The Middle East and North Africa region has become a hub for Chinese technology connectivity. Over the years, Chinese entities have invested heavily in railways, ports, and the energy sector in the MENA region. However, in the absence of internet connectivity, software, and cyber security, much of this architecture would not be able to function effectively.
Enter big Chinese technology.
Huawei provides communications technology for the Moroccan National Railways (ONCF) system, has built a logistics center in the Tangier Med port, and participated in the construction and launch of the Marrakech Safe City project. Nearly 7,000 kilometers away, the UAE Cyber Security Council signed a memorandum of understanding with Huawei at the GISEC 2022 Cyber Security Conference in Dubai to cooperate in promoting local cyber strategies. Meanwhile, governments and telecom companies in eight countries in the Middle East and North Africa region are working with Huawei to pilot, develop and deploy the 5G network. In 2021, Huawei has committed to inject $15 million into the cloud computing market in the Middle East.
This is just one Chinese company out of dozens active in the Middle East and North Africa region.
Unlike traditional Belt and Road Initiative (BRI) projects that are often led by state-owned enterprises (SOEs), the Digital Silk Road (DSR) is led primarily by profit-driven private technology companies.
The efforts of Middle Eastern and North African countries to digitize and diversify their economies have made them attractive markets for these Chinese companies to expand their presence abroad. The draws for companies looking to enter the region include a relatively stable physical and digital infrastructure compared to other developing Belt and Road regions, steadily increasing internet penetration, and a digital economy expected to reach $400 billion by 2030.
All of this gives the impression that technology cooperation between China and the Middle East and North Africa is simply driven by market forces. However, the logic driving China’s engagement with the MENA region extends beyond the law of supply and demand into the realm of geostrategy.
In a 2016 speech, Chinese Supreme Leader Xi Jinping said, “We must encourage and support Chinese Internet companies to go global… in order to realize the principle of ‘Wherever our national interests lie, [our] computing [technology] You will also cover those areas. Through DSR, China seeks to link its civilian and military assets along the Belt and Road Initiative. The Pakistan-East Africa Fiber Optic Cable Connecting Europe, or PEACE, is an example of such efforts.
Peace travels from the China-Pakistan Economic Corridor, flagship of the $62 billion Belt and Road Initiative, to Djibouti — where the Chinese military established a naval base in 2017. From there, it passes through the Bab al-Mandab Strait, a critical maritime chokepoint, and moves toward China and Egypt’s Teda region. Suez for economic and trade cooperation, where China built a 7.34 square kilometer industrial zone. Peace then travels across the Mediterranean and onwards to Europe.
Infrastructure such as PEACE ensures that Chinese port operators enjoy the high-speed, low-latency connectivity that is essential to maintaining the integrity of supply chains and other activities that enhance China’s economic stability. Add to the mix that China, like other countries, relies on this weak civilian infrastructure to coordinate military operations, and Beijing’s push to assert control over these networks should come as no surprise.
Scholars such as Zheng Anqi of the Chinese Academy of Information and Communications Technology directly relate military power to “information power”. According to Cheng, “The network is the foundation of information power. Without the ubiquitous support of broadband and mobile networks, a powerful information army is just bunk.”
The 1996 Taiwan Strait Missile Crisis highlighted precisely how the missing link in the technology stack could disrupt military operations when the People’s Liberation Army lost track of two missiles it fired into the East China Sea. Chinese military officers attributed the failure to a glitch in US-controlled GPS satellite technology. Since then, China has worked hard to develop the BeiDou satellite navigation system and looked to the Middle East and North Africa region for cooperation partners.
In 2017, the country launched the Beidou Forum for Cooperation between China and Arab Countries. Shortly after the conclusion of the second forum in Tunis in 2019, the Saudi Ministry of Defense and the Chinese Equipment Development Commission signed a memorandum of understanding for cooperation in the military use of Beidou. Admittedly, the data collected from these satellites has applications that extend far beyond the military realm. For example, Beidou has been commercially deployed in areas as diverse as environmental monitoring, smart agriculture, disaster relief, and transportation in Saudi Arabia, Algeria, Lebanon, Oman, and Morocco.
Data as a source of energy
Most of the infrastructure along the Digital Silk Road is data-driven. Undersea cables, for example, carry more than 95 percent of the global Internet traffic and facilitate trillions of dollars in international financial transactions every day. In addition to PEACE cable, Chinese companies such as HMN tech (formerly Huawei Marine), China Telecom and China Unicom have built, upgraded or acquired ownership stakes in at least nine other cables that cross the MENA region.
Meanwhile, companies such as the Shenzhen-based Beijing Genomics Institute (BGI) have won hundreds of millions of dollars in contracts with US allies such as Israel, the United Arab Emirates and Saudi Arabia. Thanks to these deals, BGI is now privy to reams of sensitive biological data.
China has come to view data as an important commodity and a source of strength. Key policy documents such as the Action Plan to Promote the Development of Big Data (2015) and the Thirteenth Five-Year Plan (2016) define data as a “foundational strategic resource” along with land, labor and capital. The action plan calls for the country to “all-round progress in the development and application of big data” and “accelerate the construction of a strong data country.” Beijing has since created legal frameworks for companies to provide data to the central government on national security grounds.
Analysts have since raised concerns that data collected along China’s Digital Silk Road could help China manipulate political perceptions, spread authoritarianism and undermine democracy. The ambiguous relationship between the public and private sectors and the ambiguity surrounding what constitutes “national security foundations” have reinforced these concerns.
Confronting American Containment
Against the backdrop of renewed great-power rivalry, Beijing has come to view its technology cooperation with the Middle East and North Africa region as increasingly important in the face of American efforts to contain China’s rising power and influence. Since 2018, the United States has succeeded in convincing many companies and allied countries around the world to “disengage” from Chinese technology and supply chains. That year, Chinese investment and infrastructure projects plummeted in every region—except the Middle East and North Africa.
And the flow of capital is slowly shifting in two more directions: Oil-rich Gulf states are now investing in high-end manufacturing, advanced technology, and research and development in China. For example, when Jaka Robotics, a Chinese startup that makes collaborative robots, pulled out of a Series D funding round of more than $150 million in July 2022, one of the main investors was a growth fund of Saudi Aramco Ventures. Two months later, the Saudi Company for Artificial Intelligence (SCAI) announced that it would pump about $206 million into a joint venture with the Chinese company SenseTime to build a state-of-the-art AI lab and enhance the AI technology ecosystem in Saudi Arabia.
In its quest to dominate the strategic technologies of tomorrow, China has also turned to countries in the Middle East and North Africa to acquire innovations and digital knowledge. The bio-innovation system in Israel has become a major target in this regard. Since 2002, the vast majority of Chinese investment and M&A deals in Israel have been in the technology sector – over $9 billion. Deserves. Through these deals, Huawei acquired Israeli cybersecurity startup Hexatier for $42 million and IT company Toga Networks for more than $100 million. Today, Toga employs more than 350 leading experts and continues to serve as Huawei’s R&D center.
With 9,547 active high-tech companies, Israel is undoubtedly the most enticing source of innovative technologies in the region. But when it comes to Chinese R&D partnerships, Beijing has looked beyond Israel’s “Silicon Valley.” Huawei OpenLabs was established in Cairo, Dubai and Istanbul to develop innovations in cloud computing, big data, smart cities and other core technologies. The facility in Turkey is Huawei’s largest overseas R&D operation and receives over $20 million in funding annually.
Following Huawei, 2018 saw Alibaba Cloud and Khalifa University of Science and Technology in the United Arab Emirates agree to launch a joint AI innovation lab for clean energy. In the same year, the International Center for Biosaline Agriculture in the United Arab Emirates partnered with BGI to establish an advanced center for genomics.
China wins twice
On the face of it, these partnerships are a win-win. However, an April 2022 study by political economy scholar Tin Hanan al-Qadi suggests that this is not always the case. In her examination of Huawei’s localization efforts in Algeria and Egypt, Elkady noted that Huawei often “engages in training, manufacturing, and research and development in a manner designed to preserve the company’s technological advantage” and “without engaging in meaningful capacity building.”
To qualify: Not all Chinese tech systems are malicious. Moreover, there are enormous economic and social benefits to engaging with China in the digital realm, including enhanced industrial efficiency, job creation, improved access to education, crime reduction, improved road safety, and more financial inclusion. Chinese companies offer the latest technology at an affordable price, and China does not require cooperation to democratize or liberalize domestic enterprises.
Regardless of these perceived benefits, it would be naïve for experts and policymakers to ignore the geostrategic dimensions of China’s technology connectivity. In a May 2021 speech before hundreds of Beijing’s elite scholars gathered in the Great Hall of the People in Beijing, Xi Jinping himself declared: “Technological innovation has become the main battlefield of the international strategy game.” The countries of the Middle East and North Africa are part of this game, whether they admit it or not.
As countries in the Middle East and North Africa become more dependent on Chinese technology systems, Beijing is gaining influence and influence. These emerging dependencies act as a deterrent mechanism in that any governments or companies that dare to offend China risk being cut off from its vast market and the critical technologies that enable everyday life. From Beijing’s perspective, this framework would ideally contribute to shaping a world more favorable to China and its interests.