A new phase in engagement between China and the Middle East – the diplomatic one

Over the years, the GCC states have been at the forefront of Beijing’s foreign policy priorities as China plans to enhance energy security, accelerate its economic growth, and deepen economic ties with the Gulf states through infrastructure building and communications development, both of which are important areas of China’s ambitious Belt and Road Initiative (BRI). BRI).

Through strategic investment in vital sectors in the GCC countries, China has become one of the largest economic partners for many Gulf countries. In the near future, Beijing hopes to expand its current presence with the countries of the region, especially after the narrowing of US influence in the region.

Thanks to Beijing’s economics-centric approach, the volume of trade between China and the Gulf states has swelled over the years. Beijing has become the region’s largest investor and the GCC’s leading trading partner, with figures reaching $330 billion in 2021. Beijing replaced Washington as the Middle East’s largest trading partner in 2010.

China’s massive demand for energy is, of course, the core of trade relations with Middle Eastern countries. The Middle East is China’s largest oil and gas supplier. 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 worth of crude oil from the region, making China the largest importer of crude oil in the world. This amount represents nearly half (47 percent) of the region’s official imports, most of which are from Saudi Arabia.

On the other hand, China has a distinct advantage that makes it stand out from other energy-hungry partners. In contrast to the polarizing position of the United States in the region, Beijing has managed to establish smooth diplomatic relations with several Middle Eastern countries by focusing on win-win understanding and a hands-off attitude.

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Diplomatic and economic relations between China and the Gulf states have also created new opportunities for the oil-based economies of the region. The vast majority of GCC states are overly dependent on oil revenues but have ambitions to wean their economies off fossil fuels. By partnering with Beijing, the GCC countries can diversify their economies and attract foreign direct investment. Hence, the Arab countries wish to expand cooperation with China in the field of technology transfer, infrastructure development and renewable energy.

Against this background, the current Chinese investments in the region are expected to increase further. Despite the decline in Chinese investment in the Middle East over the past few years, total investment in Middle East and North Africa (MENA) countries reached $213.9 billion between 2005 and 2021. Saudi Arabia is the largest recipient of Chinese investment among Middle Eastern countries and North Africa, receiving $43.47 billion between 2005 and 2021.

The growth of Chinese investment in the Middle East varies widely in terms of economic diversification. For example, in the past 15 years, China’s 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 advance relations with the Middle East.

Economic relations between China and the Gulf countries are expected to move to a new stage after the first China-Arab Summit held on December 9, 2022 in Riyadh. During the summit, bilateral relations were brought to a higher level in the political and economic fields. The summit focused on capacity building and teamwork. Energy security, nuclear energy and new energy were at the top of the meeting’s issues. The summit also emphasized the food crisis and climate change.

However, the summit raised a lot of skepticism in the media as some pundits in the West accused Beijing of trying to usurp US influence in the Middle East. China’s Foreign Ministry denied the allegations, noting in its recently released “Report on China-Arab Cooperation in a New Era” that Beijing has no desire to challenge Washington’s hegemony in the Middle East. Instead, the report emphasized the common development and win-win partnership of China and the GCC countries.

The paper also shed light on the details of China’s cooperation with the Middle East over the next decade in key areas such as agriculture, investment, finance and high-tech industries. Whether or not Beijing has ulterior motives in the Middle East, the new process that will begin after the Sino-Arab summit will transform the relationship between Beijing and the Gulf states, and elevate their economic relations to a new higher level.

In short, recent developments between China and the Gulf states have shown that Beijing is firmly determined to forge comprehensive strategic partnerships with the Arab world and expand economic ties with regional powers in the Middle East. Of course, China still has a long way to go to dislodge Washington’s unparalleled influence in the region. However, the recent disagreement between Saudi leaders and US President Joe Biden over the OPEC + decision to cut oil production prompted the Gulf Cooperation Council countries to seek closer relations with China to counter Washington’s hegemony in the region.

The summit in Saudi Arabia has the potential to create win-win alliances for both Beijing and the Gulf states, in which all partners secure their interests while balancing the overwhelming powers of the competing nations.

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