The discourse surrounding China’s influence in the Middle East all too often swings between binary narratives. Some overstate China’s regional clout, suggesting its expanding footprint is pushing the United States out of the Middle East. Others underestimate China, contending that despite its growing regional power, Beijing harbors insufficient leverage to affect any meaningful change. Between these extremes exists a reality in which China’s formidable capabilities are tempered by equally formidable constraints.
Analysts can be forgiven for believing that China is on track to usurp the United States’ role as regional hegemon. A confident China asserting its presence in the Middle East was on full display throughout 2023. At the tenth Arab-China Business Conference, some 30 deals worth $10 billion were inked between Chinese firms and Middle Eastern investors. That year, Saudi Arabia, the United Arab Emirates (UAE), Kuwait, Bahrain, and Egypt joined the Shanghai Cooperation Organization as dialogue partners while Iran was granted full membership. Perhaps most notable was China’s March 10 announcement that it had brokered a rapprochement between regional rivals Saudi Arabia and Iran. Media outlets worldwide took to framing these developments as “China’s diplomatic coup in the Middle East.”
China’s Regional Footprint
Admittedly, China’s regional footprint is far from negligible. China imports more oil than any other country in the world, roughly half of which comes from just six Gulf countries. It stands as the primary trading partner for most Middle Eastern nations and has provided substantial investment, infrastructure, and advanced technology.
Chinese customs data reveals that from 2017 to 2022, China-Middle East trade almost doubled, growing from $262.5 billion to $507.2 billion. According to China’s State Council, the Middle East was China’s fastest-growing trading partner in 2022, up 27.1 percent year-on-year, surpassing the growth rates with the Association of Southeast Asian Nations (15 percent), the European Union (5.6 percent), and the United States (3.7 percent).
Due to its Belt and Road Initiative (BRI), China now holds stakes in at least 20 port projects along critical maritime passages that straddle the Middle East and North Africa. China enjoys comprehensive strategic partnerships or strategic partnerships with 12 Arab countries, and 21 Arab states, along with the Arab League, have formally signed onto the BRI. Meanwhile, 17 Arab nations have endorsed China’s Global Development Initiative, 15 are members of the Asian Infrastructure Investment Bank, and 14 have participated in the “China-Arab Cooperation Initiative for Data Security.”
With that in mind, it doesn’t seem all that unreasonable to assume that Beijing possesses considerable leverage over these nations. Even American officials seem to believe this to be the case: When U.S. National Security Advisor Jake Sullivan met Chinese State Councillor and Foreign Minister Wang Yi in Thailand this January, he asked that China leverage its influence with Tehran to reign in the Houthis. A few months back, U.S. Senator Chuck Schumer shared similar sentiments with his Chinese counterparts.
Faulty Assumptions
However, such reasoning fails to appreciate the nature of power in today’s hyperconnected world. Admittedly, the China-Iran relationship exhibits stark asymmetries: China accounts for 30 percent of Iran’s trade portfolio, whereas Iran represents a mere fraction of Chinese trade, less than 1 percent. Moreover, in the shadow of Western sanctions implemented over Iran’s nuclear program, China continued purchasing massive amounts of Iranian oil.
Beijing’s decision to provide Tehean with this vital lifeline is no act of goodwill. Over the course of 2022, China funneled roughly 4 million barrels of Iranian oil into state reserves, a strategic maneuver to establish a safeguard against economic volatility or geopolitical shocks. Add to the equation that most of China’s ME oil imports originate from Saudi Arabia, Iraq, the UAE, Kuwait, Qatar, and Oman – countries over which Beijing’s primary strategic rival, the United States, has substantial influence – and Iran’s importance to China comes into sharper focus.
A Chinese security analyst explained this logic to Financial Times: “The fact that the US has influence, or even control, over certain countries in the Middle East poses a risk to China.” The analyst added that “if Beijing imposed a trade quarantine or blockade on Taiwan, Washington might retaliate by pressing its Middle Eastern allies to suspend oil shipments to China or acquiesce to a U.S. blockade.” Thus, for China, energy cooperation with Iran serves as a useful hedge.
Even if Beijing employed coercive economic statecraft, slashing trade and investment with the Islamic Republic, there is simply no guarantee that Tehran would fall in line. Iran’s history of withstanding harsh economic impacts from Western sanctions is a case in point. What’s more, Iran has developed strategies to offset external pressures and enhance its room to maneuver: leveraging its nuclear program, wielding its regional influence, and engaging in asymmetrical warfare strategies.
China has never been directly targeted by Tehran’s proxies. But it certainly felt the ripple effects when Iranian-backed Houthi rebels launched drone strikes on Saudi Aramco in September 2019: the price of Brent crude subsequently spiked 20 percent and China found itself spending an additional $97 million on oil each day.
Where’s China’s Navy?
China currently lacks the regional hard power projection capabilities to provide adequate security for its vast interests in the Middle East. Although China set up a naval base in Djibouti back in 2017, equipped with a berth capable of accommodating aircraft carriers, its military presence in the Gulf of Aden remains modest. The Djibouti base reportedly hosts around 200 marines, while the typical naval deployment includes just three military vessels at a time that engage primarily with anti-piracy and rescue missions.
Chinese state media regularly showcase the Chinese navy’s efforts in maritime safety off the Horn of Africa, proudly referencing the 7,200 ships they have escorted through the region since 2008 as a testament to their naval prowess. Yet amid the Israel-Hamas war, China has failed to take substantive action against recent attacks by Houthi rebels on international shipping in the Red Sea and the Gulf of Aden and turned down a U.S. request to join an international coalition, Operation Prosperity, to protect civilian ships in the region.
Beijing understands that doing so could invite retribution from the Houthis, putting Chinese ships and personnel in danger. It would also detract from China’s efforts to undermine the United States by portraying itself as a non-interventionist great power. Instead, Chinese container carriers like OOCL and COSCO have taken to suspending all shipments to and from Israel.
The imperative to secure these critical maritime chokepoints remains vital for China’s economy. The Suez Canal is a key route for China’s westward shipments of goods, including around 60 percent of its exports to Europe. For now, China continues to freeride on the U.S. security umbrella to protect its interests in the Middle East. As tensions escalate, this arrangement will become increasingly untenable for Beijing, and China may well look to increase its regional military presence in the medium-to-long term.
China’s concerns surrounding vital maritime chokepoints actually play to the advantage of many Middle Eastern countries. As China’s State Council Information Office admits: “The supervision of the Arab countries over the Strait of Hormuz (Oman and Iran), the Bab el-Mandeb Strait (Yemen and Djibouti) and the Suez Canal (Egypt) accords the region unique importance.”
Egypt, in particular, has been among the primary benefactors of Chinese anxieties surrounding these critical waterways, securing investment deals with Chinese companies worth more than $8 billion for its Suez Canal Economic Zone, and attracting massive Chinese infrastructure projects, including several ports and a new capital city. Meanwhile, in Djibouti, China Merchants Group, China’s largest port operator, signed a $350 million investment deal with Great Horn Investment Holding to transform the Djibouti Port into a global economic hub. China has also funded a railway, airports, and a pipeline expected to transport water to Ethiopia.
Asymmetries Are Shifting
Amid rising tensions with the West, the Middle East has become ever more important to China.
As Western countries closed the door to Chinese technology, Middle Eastern countries have largely continued to welcome China’s presence in their digital ecosystems – from fifth-generation telecommunication networks and smart cities to satellites and surveillance tech.
It’s not just technology cooperation that is tilting the asymmetries in favor of many Middle Eastern countries. Geopolitical forces have also taken a toll on China investment sentiment, which has seen foreign capital flows toward the Asian giant dry up. Gulf Cooperation Council states with their massive sovereign wealth funds (currently valued at $4 trillion) are now becoming an increasingly vital source of finance capital.
A similar trend is occurring in the realm of trade. As Asia Times Deputy Editor David Goldman pointed out in November 2023: “China now exports more to the Muslim world ($42 billion a month) than to the United States ($38 billion a month).” Notably, these figures include countries outside the Middle East, like Malaysia and Indonesia. The influence of countries like Iran, Saudi Arabia, and Turkey on these Muslim-majority countries, and the 20 million Muslims residing in China, is not lost on Beijing.
Beyond economics, Middle Eastern countries have become pivotal in Beijing’s push to galvanize the Global South as a counterweight to the U.S. alliance network and advance its vision of a multipolar world order – one in which China is not beholden to the Western-dominated institutions that form the foundation of the postwar system.
All these realities influence Beijing’s calculations when assessing the feasibility of engaging in any punitive economic statecraft. Strategists in Beijing are well aware that pulling levers is often accompanied by unintended consequences.
In the Middle East, China speaks loudly but carries a small stick.
Beijing will continue to engage the region cautiously, embracing low-risk opportunities to undermine the United States and its allies. At the same time, China will avoid engaging in actions that could harm its relations with local players – except perhaps Israel – or those that risk embroiling China in the region’s tumultuous conflicts. This is especially true regarding matters that pose little threat to core Chinese interests.
At the same time, Beijing will continue to cultivate asymmetric advantages, particularly through trade, infrastructure and technology cooperation. While this warrants close monitoring by policymakers in the region and beyond, viewing China’s involvement in the Middle East through either an alarmist lens or with complacency runs the risk of formulating unsound policies rooted in faulty assumptions.