers, toys to religious artefacts, and everything in between – much of which is sourced from Yiwu.
The entrance for East District 1
Yiwu’s International Trade Centre (ITC), also known as the China Commodity City (CCC) and the Futian Market, is where traders convene from all corners of the world to source that which is ‘Made in China’.
Open year around, it covers 5.5 million square metres and is home to over 75,000 stalls that vend over 1.8 million different products. It is the preeminent contributor to Yiwu’s designation as the ‘world’s largest wholesale small commodities market’ where Middle Eastern traders are offered a unique entry point to small scale transnational trade. Unlike the challenges and financial commitment of sourcing from factories directly, Yiwu is like a large “supermarket” where traders can just as easily make a handful of small purchases that they carry back to their home country in their own luggage or invest in a container of multiple products.
It was estimated in 2014 that 60% of the world’s Christmas decorations came from Yiwu
Multicultural Yiwu
It is difficult to access reliable figures on Yiwu’s population, least of all its foreign population. Results from China’s most recent census conducted in 2020 indicates a total population of 1,859,400, up from 1,234,000 in 2010.
At the time of my first visit to Yiwu in 2017 it was home to an estimated 10,000-15,000 foreigners, who combined with the broader non-local population (mainly migrant workers from across China) made up roughly half of the city’s population; not to mention the thousands who passed through.
In 2013 it was estimated that 438,000 foreign traders visited Yiwu with 75% of their commercial transactions undertaken in the Futian Market.
The overseas influence on Yiwu is immediately apparent. Walking along some of the city’s main streets is akin to a journey across the Silk Road with detours that may take in Africa, Latin America, and Southeast Asia. A night spent in an evening hangout spot of foreign traders can include dining on halal meat and smoking shisha while men in traditional African dashikis and women in hijabs pass by. For a comparatively unknown city outside of China, it is a ‘multicultural’ city through and through or, as one trader described it to me, “a world village”.
Of the various foreign communities in Yiwu, it is believed that the largest contingent is from the Middle East and North Africa (MENA) region; in 2010 it was estimated to account for approximately 70% of Yiwu’s foreign population.[1]
There is no consensus on the origin of the first foreign traders, some claim that it was initially Yemeni’s followed by Palestinians, Syrians, and then Egyptians, others believe the earliest were in fact Afghans and Pakistanis. [2] It is hard to say for certain, but it is thought that the largest permanent Arab communities are -in order of size- Egyptian, Syrian, Lebanese, Turkish, and Algerian, but those with whom I spent most of my time, were the roughly one hundred Palestinians.
The Arab business community, as with other foreign businesspeople in Yiwu, is primarily comprised of ‘agents’ who facilitate China-Middle East trade and have played an increasingly significant role since the early 2000s, and even more so in recent years with the escalation of conflicts across the region.
Agents are intermediaries that facilitate business between visiting traders and Chinese suppliers – typically working on a commission of 5% of the value of goods they help to oversee. They provide a range of services that span the initial sourcing of goods to its final delivery; this often includes accompanying traders around the Futian Market and to nearby factories, and thereafter, managing the various import-export procedures and financial transactions.
Agents are also well informed of the necessary practices to, for example, coordinate with local partners to modify formal documentation or provide “under the table” payments to facilitate the export of goods without the appropriate scrutiny. For those overseas traders who have established good relations with an agent, they will not just provide repeat custom, but will often trust the agent to source goods for them in their absence to avoid the need to travel to China.
The Rise of the Arab Trader
Early observers of the expansion of Arab traders in China –and Yiwu specifically- accredited it to the geopolitical shifts in the post-9/11 political climate.[3] The growing stringency on US visa allocations to Arab citizens and the scrutinizing or blocking of commercial deals had a profound effect on severing vital links between the US and the Arab world.[4]
In response, between 2000 and 2007, the number of Arab visitors to the US fell from 250,000 to 170,000 while a growing tide of Arab traders, for whom it was easier to obtain Chinese visas, headed East to pursue new economic opportunities.[5] Simultaneously, many Arab states had started to pursue trade liberalisation policies from the early 1990s, steadily opening their markets to Chinese goods. China’s accession into the WTO a few months after the events of September 11th, 2001, meant that it was in a perfect position to expand its global economic engagements; the Middle East was a priority target.
Arab businessmen flocked to China to source all manners of consumer goods, from low-cost textiles to higher end electronics. The impact was immediately apparent. By 2005 Sino-Arab Trade had increased tenfold to $51 billion from 1995 figures, in 2020 it was almost $240 billion.[6]
The United Arab Emirates (UAE) played a key role in the early years, primarily due to its re-export sector that saw Chinese goods shipped to key commercial hubs such as Dubai and then onward across the region. The UAE was the top export destination for goods from Yiwu in 2002 and continues to rank highly. In 2004, the establishment in Dubai of the world’s largest commodity market outside of China aptly named ‘Dragon Mart’ further cemented China-Middle East trade.
Many of the original traders who set up offices in Yiwu in the 1990s had also come to China on funded scholarships to study at Chinese universities. One such traders was Khader, from Gaza, who in 1996 was funded to study electrical engineering at Shanghai Jiaotong University. Sceptical of moving to China while most of his classmates were sponsored to go to Europe, he had a deep sense that he needed to, in his own words, “check China, and if it doesn’t work in the first one to two years I will come back”.
That was over twenty years ago and Khader now lives in Yiwu with his wife and two children. Khader’s story is not too dissimilar to many of the younger traders in Yiwu today who likewise started their time in China as students.
A young Yemenite trader whom I befriended named Bandar offers a common story. As he studied in Shanghai a contact back home asked for his help to source some goods from Yiwu, soon after, Bandar who is now fluent in Chinese realises the opportunity that potentially lies ahead if he stays in China. Bandar then sets up an office in Yiwu and is now the latest mediator in China-Middle East trade but also a facilitator for relatives or friends to similarly consider a move to the city. Bandar has lived in Yiwu for almost ten years with his wife and two children.
An alley for fluffy toys
Into the late 2010s, Yiwu had also become a destination for those fleeing regional conflict and seeking to rebuild their lives through the economic opportunities the city provides. These new arrivals come from the troubled regions of Syria, Libya, Iraq, and Yemen. In 2016, it was estimated that 4,000 of the 9,675 temporary residence permits granted in Yiwu were for applicants from such ‘war torn’ countries; Iraqis being the largest group.[7]
As with the longer-term traders the new arrivals plan for the best ways to make Yiwu their home. Many attempt to learn Chinese and put heavy emphasis on their children becoming fully bilingual. A future in China is, however, far from guaranteed for all Arabs in Yiwu.
This is because gaining Chinese citizenship and the entitlements that come with it can still only reliably be achieved through marrying a Chinese spouse. Therefore, even with a registered business they must still renew their visas every two years. The day they decide to stop working, this privilege should theoretically be revoked.
This has been a common issue of contention for foreign traders across China, a Jordanian I met in Yiwu reinforced this point: “I have been in China for 10 years. I am happy here. I have a good business here and make money here. But I have no future in China.” Today, the question of a future in Yiwu has scarcely been more relevant to this community as it navigates China’s response to Covid-19.
Yiwu in a Time of Covid-19 and Beyond
“The Futian Market is dead right now, no one can come to China”: These were the words of Bandar (introduced earlier) during one of our recent interactions. China’s stringent policies to prevent the spread of Covid has meant two years since foreigners could travel to and from China as they once did. The bustling alleyways of the Futian Market have gone quiet; that is when it is even allowed to open as China manoeuvres between lockdowns (both localised and city-wide) and mass testing.
As with many Arab traders in Yiwu, Bandar has also not gone back to his home country for two years as he is caught in a dilemma. Does he go home and risk leaving his business in Yiwu, not knowing if another Chinese lockdown will keep him out of the country, while he is equally put off by the thought of nearly one month in hotel quarantine if he does return from overseas? Does he stay and remain steadfast, continue to offer his services to those who are still able to import from China, even with the soaring prices and logistical complexities of shipping goods to the region. Bandar chose the latter, in so doing, he is now both a witness to and participant of a progressive shift in how China-Middle East trade is conducted and the role of cities such as Yiwu.
One notable development observed during my recent conversations with Bandar is how global commerce and communication has continued its rapid transition to online platforms. I spent many days with Bandar over various trips to Yiwu from 2017-2019, yet all the insights I now receive are via our interactions using the Chinese social media application WeChat.
Similarly, this is how he increasingly connects with traders in the Middle East who in turn are steadily bypassing his services as they directly converse with Chinese suppliers using the application – any language barriers have also been mitigated through the platform’s online translation function.
Even before the pandemic, this shift to online communication had eased the need for Arab traders to visit Yiwu, while Middle Eastern consumers had accelerated their own direct purchasing of Chinese goods through online retail platforms like AliExpress (akin to Amazon) - cutting out the middleman; the fallout of Covid-19 may now cement this process. Simultaneously, Yiwu’s vision to accelerate the digitalisation of its trade sector, part of the broader global shift towards e-commerce, may be realised sooner than expected. In so doing, re-ordering global supply chains and modes of economic transaction.
It is therefore apparent that the days when Arab traders flooded the city and operated for months out of hotel rooms while lobbies played reception to Chinese vendors showing samples and signing off new contracts are virtually over.
The question is where does this leave traders such as Bander who have dedicated their professional lives to Yiwu? What new roles and possibilities lie ahead for them? As a select group of Arabs that remained in China during these unprecedented times many have found themselves as key intermediaries, diplomats of sorts, maintaining both economic but also practical and political links between China and the Middle East.
What about the many Middle Eastern businessmen who too have relied on China-Middle East trade for lucrative gain, and in some cases economic survival in the absence of opportunities in their home countries – opportunities that have been further diminished by the current global economic challenges? What of Yiwu itself, as Arab traders begin to move more freely across the region as Covid restrictions ease, which hubs of trade activity might emerge? There are signs of Turkey steadily replacing China as the supplier of choice, and the Gulf possibly claiming a new role in mediating the transfer of Chinese products.
The great dilemma is left for China as a whole and the sustainability of its strict Covid-19 measures. If Yiwu is an accurate gauge of China’s economic wellbeing as it has been traditionally, then how viable is it for the country to remain steadfast in its zero-Covid policy, especially given other lurking challenges such as the Russia-Ukraine crisis or China’s ongoing tensions with the United States?
Whichever angle of interest one pursues, the New Silk Road is taking a new route, and with that the study of China-Middle East economic relations must continue to be explored from these more nuanced and alternative perspectives. Yiwu and its Arab traders have already presented a different prism to analyse the past, it is certain that they will offer an equally integral insight for what may lie ahead in the future.
[1] Belguidoum, Saïd, and Olivier Pliez. "Yiwu: The creation of a global market town in China." Articulo-Journal of Urban Research 12 (2015).
[2] Jacobs, Mark D. Yiwu, China: a study of the world's largest small commodities market. Homa & Sekey Books, 2016.
[3] Simpfendorfer, Ben. The New Silk Road: How a rising Arab world is turning away from the West and Rediscovering China. Springer, 2011.
[4] Alterman, Jon B., and John W. Garver. The Vital Triangle: China, the United States, and the Middle East. Vol. 30. CSIS, 2008.
[5] Simpfendorfer, Ben. The New Silk Road: How a rising Arab world is turning away from the West and Rediscovering China. Springer, 2011.
[6] Anon. “China-Arab trade peaks at nearly $240 billion in 2020 despite global pandemic,” The New Arab, 21June, 2021. https://english.alaraby.co.uk/news/china-arab-trade-peaks-240-billion-2020-despite-virus
[7] Anon. “China's 'Christmas Town' opens doors to Middle East migrants but future uncertain,” Reuters, April 25, 2017. https://www.reuters.com/article/us-china-migrants-mideast-idUSKBN17R003
