Beyond Oil: A New Phase in China-Middle East Engagement

Over the 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 its economic growth and deepen economic ties. with Gulf nations through infrastructure construction and telecommunications development, both of which are critical domains for China’s ambitious Belt and Road Initiative (BRI).

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

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

China’s huge demand for energy is naturally at the core of the trade relationship 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 of crude oil in the region, making China the world’s largest crude oil importer. This amount represents about half (47 percent) of the region’s official imports, most of which come from Saudi Arabia.

On the other hand, China has one distinctive feature that sets it apart from other energy-hungry partners. Unlike the polarizing US attitude in the region, Beijing has been able to establish smooth diplomatic ties with many Middle Eastern countries by focusing on a win-win understanding and a non-interventionist attitude.

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China’s diplomatic and economic ties with the Gulf countries have also created new opportunities for the region’s oil-based economies. The vast majority of GCC countries are overly dependent on oil revenue, but have ambitions to shift their economies away from fossil fuels. By partnering with Beijing, the GCC countries can diversify their economy and attract foreign direct investment. Therefore, the Arab countries want to expand cooperation with China in technology transfer, infrastructure development and renewable energy.

In this context, existing Chinese investment in the region is expected to grow further. Although Chinese investment in the Middle East has declined in recent years, total investment in MENA (Middle East and North Africa) countries reached $213.9 billion between 2005 and 2021. Saudi Arabia is the largest recipient of Chinese investments among MENA countries, receiving $43.47 billion between 2005 and 2021.

Chinese investment growth in the Middle East varies substantially in terms of economic diversification. For example, over the past 15 years, China’s investments in Saudi Arabia have spread widely across technology, renewable and nuclear energy, finance, logistics, weapons production, and communications. Such economic diversification gives Chinese leaders more leverage to boost 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, which was held on December 9, 2022 in Riyadh. During the summit, bilateral relations were taken to a higher level in both the political and economic fields. The summit focused on capacity building and collective action. Energy security, nuclear energy and new energies were the main topics of the meeting. The summit also highlighted the food crisis and climate change.

However, the summit has generated much suspicion in the media, as some Western experts have accused Beijing of trying to usurp US influence in the Middle East. The Chinese Foreign Ministry denied the allegation, stating in its recently released statement “Report on Sino-Arab cooperation in a new era” that Beijing has no desire to challenge Washington’s hegemony in the Middle East. Instead, the report emphasized joint development and a win-win partnership for China and the GCC countries.

The document also outlines 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 nations, taking their economic ties to a new higher level.

In short, recent events between China and the Gulf countries have shown that Beijing is very determined to forge comprehensive strategic partnerships with the Arab world and expand economic relations with regional powers in the Middle East. Of course, China still has a long way to go to dislodge Washington’s unequaled influence in the region. However, the recent disagreement between Saudi leaders and US President Joe Biden over OPEC+’s decision to cut oil production has further pushed GCC 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 a win-win case for both Beijing and the Gulf states, with all partners securing their interests while countering the overreaching powers of rival states.

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