University of world economy and diplomacy international relations faculty department of international relations

Chapter I. China’s Interests and Objectives in the Middle East

1. The Middle East as China’s energy supplier

The most obvious answer is that China does not have a strategy toward the Middle East because Beijing has not publicly articulated one. Why? The reason is because of a desire to avoid controversy in, and blowback from, the region. As noted above, China maintains the remarkable status of an outside power that remains on good terms with all Middle Eastern countries, and Beijing would prefer not to jeopardize this situation by articulating concrete policy positions or an explicit regional strategy. To do so would risk antagonizing or alienating one or more states—something China is loath to do.
Beijing has been careful not to be seen as meddling in the internal political affairs of Middle Eastern states or taking very clear-cut positions on contentious regional issues. China’s involvement in the Israel-Palestinian peace process, for example, has been negligible. And Beijing has shied away from joining the coalition against the Islamic State in Iraq and the Levant (ISIL). One of China’s overarching principles of foreign policy is “noninterference.”
But if China does have an unarticulated strategy toward the Middle East—Beijing certainly takes the region very seriously—how would one know? China can be said to have a Middle East strategy if clear goals could be identified, based on explicit national interests, and if instruments of national power were used to advance these goals. Thus, one should be able to answer the following questions:
• What interests have been articulated by Beijing as being at stake in the Middle East?
• What objectives has China identified for the region?
• What instruments is China using in the Middle East and how are these employed?
The remainder of this chapter identifies China’s key interests and related objectives in the Middle East. Then, by looking at how China has employed the instruments of national power at its disposal, Chapters Three and Four analyze how effective Beijing has been in implementing these interests and promoting these objectives.
China’s major interests in the Middle East are energy security, geostrategic ambitions, external linkages to internal stability, and enhanced great-power status. Beijing’s corresponding objectives are ensuring access to energy and other resources, balancing against—but not directly opposing—U.S. influence, suppressing vocal and material support for China’s minority Uighurs, and receiving explicit and implicit recognition from Middle Eastern states that China is a great power, respectively.
Beijing’s foremost interest in the Middle East is continued access to energy resources.¹ China’s remarkable sustained economic growth since the late 1970s has prompted a growing appetite for energy (and other natural resources). Oil is of increasing importance to China, which became a net energy importer in 1993. And, since 1995, the Middle East has been China’s number one source of imported petroleum.²
According to one Chinese analyst writing in a prominent international affairs journal in 2014: “The Middle East will remain China’s largest source of oil imports, and that is the strategic significance of the Middle East for China.”³ Petroleum is certainly central in China’s bilateral ties with both Saudi Arabia and Iran. In 2012, Saudi Arabia was the number one source of petroleum (before Angola and Russia), and Iran was the fourth most important source of imported Chinese oil.
China also targets natural gas and commodities. In addition, Beijing actively pursues opportunities for investment and seeks contracts for infrastructure projects and access to new markets for Chinese products in the Middle East. Indeed, the New Silk Road initiative (often referred to as One Belt, One Road), officially launched by President Xi Jinping in 2013, is all-encompassing and seems to include all manner of economic activity and involvement in the region by the PRC government, state-owned corporations, and private companies and individual Chinese entrepreneurs.

2. China's silk road project

The Middle East sits at the crossroads of Europe, Africa, and Asia — which the Belt and Road is intended to link together — and lies at the center of the “oil roads” that feed China’s growing energy needs. Accordingly, Middle Eastern countries have emerged as target markets for Chinese contractors as well as potential Belt and Road gateways to destination markets in Europe and Africa.
Of the two branches of the BRI — the Silk Road Economic Belt (SRB) and the Maritime Silk Road (MSR) — the latter route accounts for half of global trade between China/East Asia and Europe and is served by the world’s largest container ports (i.e., Shanghai, Singapore, Shenzhen, Ningbo-Zhoushan, Busan, and Hong Kong). The Gulf sub-region is particularly well-positioned to take advantage of the MSR, as it has already established itself as an important intersection for global trade, logistics, travel, and finance.
Yet, one must take care to avoid exaggerating the level of priority that Beijing attaches to the MENA region as a whole, and to the Gulf in particular, in advancing the Belt and Road. For one thing, it is difficult to separate BRI-specific activities from the “normal” business China has been conducting in the region, especially as some infrastructure projects had been undertaken before the initiative was officially launched. For another, the claim that China-Middle East economic ties have increased “exponentially” must be weighed against the fact that China’s trade and investment flows are still skewed toward its nearby neighbors and that most projects involving Chinese contractors are located in Asian markets such as Indonesia, Pakistan, and Laos. It also should be noted that the energy sector remains the bedrock of China’s relations with the MENA countries, accounting for over 56% of Beijing’s investments in the MENA region from 2013 to 2019 and amounting to $75.3 billion in value of projects awarded to Chinese contractors in the region (from stage of announcement to execution). Finally, there is little evidence that MENA countries’ growing ties with China, including their engagement in the BRI, are intended or will necessarily lead to an attenuation of their commercial and strategic relationships with the West.
Nevertheless, there is no denying Beijing’s growing ambition to integrate the Middle East into the Maritime Silk Road, as illustrated by its push to develop a series of joint port-industrial park complexes linking China to the Gulf, the Arabian Sea, the Red Sea, and the Mediterranean Basin. China has found ready partners among the Gulf States, which have incorporated the buildup of logistics facilities into their respective “national visions.” Oman, Saudi Arabia, and the United Arab Emirates (UAE) have been early and active participants in the BRI through the development of a chain of port-industrial park complexes aimed at linking markets across the MENA region. It is therefore not surprising that three of the five leading destinations for Chinese investment in the region are Saudi Arabia, the UAE, and Egypt, while the others (Iraq and Algeria) have large domestic markets, hydrocarbon resources, and maritime access.
What is striking is that efforts to extend the Maritime Silk Road to the Middle East have made headway amid the problems that the Belt and Road has encountered elsewhere and despite the persistence of conflict in and rivalries dividing the region. The UAE is leading the pack. Khalifa Port’s CSP Abu Dhabi Terminal, a joint venture between Cosco Shipping Ports and Abu Dhabi Ports, has been operational for a year. The KIZAD Logistics Park is nearing completion. It has attracted more than 20 Chinese companies. The first phase of Abu Dhabi Port’s project to provide residential accommodation for 5,000 management and operational employees as part of its 50-year agreement with China’s Jiangsu Provincial Overseas Co-operation Investment Company (JOCIC) is underway.
This progress is at least partly attributable to the expansive commercial and strategic agendas of the Gulf States, particularly those of Saudi Arabia and the UAE, both of which appear to perceive the Maritime Silk Road as a vehicle for securing their foothold and increasing their influence in East Africa. Equally striking is that progress on this front has not been hobbled by some of the problems that have surfaced in the course of Belt and Road project implementation in other regions. Of those BRI participants recently identified as potentially in debt distress, none are MENA countries. To date, there have been no reported angry public outbursts over elite corruption or the adverse environmental impact of Chinese-funded projects that have fueled anti-Chinese sentiment in other regions. Nor has there been a public backlash in the Gulf States arising from complaints that Chinese employees are saturating local labor markets, perhaps because they have long hosted large numbers of expatriate workers. In fact, with the exception of Turkey, Middle Eastern publics seem favorably disposed toward China. At the governmental level, the Chinese state capitalism model and the “de facto ‘oligarchic’ pact” between Gulf ruling families and business elites appear well-suited to each other and both are strongly committed to make the MSR serve their respective interests.
The covid-19 pandemic has thus far proved to be as much an opportunity for China and its MENA partners to demonstrate solidarity as a test of the resilience of their relationships. Early on, Saudi, Emirati, and Qatari officials and others leavened their expressions of concern for the well-being of Chinese citizens and their confidence in Beijing’s ability to tackle the virus with donated shipments of medical supplies to help China combat the virus. Later, as infections spread across the Middle East, China reciprocated this goodwill by dispatching medics and/or cargoes of medical equipment throughout the region.
As the covid-19 virus sweeps through and across emerging markets, marked slowdowns or outright contractions in economic activity can be expected, though their severity and duration will depend critically on how quickly the pandemic fades, thereby allowing containment efforts to be scaled back such that consumer and investor confidence are restored. In the recently released World Economic Outlook 2020, the IMF has forecasted that every MENA economy, with the exception of Egypt, will shrink this year. The more affluent Gulf States could face a multi-quarter u-shaped recovery, in spite of deploying robust stimulus packages, especially if International Energy Agency (IEA) projections of weakening oil demand prove correct.
On April 15, China joined the other members of the G20 in suspending official debt service payments for the world’s least-developed countries through the end of the year. However, as the global economy contracts, China is likely to face pressure to renegotiate debts simultaneously with a significant number of BRI partner states whose economies come under severe strain. Additionally, these circumstances are likely to reduce China’s appetite for outbound lending, especially to poor countries. In the MENA region, this could mean that Beijing might not splurge on new domestic “vision” or Maritime Silk Road projects. China had not rushed to incorporate Lebanon or Syria into the Maritime Silk Road before the current crisis; presumably, there is even less enthusiasm for doing so now.
Whether, and if so, when all existing pledges will be honored and plans materialize is uncertain. It is unclear, for example, whether the progress that had been made in securing Chinese companies’ participation in the UAE’s KIZAD free industrial zone prior to the covid-19 outbreak can be sustained. Also unclear is when phase two construction of the Sino-Oman Industrial City will begin. In fact, the outlook regarding the payoff for China and its Middle Eastern partners from these regional connectivity projects will largely depend on how well the Gulf States grapple with the severe fiscal strain imposed by plunging oil prices and the fallout from the pandemic, and on how quickly European and African destination markets recover. Meanwhile, though, China could seek to leverage its early recovery from the virus to secure first-mover advantage in both digital and health care infrastructure.
In the face of the coronavirus pandemic and the impending global economic downturn, China will have little choice but to recalibrate its BRI ambitions. This reassessment is likely to lead to more selective and limited outbound investments in new large-scale Belt and Road projects in the short term. However, protecting its equities in the Middle East requires that China project itself as a dependable partner. While China and its regional partners might have to adjust their expectations and their targets, both sides have expended too much financial and political capital to forsake the Maritime Silk Road.