by Dr. Mordechai Chaziza
China’s policy toward the Middle East is necessarily defined within a complex regional context that involves a multitude of local rivalries enmeshed with serious great power competition.
Middle East, satellite image via satellite.ehabich.info
BESA Center Perspectives Paper No. 1,473, March 8, 2020
EXECUTIVE SUMMARY: In
recent years, the People’s Republic of China has significantly increased
its economic and diplomatic engagement with the Middle East. Most of
Beijing’s investment in the region focuses on energy, infrastructure
construction, nuclear power, new energy sources, agriculture, and
finance. These investments serve not only China’s interests but also
those of Middle Eastern countries hoping to boost their economies as a
means of strengthening social stability.
Outside the Asia-Pacific, the Middle East is
likely the most critical region in the world for China, connecting it to
the Mediterranean and Europe. It is a critical source of much-needed
energy resources and an area of expanding economic ties. In turn, Middle
Eastern countries see Beijing as the most important world capital after
Washington because of China’s considerable economic power.
China’s policy toward the Middle East is
necessarily defined within a complex regional context that involves a
multitude of local rivalries enmeshed with serious great power
competition. The Chinese policy is to maintain a balance among several priorities that are at times in conflict. These priorities are to:
- maintain mutual respect between China and each regional state, which means honoring one another’s territorial integrity and sovereignty and agreeing not to interfere in each other’s internal affairs;
- maintain a peaceful and stable environment for the advancement of China’s modernization drive, promotion of development, and improvement of its people’s livelihood;
- maintain a peaceful environment in the Middle East, in line with the above, to protect Beijing’s regional interests;
- maintain good relations with all countries in the region; and finally,
- avoid a major confrontation with the US while limiting its regional hegemony and promoting regional as well as global multi-polarity.
In keeping with this policy, China seeks to forge a
mutual interdependency with the countries of the region in sectors such
as energy, construction and infrastructure projects—in other words, to
leverage its economic strength to make the new Silk Road a success.
The Belt and Road Initiative (BRI), a sprawling
framework of trade and commercial ties between China and various world
regions, is the flagship foreign policy of the Xi administration and its
most significant diplomatic and economic activity of the 21st century. It seeks
to open up new markets and secure global supply chains to help generate
sustained Chinese economic growth and thereby contribute to social
stability at home.
The initiative has both land-based and maritime
components. The different sub-branches of the Silk Road Economic Belt (a
series of land-based infrastructure projects including roads, railways,
and pipelines) and the 21st-century Maritime Silk Road (made
up of ports and coastal development) would create a multinational
network connecting China to Europe and Africa via the Middle East. This
will facilitate trade, improve access to foreign energy resources, and
give China access to new markets. The two schemes are inseparable, and
they are meant to be implemented in parallel.
The Middle East is situated at the physical heart
of the BRI. Not only do the three continents of Asia, Africa, and Europe
meet there, but the Mediterranean, the Red Sea, the Arabian Sea, the
Caspian Sea, and the Black Sea also converge there. It is adjacent to
the four strategic maritime channels of the Bosporus, the Dardanelles,
Bab el-Mandeb, and the Hormuz Strait. The region contains diverse and
complex humanitarian, religious, and ethnic factors, and its significant
energy resources mean it will play a decisive role in the building of
the BRI. This region will also play a major role in security
coordination, economic cooperation, and cultural exchanges under the BRI
framework.
The BRI is at the core of China’s diplomatic
encounter with Middle East countries, a point repeatedly emphasized by
Beijing officials. The Silk Road strategy thus provides new momentum for
the economic transformation of the Middle East. Despite challenges,
risks can be turned into opportunities as long as China faces up to them
squarely and responds positively.
In the past two decades, major changes in the
global economy and geopolitical trends have paralleled China’s ascent.
These developments are creating new opportunities for Middle East
countries as they look to diversify or rebuild their economies, increase
trade, and seek investment opportunities in emerging markets. There is a
growing tendency among the countries of the region to see China’s
favorable business conditions, expertise, and experience as a path
to economic development, a view that has led them to look favorably on
the BRI and wish to incorporate it into their national development
plans.
Chinese trade with the Middle East has sharply
increased in recent years, making it the region’s largest trade partner.
The two sides have deepened cooperation in the fields of energy, trade,
project contracting, and investment. According to China Customs Statistics (export-import), China-Middle Eastern countries’ trade volume increased to $294.4 billion by 2019, up from $227 billion in 2018.
The Middle East also accounts for more than 40% of
China’s oil imports and is a key supplier of the country’s liquefied
natural gas. Forty-five countries supplied crude oil to China, but close
to half (44.1%) of Chinese imported crude originates from just nine
Middle Eastern nations, and six Persian Gulf states are among the top 15
crude oil suppliers to Beijing. This energy relationship is set to
continue as Middle Eastern exporters look to East Asia in general and
China in particular as a reliable long-term energy export market. The
International Energy Agency (IEA) expects Beijing to double its oil imports from the region by 2035.
According to the China Global Investment Tracker, Beijing’s investments in the Middle Eastern states from 2013 to 2019 reached
$93.3 billion. Most are in the energy sector ($52.8 billion), real
estate ($18.4 billion), transport ($18.6 billion), and utilities ($5.9
billion). This is important for the Middle Eastern countries as they are
all under pressure to create more diverse economies, and so are
embarking upon massive infrastructure and construction projects. Chinese
firms are uniquely well-positioned to take advantage of this, and an
aggressive approach to infrastructure development is driving much of the BRI.
Moreover, Chinese companies are operating directly
in the Middle East, often focusing on projects that lend themselves to
the BRI’s goal of connectivity. Ports and industrial parks have been
central to such cooperation, as they create an economic chain that links
China to the Gulf, the Arabian Sea, the Red Sea, and the Mediterranean.
Examples include the UAE’s Khalifa Port, Oman’s Duqm Port, Saudi
Arabia’s Jizan Port, Egypt’s Port Said, and Israel’s Ashdod and Haifa
ports. Chinese companies are also likely to play a significant role in
reconstruction projects in Iraq, Syria, Lebanon, and Yemen. The Gulf
monarchies have been major sources of infrastructure construction
contracts for Chinese companies, such as those for Qatar’s Lusail
Stadium, Saudi Arabia’s Yanbu Refinery, and the high-speed rail line
that connects Jeddah with Mecca and Medina.
In the wake of the Arab uprisings and civil wars,
the Middle Eastern countries are under pressure to rebuild their
economies and boost growth to assuage domestic conflict and avoid being
left behind in the wave of globalization. To this end, they have been
actively rolling out plans for rehabilitation and long-term development.
Comprehensive and upgraded Chinese engagement will provide a new
impetus for regional economic growth.
China and the Middle Eastern countries have a common interest in integrating and synergizing
the Belt and Road Initiative with major initiatives for national
rejuvenation. These include Saudi Arabia’s Vision 2030, UAE’s Vision
2021, Jordan’s Vision 2025, Turkey’s Middle Corridor, Egypt’s Vision
2030 and Suez Canal Corridor Development Project, Oman’s Vision 2020,
and Kuwait’s Vision 2035.
Source: https://besacenter.org/perspectives-papers/china-silk-road-middle-east/
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