A New Stage in China-Middle East Relations – The Diplomat

For many years, the Gulf Cooperation Council (GCC) countries have been at the forefront of Beijing’s foreign policy priorities as China plans to strengthen its energy security, accelerate economic growth, and deepen economic ties with the Gulf States through infrastructure and telecommunications development, of which China is critical areas for China’s ambitious Belt and Road Initiative (OBOR).

By strategically investing in critical sectors of the Gulf countries, China has become one of the main economic partners of several Gulf countries. In the near future, Beijing hopes to expand its existing presence in the countries of the region, especially after the narrowing of US influence in the region.

Thanks to Beijing’s economics-driven approach, the volume of trade between China and the Gulf countries has skyrocketed over the years. Beijing has become the region’s largest investor, while the Gulf leading trading partnerwith numbers reaching $330 billion in 2021. Beijing replaced Washington as the Middle East’s largest trading partner in 2010.

China’s huge demand for energy naturally underlies trade relations with the countries of the Middle East. The Middle East is China’s largest supplier of oil and gas. In particular, the region accounts for nearly half of China’s oil imports, making it vital to Beijing’s energy security. In 2020 Beijing imported $176 billion. crude oil from the region, making China the world’s largest importer of crude oil. This amount is almost half (47 percent) of the region’s official imports, most of which come from Saudi Arabia.

On the other hand, China has a distinctive feature that distinguishes it from other energy-hungry partners. In contrast to the polarizing position of the United States in the region, Beijing has been able to establish smooth diplomatic relations with many countries in the Middle East, focusing on mutual understanding and non-interference.

Do you like this article? Click here to sign up for full access. Only $5 per month.

China’s diplomatic and economic ties with the Gulf countries have also created new opportunities for the region’s oil economy. The vast majority of the Gulf states are overly dependent on oil revenues but have ambitions to wean their economies off fossil fuels. By partnering with Beijing, the Gulf countries can diversify their economies and attract foreign direct investment. Consequently, the Arab countries are willing to expand cooperation with China in the areas of technology transfer, infrastructure development and renewable energy.

Against this background, further growth of existing Chinese investments in the region is expected. Although Chinese investment in the Middle East has declined over the past few years, total investment in the MENA (Middle East and North Africa) countries reached $213.9 billion between 2005 and 2021. Saudi Arabia is the largest recipient Chinese investment among MENA countries, receiving $43.47 billion between 2005 and 2021.

The growth of Chinese investment in the Middle East differs significantly in terms of economic diversification. For example, over the past 15 years, Chinese investment in Saudi Arabia has been widely distributed in technology, renewable and nuclear energy, finance, logistics, arms production and communications. This economic diversification gives Chinese leaders more leverage to strengthen ties with the Middle East.

Economic ties between China and the Gulf countries are expected to enter a new phase after the first Sino-Arab summit held on December 9, 2022 in Riyadh. During the summit, bilateral relations were brought to a higher level both in the political and economic spheres. The summit focused on capacity building and collective action. Energy security, nuclear and new energy were the main topics of the meeting. The summit also highlighted the food crisis and climate change.

However, the summit raised a lot of suspicion in the media, as some experts in the West accused Beijing of trying to usurp the influence of the United States in the Middle East. The Chinese Ministry of Foreign Affairs has denied the accusation, saying in its recently released “Report on Sino-Arab Cooperation in the New Erathat Beijing has no desire to challenge Washington’s hegemony in the Middle East. Instead, the report emphasizes joint development and mutually beneficial partnerships for China and the Gulf states.

The document also highlights China’s cooperation with the Middle East over the next decade in key areas such as agriculture, investment, finance and high-tech industries. Whether Beijing has ulterior motives in the Middle East or not, the new process that will begin after the Sino-Arab summit will change the relationship between Beijing and the Gulf states, taking their economic ties to a new and higher level.

Thus, recent developments between China and the Gulf countries have shown that Beijing is firmly committed to establishing comprehensive strategic partnerships with the Arab world and expanding economic relations with regional powers in the Middle East. Of course, China still has a long way to go to supplant Washington’s unrivaled influence in the region. However, recent disagreements between Saudi Arabian leaders and US President Joe Biden over OPEC+’s decision to cut oil production have further pushed Gulf states to seek closer ties with China to counter Washington’s hegemony in the region.

A summit in Saudi Arabia could create a win-win deal for both Beijing and the Gulf states, so that all partners will protect their interests while balancing the excessive power of rival states.