Saturday, April 20, 2024

U.S.-China Economic and Security Review Commission: Hearing on "China and the Middle East" Friday, April 19, 2024

 


U.S.-China Economic and Security Review Commission held a widely publicized hearing on "China and the Middle East"  Friday, April 19, 2024  organized by the hearing co-chairs, Commissioners Aaron Friedberg and Jonathan Stivers. As posted to its website, "The U.S.-China Economic and Security Review Commission was created by the United States Congress in October 2000 with the legislative mandate to monitor, investigate, and submit to Congress an annual report on the national security implications of the bilateral trade and economic relationship between the United States and the People’s Republic of China, and to provide recommendations, where appropriate, to Congress for legislative and administrative action." Jonathan Stivers is the U.S. Director of the Committee for Freedom in Hong Kong (CFHK) Foundation. Aaron Friedberg is Professor of Politics and International Affairs at Princeton University, where he has been a member of the faculty since 1987, and co-director of Princeton’s Center for International Security Studies. 

The Program gives a good indication of the topics considered. It was fairly straightforward focusing on what one might expect, first the economic value of the region, second the efforts of China to change the narrative and therefore the power relations among those invested in the region (in every sense of the word), and third to consider China's security interest in the region (which are real and growing within that large space left open by everyone else). 

Hearing Co-Chairs: Commissioner Aaron Friedberg and Commissioner Jonathan Stivers

9:30 AM – 9:40 AM: Co-Chairs' Opening Remarks
 
9:40 AM – 11:10 AM: Panel I: Energy, Investment, and Economic Interests

11:10 AM – 11:20 AM: Break

11:20 AM – 12:50 PM: Panel II: China’s Diplomatic Engagement with the Middle East Bolsters Efforts to Shape a New World Order

12:50 PM – 1:50 PM: Lunch Break

1:50 PM – 3:20 PM: Panel III: China’s Security Interests and Activities in the Middle East

3:20 PM – 3:25 PM: Closing Remarks

3:25 PM: Adjourn

The event was recorded. To see the video of the event click here.

The testimony of the participants may be accessed in the links above and some follow below.

 

Statement before the
U.S.-China Economic and Security Review Commission
“China and the Middle East”
Testimony by:
Jon B. Alterman
Senior Vice President, Zbigniew Brzezinski Chair in Global Security
and Geostrategy, and Director, Middle East Program, Center for
Strategic and International Studies
April 19, 2024
Commissioner Friedberg, Commissioner Stivers, distinguished members, I am honored to share
my views with you on China’s Middle East ties. CSIS does not take policy positions, so the
views represented in this testimony are my own and not those of my employer.
In my testimony, I would like to give you my assessment of China’s ambitions in the Middle
East, and the Middle East’s ambitions with China. I have been exploring this subject for almost
20 years, and it has evolved considerably. It is my strong sense that we wrongly assume that
China is interested in winning a symmetrical competition with us, and we underestimate the
extent to which China is seeking to reshape competition on more favorable terms. We also
underestimate the extent to which our partners in the Middle East welcome Chinese influence as
a check on what they see as U.S. excesses. They seek to sustain their strong ties with us while
simultaneously building stronger ties with China. The consistent message from China is that
doing so is both possible and desirable, and they should undermine U.S. efforts to divide them
from China. In the process, China seeks to peel the region away from the United States and
advance China’s strategic goal of a more globally unaligned world.
China’s Regional View
China became a net oil importer in 1993, since the beginning, about half China’s oil has come
from the Middle East. China therefore has found itself persistently reliant on a region that the
United States continues to dominate, and its investments have been steady for decades.
Chinese strategic thinkers see the Middle East as a place with far more peril than promise.
The region has a history of both intra-regional strife and domestic unrest, and China is concerned
that extremist ideologies originating in the region will infect western China. China is also
concerned that the Middle East is well within the U.S. sphere of influence, and differences over
the region could precipitate a U.S.-China conflict. As I understand it, China feels it cannot afford
to be disengaged in the Middle East, but its engagement must be selective. In addition, China’s
actions in the Middle East are clearly subordinate to its global strategic concerns, the most
significant of which is its rivalry with the United States.
The Chinese position in the Middle East has been dynamic for the last quarter-century, not least
because the U.S. position in the region has been dynamic. China has developed strong relations
with U.S. allies and adversaries alike, building robust commercial ties all along the way. Several
years ago, Indian Minister of External Affairs S. Jaishankar said, “For the last 20 years, the
United States has been fighting but not winning in the Middle East, and China has been winning
but not fighting in the Middle East.” That seems accurate to me.
To a remarkable degree, there is great regional enthusiasm for stronger relationships with China.
In part, this stems from a general sense that China is a rising power in the world, and closer ties
with the country are prudent. But the most significant driver of this enthusiasm is a mutual belief
that energy brings the two regions together. Beginning in the late 20th century, China became the
single largest driver of energy demand growth in the world. The rapidly expanding Chinese
industrial base was hungry for oil, and the Middle East has the only exporters who could meet
that growing need. As demand plateaued in the United States and began to fall in Europe, it was
China’s growth that kept global demand growing. It became unthinkable for energy producers
not to seek to grow their relationships with China as a consequence.
There is also deep admiration for China’s economic growth, and quiet appreciation for the fact
that China has grown strongly without making the concessions to the political, economic, and
social liberalism that Western states often insist are necessary for prosperity and stability. The
Belt and Road Initiative was a masterstroke of branding, persuading state after state in the
Middle East that it could play a central role in the geostrategic calculations of the world’s
greatest rising power, with each imagining the growing power it would accrue as a result. Of
course, the dividends of the Belt and Road initiative in the Middle East are scant, but the residual
desire to engage more closely with China endures.
The Middle East also has suffered from growing disenchantment with the United States. For
decades there has been disappointment with U.S. policy toward the Palestinian-Israeli conflict,
and this disappointment and anger has become acute in the late six months. There was also
frustration that U.S.-led wars in Iraq and Afghanistan had little justification in the international
law the United States claimed to be upholding, and the United States prosecuted the wars while
indifferent to the civilian casualties they imposed. Governments were discomforted by the U.S.
embrace of democratization in the Arab Spring, they complained of U.S. abandonment as the
Obama administration announced its rebalancing toward Asia, and Arab governments
complained that U.S. policy toward Iran was recklessly empowering the Islamic Republic.
Countries and populations felt that a closer relationship with China would give them the ability
to resist U.S. hegemony and resist demands to reshape their domestic and foreign policy to
reflect U.S. preferences. Even U.S. partners and allies felt that the U.S. had enjoyed monopoly
power in the Middle East for two long, and competition would benefit them.
In this, China had a great deal to offer. Not only did China have the aura of geostrategic heft, but
it brought economic resources to bear. Trade relationships have grown exponentially over the
last two decades, through massive energy exports, the importation of Chinese manufactured
goods, and the extensive use of Chinese companies to build infrastructure, housing, factories,
and more. Where Western companies moved slowly toward agreements, sought external
financing, and had extensive regulations that governed everything from environmental protection
to anti-corruption statutes, Chinese companies were one-stop shops in league with the
government, they were happy to build things quickly if not always well, and they were open to
the costs of doing business in an environment with extensive patronage networks.
China doesn't want to supplant the United States in the Middle East but wants to supplement the
United States in the Middle East. China also doesn't want to sacrifice much to advance any of its
interests in the Middle East. Where it invests, it does so deliberately.
China, as you know, has created a hierarchy of relationships, with the most elevated being a
“comprehensive strategic partnership.” In the Middle East, it has such a partnership with Saudi
Arabia, the UAE, Iran, Egypt, and Algeria. The latter, it feels to me, is mostly sentimental, tied
to the links the two revolutionary countries established in the 1950s and have sustained in the
decades since. As China has become more market-oriented, it has turned a mercantile eye toward
regional states, making shrewd efforts to build ties where they have the most potential for China.
Saudi Arabia
Saudi Arabia has been among the Middle Eastern countries most interested in courting China.
Part of the interest is simply about energy: China was driving global growth, and Saudi Arabia
has the world’s largest proven oil reserves. As Saudi Arabia sees its role as “the world’s central
banker of oil,” it would be ludicrous in the Saudi view not to build a close relationship with the
world’s largest customer for imported oil. Strategically, Saudi Arabia also sought to displace Iran
as China's largest foreign supplier of energy. From a Saudi perspective, closer trade relations
with China puts a cap on how close Iranian-Chinese relations can grow and gives the Saudis
some assurance that China will not advance Iranian interests in international forums.
Saudi Arabia began engaging more deeply with Chinese firms when it sought low-cost
construction options amidst a slumping economy in the 1990s. When oil prices rose in the 2000s
and the Saudi economy was flush with cash, Chinese-Saudi trade grew strongly. In 2012, China
and Saudi Aramco agreed to build a massive refinery together in Yanbu, on the Red Sea. Within
four years, the refinery was operational, processing about 400,000 barrels per day of crude.
China has built some of the country’s most important projects in the last two decades, including
light rail, desalination plants, and industrial estates. China is intimately involved in building out
the Saudi IT backbone, and Chinese firms are key partners in constructing NEOM, the futuristic
city on the Red Sea.
China has explicitly sought to portray itself as an essential strategic partner to Saudi Arabia. It
has done so partly in the wake of Saudi concerns that the United States has been abandoning the
Middle East as it pivots toward Asia, and partly by marketing the idea that the Chinese
experience in economic growth holds lessons for Saudi Arabia’s own ambitious economic
diversification efforts. China has portrayed itself as an essential partner to Saudi Vision 2030,
which Crown Prince Mohammed bin Salman has used as a focus for Saudi Arabia’s economic
planning.
In recent years, Saudi Arabia has had a sustained but superficial fascination with Deng
Xiaoping's efforts in the 1980s to transition China from a relatively poor and parochial Maoist
dictatorship to a robust and cosmopolitan global economic powerhouse. I recently wrote a paper
on Middle Eastern states’ understanding of the China model, and one of the fascinating examples
is a modern art exhibit in Diriyya a couple of years ago that was curated by an American curator
of modern Chinese art. The exhibit was entitled, “Crossing the River by Feeling the Stones,” a
phrase attributed to Deng Xiaoping. An explanatory panel explained, “When it was coined, this
maxim referred to strategies for implementing and adapting to the massive economic and cultural
transformations that were then taking place. Saudi Arabia finds itself today in a similar moment
of optimistic energy, willingness to ask questions, and openness to new futures.”
The Chinese-Saudi relationship is more robust than merely an energy relationship. There is also
a military strand that runs through bilateral ties. Starting in the 1980s, Saudi Arabia occasionally
saw China as a source for weapons that the United States would not provide, such as the CSS-2
missiles. This trend has continued, with China reportedly selling Saudi Arabia drone aircrafts
and helping Saudi Arabia build ballistic missiles. There seems to be extensive Chinese
involvement in efforts at domestic surveillance.
Even so, when it comes to human capital, the Chinese are not very present. The Chinese have no
role, for example, in extensive Saudi efforts to reform their defense establishment, which are
being done along an Anglo-American model. There’s also little evidence that China helps
provide management training to senior Saudis, whose experience is almost entirely Western (and
mostly American). Given that there is such a huge need in the Kingdom for management
expertise for a vastly growing enterprise, and given the role of Western institutions providing it,
this appears to provide a ceiling for how closely Chinese ties can develop.
Even so, ties are clearly developing. Saudi interlocutors have told me that Chinese
representatives often come in and explicitly red team the United States. When they make an
offer, they also predict what the United States would do, the kinds of conditions it would impose
and the timelines it would give. They explain why their offer is better, and by Saudi estimates,
they understand the U.S. position as well as Americans.
The Saudi ambition to draw closer to China grew after U.S. outrage at the murder of Jamal
Khashoggi and now-President Biden’s promise during the 2020 presidential campaign that he
would treat the Saudis “like the pariahs that they are.” This ambition has dampened in recent
years, partly because the Biden administration has reassured Saudi Arabia that it is not hostile,
and because China's regional diplomacy has demonstrated it is no substitute for the United
States. While some expected that the Chinese role brokering a Saudi-Iranian agreement a year
ago was a sign of China’s regional diplomatic clout, it was largely Saudi determination that
drove the diplomacy—including China’s own involvement—and China has played no serious
role trying to resolve the conflict in Gaza or resolving issues in Yemen, which is a long running
Saudi security concern.
It is clear to Saudis that the country needs a robust relationship with China. Even if China doesn't
replace the United States, Saudi Arabia sees China as an important check on the United States,
and an important supplement to what the United States is willing to provide to China.
United Arab Emirates
The UAE has an even more complicated relationship with China than Saudi Arabia, in part
because the UAE has distinctive sets of interests within a single country. Dubai has been a
trading entrepot for centuries, and China’s global trade and Dubai’s role as a vital global
transshipment point have grown in tandem. Today, 60 percent of China’s trade with Europe and
Africa passes through the UAE (mostly Dubai), as does a large percentage of its trade with the
Middle East. About a quarter-million Chinese live in the UAE, again mostly in Dubai, compared
to only a million Emirati citizens in the whole country. Chinese firms have driven much of the
construction in Dubai, and the country’s mercantilist spirit jogs quite well with the Dubai
business community. Chinese organized crime operates in Dubai as well, including gambling
enterprises, and the Dubai police closely monitor its progress.
Abu Dhabi is less interested in transshipment and trade, and much more focused on its role as a
major oil exporter. As such, the Abu Dhabi leadership concentrates on security and geopolitics.
As in Saudi Arabia, there appears to be extensive cooperation between the national government
and China on domestic security issues including surveillance, but Abu Dhabi works extensively
with other security providers including Israel to bolster its surveillance capability. Abu Dhabi
had a close partnership with China in the early months of the COVID pandemic on both testing
and vaccines, although that cooperation dimmed when evidence emerged that the Chinese
vaccine was much less effective than Western versions. While there were reports about a year
ago that China was working closely with Abu Dhabi on artificial intelligence (ironically or
perhaps significantly, led by a company chaired by the UAE national security advisor), some of
that cooperation seems to have cooled, presumably in alignment with U.S. concerns.
The Abu Dhabi government increasingly has sought to strike an “active neutrality” posture in the
world, retaining intimate ties with the United States but growing substantial ties with Russia and
China. After the invasion of Ukraine, billions of dollars and thousands of Russians found safe
haven in the UAE, despite—and arguably because of—U.S.-led sanctions on Russia. In a widely
reported incident, in late 2021 the UAE shut down construction of what U.S. officials claimed
was a Chinese military facility in Khalifa Port in Abu Dhabi, although there have been scattered
reports that construction has continued.
The issue is not so much that there is overt tension between the United States and the UAE, but
rather that the UAE has a growing sense that it is large enough and powerful enough to advance
its own interests and should not slavishly follow the diktats of the United States. Whereas Saudi
Arabia feels like it is embarking on a transformation, the UAE is more self-confident that its
transformation has been underway for decades. The UAE sees itself as a regional thought leader,
and the model it has demonstrated is one of careful balance between regional and global
concerns, Western and Arab mores, and private and public capital development.
The UAE’s balancing reflects itself in complicated ways in domestic affairs. In foreign policy,
though, it feels more straightforward. Perhaps surprisingly, the tiny UAE seems to be adopted a
foreign policy that is in line with that advocated by India, a growing global heavyweight. Ties
between the two, which date back centuries, are interesting. India is closer to the UAE than
Kuwait, and there are more than two and a half times as many Indian citizens in the UAE as
Emiratis in the UAE. Despite the large disparities in size—with India’s population almost 15
times that of the UAE when the UAE includes expatriates, and 150 times its size without them—
the two countries have leaders with strong domestic support who share a vision of not needing to
fall in line with a world that's broken into blocs.
Iran
Rather than seek to balance within the global system like the UAE, Iran seeks to undermine the
structure of that system, which the Iranian leadership sees as hostile to Iran. In this effort, China
is an eager partner. Both countries share discomfort with what the United States claims is a
“rules-based order” and which China and Iran agree is an order that is intended to constrain
them. In addition, China prefers a world in which the United States is bogged down in the
Middle East and alienates much of the Global South through its actions there. In a way, sustained
U.S.-Iran tensions are a manifestation of the United States trying to impose its will on a smaller
state, and many countries feel some combination of solidarity and sympathy with Iran. China is
eager to stand by Iran, as long as it doesn’t cost China much. In 2021, China and Iran made
headlines by signing a 25-year cooperation agreement that promised a $400 billion investment in
the Iranian economy. While the agreement made headlines, implementation has been weak at
best, and the more Iran has seemed desperate for Chinese investment, the scarcer it has proven to
be.
Despite common cause, there are vast disparities between China and Iran. The starkest area is
economics. China represents about a third of Iranian trade, but Iran represents less than one
percent of Chinese trade. It is clear who is in control of this relationship. Time after time, China
has instrumentalized its relationship with Iran in order to advance Chinese interests. In political
science terms, the Iranian-Chinese relationship is always a dependent variable based on China's
other interests in the world. The Iranians both resent this and know there's nothing they can do
about it.
It was a little bit surprising to me China has not been more outspoken about Houthi attacks on
Red Sea shipping. Iran supports the Houthis with arms, cash, and reportedly with some targeting
data. Attacks on shipping does more than hurt Chinese trade with Europe. Chinese ships have
now been attacked despite Houthi promises they would not be, and the need to circumnavigate
Africa has added to costs delays. In addition, the Houthis attacks have cut Suez Canal revenues
in half since the first of the year, denying billions of dollars in hard current to a country with
which China has a comprehensive strategic partnership and in which China has invested billions
of dollars in recent years. It seems to me that’s a reflection of two things. The first is that China
has decided it can't have much of an impact. But the second and more important aspect is that it
reveals that virtually everything China does in the Middle East is with an eye toward its most
serious consideration: strategic competition with the United States.
China plays off the two beautifully. In circumventing U.S. sanctions by purchasing Iranian crude
oil, China simultaneously undermines the U.S. ability to use the international financial system to
sanction adversaries while gaining access to discounted oil. For China, this is a win-win solution,
but the strategic goals (constraining U.S. hegemony, undermining the centrality of the global
dollar economy, and demonstrating the inability of the United States to strangle the economies of
its adversaries) are even more important than near-term economic benefit. China is guarding
against a world in which the United States might seek to isolate China, and chipping away at its
ability to do so is a central Chinese concern.
Israel
Israel is a close U.S. ally that actively courted China starting in the early 2000s, and China
responded in kind. China not only sought Israeli counterterrorism assistance in the years after
9/11, but it also saw Israel is an important source of technical expertise. Chinese firms began
investing in Israel, for example buying the country’s largest dairy producer in 2014, but that
wasn’t where the real news was. About a decade ago, concern began to grow in the United States
that China would use Israeli technology and the infrastructure it was building in Israel to advance
Chinese espionage efforts. Israelis were dismissive of that fear 10 years ago, but in the last five
have seemed to be more open to U.S. concerns. Whether that is a result of what Israelis
themselves saw, what Americans were able to persuade them of, or a general assessment that the
U.S. relationship needed to be protected is unclear.
But the largest shift in China-Israel ties came in the weeks and months after October 7. China has
been openly critical of Israel and has shown little sympathy for Israel’s assertions that it is in an
existential struggle against a terrorist group. Instead, China has swung firmly behind a strategy of
showing solidarity with the Global South, and thus siding with Palestinians over Israelis. We
haven't yet seen this manifest in terms of disinvestment, but there is certainly less engagement,
and the scars of this conflict are likely to run deep. Even so, it is likely that China will seek to
reassert itself when the conflict begins to ebb. If there is some sort of broad international effort to
resolve the conflict between Israelis and Palestinians, China is certain to pursue a central role in
that effort as a matter of prestige. From that position, China is likely to seek to revive its
relationship with Israel.
China And the Global South
China’s role in the Gaza conflict now has been almost entirely opportunistic. While China’s
default position has been to favor states over non-state actors, China slid quickly into a position
expressing solidarity between the countries of the Global South and Palestinians. China has had
little positive to say to Israel, and its messaging stresses the hypocrisy of a U.S. position that on
the one hand advocates international law but also turns away from any responsibility to protect
Palestinian civilians from Israeli Army assault.
The difference between Chinese relations in the Middle East versus a place like Latin America or
Africa is that China sees the region as having difficult—some in China would say intractable—
security challenges. China sees little advantage in working to resolve them, and little capacity to
do so. Instead, China seeks to position itself behind the United States, allowing the United States
to get sucked in. China is focused on two things in the region: ensuring its competition with the
United States does not escalate to outright conflict, and not replacing the United States. Instead,
China sees the Middle East as the point of the spear of creating a different world which is more
mercantilist and less committed to international law and multilateralism. The more international
relations revolve around the bilateral relations between states, the better it is for China, which is
the stronger party in all of its bilateral relations except with the United States.
Recommendations
1. While the overall frame of U.S. foreign policy is increasingly focused on competition
with China, the USG must understand that China is committed to asymmetrical
competition in the Middle East. At the same time, Chinese strategy in the Middle East is
focused on China’s global rivalry with the United States. Understanding these two
distinct points is vital to constructing an appropriate U.S. policy toward China’s role in
the region.
2. Similarly, it is appropriate to understand the Chinese-Iranian relationship for what it is,
and not mistake it for what it isn’t. Iran is a tool for China to use in China’s relations with
the United States, and China will not make sacrifices for Iranian benefit. There is no
alliance here, and the prospect of one should be less alarming to U.S. officials than many
seem to assume.
3. It is important to continue to articulate the USG view that while it is appropriate for
countries to develop close economic ties with China, it is also appropriate to be wary of
China’s actions. China has an interest is saying the United States is forcing countries to
choose, and they should resist out of their own economic interest. It cannot be repeated
enough that the volume of U.S. trade with China is prima fascie evidence that the United
States does not object to economic ties.
4. China’s passivity and frequent irrelevance to addressing the robust security challenges
facing the Middle East today, and the central role U.S. diplomacy plays in seeking to
resolve them, should give lie to the theory that the United States is leaving the region and
China is the rising power in the Middle East. Neither is true, and the USG should remind
regional governments why.
5. There are any number of polls that attest to the popularity of China and the unpopularity
of the United States in the Middle East, yet public opinion polls on foreign policy are not
reliable indicators of Middle Eastern governments’ behaviors. Regional rulers are
presumed to have the prerogative to make foreign policy as they see fit. Regional
leaderships are fascinated by China in a superficial way, but they don’t know much about
China. They are mostly interested in the way China’s example seems to refute Western
insistence on their need to adopt liberalism. The United States should focus less on issues
of political ideology and more on the fact that human capital development is the only way
the Middle East can make it through the energy transition whole. The unique value
proposition of Western education and training versus the Chinese model is irrefutable and
gives a strong strategic advantage to sustained influence of the United States and its
allies. 

*       *       *

April 19, 2024
Karen E. Young, Ph.D.
Senior Research Scholar
Columbia University, Center on Global Energy Policy
Testimony before the U.S.-China Economic and Security Review Commission
USCC Hearing on “China and the Middle East”
Panel 1: Energy, Investment, and Economic Interests
Witness Topic: BRI and the Evolution of Chinese Investment in the Region
China's Trade, Investment and Contracting Relations in the Arabian Peninsula
Madam Chairperson and Members of the Commission, Thank you for this opportunity to share
my views and research on the relationship between the Gulf Arab states (Gulf states) and China.
I would like to open my remarks with some framing of the geopolitical environment in which the
Gulf states operate, and their consideration of Chinese investment and trade relations. I will
center my remarks on the Gulf rather than the entire Middle East and North Africa but will draw
on some data from my recent book, Gulf Economic Statecraft: Deploying Aid, Investment and
Development Across the Middle East, North Africa, and Pakistan (MENAP) and some of my
previous and forthcoming publications on Gulf-China economic ties.
Introduction and Framing the Gulf-China Geopolitical Relationship1
The geopolitics of the current age are more than great power competition between the United
States and China; it is a false narrative to limit the role of developing economies of the Global
South to aligning themselves with one side or the other. While we may indeed be in some inter-
regnum period of heightened risk of conflict, there are broader economic trends that may be
more important in the shaping of our future global political economy. And in this new global
economy, it is precisely the role of developing countries that will set the pace and geography of
trade as well as relationships between new trade partners and intermediaries. New trade routes,
investment partnerships, energy demand, and adaptation of technology within and among
developing economies will shape new political relationships and build multiple new centers of
economic power. The Gulf is not between the US and China, but one center or node of new trade
routes and a changing energy demand landscape, new manufacturing locales, each positioning
the Gulf Arab states of the Arabian Peninsula (most notably two: Saudi Arabia and the United
Arab Emirates (UAE)) as a burgeoning logistics hub and artery of the global economy. There is
no fixed center of trade, but rather an eastward shift of intensity.
1 Forthcoming, Young, K. (2024) "The Gulf as Trade Artery of the World" in The Reshaping of Global Logistics.
Geopolitics, Economics, and Technology Trends, Italian Institute on International Political Studies (ISPI) and
McKinsey & Co.
04/19/2024 HEARING BRIEFING BOOK - Page 21-1
2
Gulf Positionality in a New Global Trade Environment
Understanding Gulf positionality in a new global trade environment requires a framing of
emerging market economy growth and connectivity. The New Silk Road is one way of
describing this geography and burgeoning economic regrouping. Stretching from East Asia to
Morocco in North Africa, a New Silk Road grouping encompasses 50 countries and 4.9 billion
people, including eight out of the world’s top 20 economies. Its share of global gross domestic
product (GDP) has risen to 40 percent and consultancy Oliver Wyman estimates this will reach
48 percent by 2040.2 Global trade is more concentrated among emerging market economies. This
transition has been underway for some time. Since 2010, emerging markets have been a global
source of export activity, accounting for nearly 45 percent of global exports compared with only
25 percent in 1996 and this growth is not driven solely by China, as researchers at the Federal
Reserve demonstrate.3 Integration into global financial markets is also part of the new geography
of trade, and a point of connection at which the Gulf states excel. New Silk Road firms, or those
based across emerging markets of Asia and the Middle East, account for 221 of Fortune 500
firms.4
The New Silk Road defines the complexity of global supply chains, including the flexibility created
by a China+1 trend, in which relocating manufacturing out of China in turn creates opportunities for
other developing countries in Asia, as well as external regional investors. The use of financial
markets and investment vehicles build a web connecting capital within emerging market economies.
Because so much capital is concentrated in the Gulf, there are unique opportunities for Gulf state
investment vehicles, many with mandates to invest more in Asia and to allocate towards clean
energy projects.
The strength of the grouping will depend on its ability to adapt technology in its manufacturing for
renewable energy supply chains. For example, India's ability to ramp up its production of solar
panels will integrate it both more with developed markets in North America and Europe, but more
likely with the kinds of firms growing in the Gulf to expand solar power production at home and
through their state-owned firms building solar power plants across Africa and West Asia. In this
sense, it is both trade and investment that are coupling in the Gulf to deploy at scale across a wide
geography of increasing energy demand and consumer product demand. To this effect, the Gulf is a
hub of both capital and logistics. Its strengths lay in four factors and trendlines discussed below,
related to: 1) geography, 2) access to capital and ability to deploy it swiftly, 3) fortuitous access to
sites of emerging growth, and 4) a deep expertise in energy product delivery that can serve through
an energy transition.
2 Adel Alfalasi and Ben Simpfendorfer (2024) "The New Silk Road: Growth, Connection and Opportunity", Oliver
Wyman. https://www.oliverwyman.com/content/dam/oliver-wyman/v2/publications/2024/mar/the-new-silk-road-
complete-series.pdf
3 Reyes-Heroles, Ricardo, Sharon Trailberman and Eva Van Leemput (2020). Emerging Markets and the New
Geography of Trade: The Effects of Rising Trade Barriers. International Finance Discussion Papers 1278, pp. 4-5.
https://www.federalreserve.gov/econres/ifdp/files/ifdp1278.pdf
4 Adel Alfalasi and Ben Simpfendorfer (2024) "The New Silk Road: Growth, Connection and Opportunity", Oliver
Wyman. https://www.oliverwyman.com/content/dam/oliver-wyman/v2/publications/2024/mar/the-new-silk-road-
complete-series.pdf
04/19/2024 HEARING BRIEFING BOOK - Page 21-2
3
The weaknesses of the Gulf are entirely political, in that its entrepot position both geographically
and politically depends on access to US capital markets and a defense umbrella, alongside access to
trade and consumer markets across emerging Asia and Africa, with a special relationship to China
and India.
Gulf Infrastructure on Call
Indeed, where we find the largest investment and growth in trade infrastructure, especially ports,
tends to be in both Asia and the Gulf. MEED reports that current projects in global port
infrastructure investment in early 2024 (including early pre-planning stages of announcement
and study, through to execution) stand with a combined value of $497bn.5 Southeast Asia has the
highest share of the pipeline value, standing at $84.5bn, followed by the Middle East and North
Africa region at $73.2bn and South Asia at $73.1bn. New port construction in the Gulf
Cooperation Council (GCC) states in the last year includes plans to build a new terminal at Ras
Al Khaimah in the UAE, with a contract awarded to China Harbour Engineering (Chec). Also, in
Jeddah Islamic Port, Bahri Logistics began construction on a new logistics and distribution
center in March 2024. AD Ports Group (Abu Dhabi government-owned) signed an agreement in
partnership with the Red Sea Ports in Egypt. Ports in the Gulf (and Middle East more broadly)
often rank as the most efficient ports in the world, according to regular World Bank and S&P
Global Market Intelligence container port performance index.
6 The port connections between the
Gulf and China include contracting services as well as trade. Chinese contractors are frequently
winning awards for port expansions and in collaborations or joint ventures in industrial zones
around Gulf ports, and that industrial activity is usually related to the energy sector (e.g.,
refineries, crude, or refined product storage) or the transport of energy and new energy products
(e.g., green steel, critical minerals for EV production, etc.)
To this end, the GCC states own, or are operating, building, and investing in the current set of
regional7 port infrastructure, some with Chinese investment and contracting awards:
1. Port of Jebel Ali (UAE)
Owned by Government of Dubai, operated by DP World.
2. Port of Salalah (Oman)
Owned by Government of Oman, operated by APM Terminals (subsidiary of Maersk Group)
3. Port of Djibouti (Djibouti). Owned by Government of Djibouti, formerly operated by DP
World, and after government take-over (2018) now operated by Djibouti Ports and Free Zones
Authority.
5 Middle East Economic Digest (MEED) (2024). "Global Economy Needs More Port Infrastructure."
https://www.meed.com/global-economy-needs-more-port-infrastructure
6 World Bank Group (2022). Middle East container ports are the most efficient in the world,"
https://www.worldbank.org/en/news/press-release/2022/05/25/middle-east-container-ports-are-the-most-efficient-in-
the-world
7 There are important expansions of Gulf port operators outside of the Gulf region, including East and West coasts of
Africa. See work by Eleonora Ardemagni (2023) "One Port, One Node: The Emirati Geostrategic Road to Africa,"
ISPI. https://www.ispionline.it/en/publication/one-port-one-node-the-emirati-geostrategic-road-to-africa-131893
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4. Port of Aden (Yemen)
Owned by the Government of Yemen, operated by multiple firms, including DP World and
China Merchants Port Holdings and local Yemeni authorities.
5. Port of Berbera (Somaliland, Somalia), owned by the Government of Somaliland and operated
by DP World.
6. Port of Aqaba (Jordan), owned by Government of Jordan, operated by Aqaba Development
Corporation (ADC), but recently AD Ports Group (Abu Dhabi government-owned) and ADC
signed a joint venture (51% stake held by AD Ports Group subsidiary Maqta Gateway) to create
an operating company Maqta Ayla to streamline operations at the port and in road trade to
Jordan.8
7. Port of Duqm (Oman) is owned by the Government of Oman and operated by Port of Duqm
Company, a government entity. There is investment in the special economic zone as part of
Duqm, including a committed $3.7bn development plan over 30 years from China's Oman
Wanfang.9 That has been slow to materialize. Though an investment from Kuwait to build an oil
refinery in Duqm has already paid dividends given its strategic location outside of both the Red
Sea and Strait of Hormuz, given recent conflict in the region.10
8. Jeddah Islamic Port (JIP) is one of the oldest ports in Saudi Arabia, recently deepened and
expanded to more than double container capacity to 6.2 million containers spread over 11
platforms.11 The terminal facility is operated by DP World.
9. Ras Al-Khair Port (Saudi Arabia) Located in the Eastern Province of Saudi Arabia is part of
an industrial zone serving the Ma'aden phosphate and aluminum plants, among other facilities
like the Shanghai-based Baoshan Iron and Steel Co. recent $4bn investment in the Ras Al-Khair
special economic zone to manufacture steel plates.12
10. Dhiba Port (Saudi Arabia) Located near the NEOM project and its Oxygon industrial zone on
the Red Sea coast, this port is under expansion plans to handle 3.5-4-million-ton equivalent units
(TEUs) by 2030. (For comparison, Jebel Ali has a capacity over 19 million TEUs.)13 The port is
near the Jordanian border and could play an instrumental role in broader Middle East and North
8 Sambidge, A. (2024, February 16). "AD ports deal to transform Jordan’s Aqaba," Arabian Gulf Business Insight.
https://www.agbi.com/trade/2024/02/ad-ports-deal-to-transform-jordans-aqaba/
9 Aguinaldo, J. (2017, April 4). "Chinese investor mobilises for Duqm Project," MEED.
https://www.meed.com/chinese-investor-mobilises-for-duqm-project/
10 Paola, A. D. (2024, February 8). "Duqm oil refinery cranks up output as fuel cargoes avoid Red Sea," Bloomberg.
https://www.bloomberg.com/news/articles/2024-02-08/new-oil-refinery-cranks-up-output-as-fuel-cargoes-avoid-red-
sea
11 Hammond, A. (2024, February 16). "Expansion of Jeddah Islamic Port complete," Arabian Gulf Business Insight.
https://www.agbi.com/logistics/2024/02/expansion-of-jeddah-islamic-port-
complete/#:~:text=The%20project%20to%20deepen%20and,11%20platforms%2C%20a%20statement%20said.
12 Arab News (2023, May 30). "China’s Baoshan Iron and Steel Co. invests $4bn in Ras al-Khair Economic Zone,"
Arab News. https://www.arabnews.com/node/2312891/business-economy
13 Nereim, V. (2021, November 25). "Saudi prince’s “NEOM” to expand port to rival region’s biggest," Bloomberg.
https://www.bloomberg.com/news/articles/2021-11-25/saudi-prince-s-neom-to-expand-port-to-rival-region-s-biggest
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Africa (MENA) connectivity for Saudi exports, in some ways in an alternative route proposed by
the India-Middle East Economic Corridor (discussed below).
11. Yanbu Commercial Port (Saudi Arabia) Located also on the Red Sea coast in the Madinah
region, the port is under expansion of berths, terminals, and ability to accommodate larger
vessels.
12. Ras al Khaimah (UAE) Saqr Port and the RAK Free Zone and Maritime Zone are all part of
RAK Ports. An expansion in 2019 included two deep water Capesize berths at Saqr Port, with
annual capacity at 95 million tons, one of the largest dry bulk ports in the world. A 2024 contract
awarded to China Harbor Engineering Company (Chec) will support a new steel sheet pile
wharf, dredging and widening of the channel.14
13. Abu Dhabi Ports Group (UAE) operates 10 ports in the UAE, including the Khalifa Port in
Abu Dhabi, in a set of commercial ports and terminals, along with community ports and tourist
cruise terminals. Beyond east-west trade, the Khalifa Port and economic trade zone (KEZAD)
are home to industrial processing, including a new agreement with Titan to import lithium mined
in Zimbabwe to be processed into battery-grade lithium carbonate and lithium hydroxide for
battery manufacturers and electric vehicle original equipment manufacturers in KEZAD.15
Abu Dhabi Ports Group also wholly owns the Port of Fujairah in the northern UAE, which is the
third largest bunkering hub in the world, with more than 10 million cubic meters of crude and oil
products storage capacity.16
GCC Rail
There has been considerable interest and speculation about the possibilities of a more inter-
connected rail system to boost intra-regional trade and to support burgeoning efforts at east-west
trade corridors from India to the Mediterranean and on to Europe. The GCC rail project has been
a point of discussion for over a decade, when the Gulf Railway project was approved at the 30th
GCC summit in Kuwait City in December 2009, with a completion date set for 2018. The steep
decline in oil prices in 2016 created the first delay in project awards, but by 2017, the GCC
dispute (formally between June 2017- January 2021) between the UAE, Saudi Arabia, Bahrain,
and Egypt with neighbor Qatar disrupted all chances of regional economic integration. With the
Al Ula agreement, the GCC secretariat in January 2021 effectively restarted the project, though
the six member states are in different stages of new tenders and awards. GCC leaders approved
the establishment of the GCC Rail Authority in January 2022. That same year, Oman and the
UAE established the Oman-Etihad Rail Company to implement a 303-kilometre network,
supported by a Mubadala investment. Not for passengers or necessarily consumer products, the
utility of the rail network lies in energy and logistics supply chains. Oman-Etihad Rail Company
signed a memorandum of understanding (MoU) with Brazilian mining company Vale to explore
14 Iqbal, Y. (2024, March 5). "Chinese contractor wins Ras Al Khaimah port upgrade," MEED.
https://www.meed.com/contractor-wins-ras-al-khaimah-port-upgrade-project
15 Iqbal, Y. (2024a, February 14). "Titan to establish $1.4bn KEZAD Lithium Plant," MEED.
https://www.meed.com/titan-to-establish-14bn-kezad-lithium-plant
16 About Us - Trade Logistics Hub. Fujairah Terminals. (2023, March 16). https://www.fujairahterminals.ae/about-
us/#:~:text=Wholly%20owned%20by%20AD%20Ports,cruise%20business%20at%20the%20Port.
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using rail to transport iron ore and its derivatives between Oman and the UAE, connecting Vale’s
industrial complex in Oman’s Sohar Port and Freezone and a planned hub in Abu Dhabi. Vale is
the same firm in which the Saudi PIF and state mining company Maaden recently acquired a ten
percent stake. Oman and Saudi Arabia plan to establish a railway link connecting Duqm with
Riyadh through the Ibri border, for a planned economic zone in the Al-Dhahirah area.
Inside of Saudi Arabia, the land bridge project has potential for considerable efficiencies and
expansion of trade networks. As Saudi Arabia plans to integrate rail with sea and dry ports, the
$7bn Saudi land bridge rail project recently began tenders for project management, with an
award to US-based Hill International, Italy’s Italferr and Spain’s Sener in December 2023. The
Saudi China land bridge consortium, a joint venture of Saudi Railway Company and China Civil
Engineering Construction, reported in November 2023 its final stages of negotiation with
contractors for the project.17 When finished, the six-line railway will connect Jubail and
Damman to Jeddah and Yanbu, running east to west across Saudi Arabia with 1,500 km of rail
lines. The Red Sea ports of Saudi Arabia have been somewhat shielded by recent attacks from
the Houthis on sea transit, as they are based farther north. East-west transit avoids the Strait of
Hormuz and has the advantage of Saudi port networks on the Red Sea coast.
India-Middle East Economic Corridor18
At the September 2023 G20 meeting, host country India along with the United States, the
European Union, France, Germany, Italy, Saudi Arabia, and the United Arab Emirates (UAE)
signed a memorandum of understanding, a non-binding commitment, to work towards building
two separate "corridors", essentially envisioning a political line that is connected by some new
and some existing, or already under construction, physical infrastructure. The east corridor
envisions connecting India to the Arabian Gulf and the northern corridor connecting the Arabian
Gulf to Europe. Its most visible infrastructure project is an old-fashioned railway, as a ship-to-
rail transit network enabling goods and services to transit to, from, and between India, the UAE,
Saudi Arabia, Jordan, Israel, and Europe. More important is what else would go along the rail
line, including the laying of cable for electricity and digital connectivity, and most critically, a
conduit for clean hydrogen export from the Gulf to Europe.
The IMEC is part of a larger collaboration among G7 governments, international financial
institutions and private (mostly US) infrastructure investors. In a belated policy response to
China's BRI, the US government, and partners in the G7 announced a Partnership for Global
Infrastructure and Investment (PGII) in May of 2023.19 The intention is to politically support
more blended finance for clean power, transport, health, and climate resilient infrastructure in
low and middle-income countries. The IMEC does not neatly fit into the PGII initiatives either,
17 Foreman, C. (2023, December 7). Firms win Saudi land bridge. MEED. https://www.meed.com/firms-win-saudi-
landbridge
18 This passage draws from Young (2023) "All you need to know about the India-Middle East Economic Corridor,"
Al Majalla, November 4, 2023. https://en.majalla.com/node/303536/politics/all-you-need-know-about-india-middle-
east-europe-economic-corridor
19 The White House (2023) Fact sheet: Partnership for global infrastructure and investment at the G7 summit. May
20, 2023. https://www.whitehouse.gov/briefing-room/statements-releases/2023/05/20/fact-sheet-partnership-for-
global-infrastructure-and-investment-at-the-g7-summit/
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as it is not an accelerator of clean energy finance and the countries it connects are not all low or
middle income. The IMEC does serve broader energy security goals for European nations and
allows the United States to advance a national security goal in supporting regional economic
integration by knitting together its strategic partners Israel and Saudi Arabia, at least by rail.
The IMEC corridor is a Western political imagining of balancing in a multipolar system, mainly
adding states to its side of the balance sheet in a future conflict with China. The IMEC corridor
provides something for all, including China. The Gulf (and the UAE in particular) is already the
most important re-export source of Chinese goods in the region. An additional corridor by land
would only facilitate that existing capacity from Jebel Ali. The question is, if the new route is any
faster, cheaper, or safer than existing sea routes. It still navigates the Strait of Hormuz and
depends on another sensitive location at Israel's Haifa, a port now managed by an Indian
conglomerate that is backed by Emirati state investment.20 The UAE is most advantaged in
cementing its trade ties with India and growing new investments in strategic infrastructure assets
through Israel, the Eastern Mediterranean, and on to Europe. Despite the GCC rail network plan
coming back in motion, Oman is not a signatory of the IMEC memorandum of understanding
and its new port development on the Arabian Sea at Duqm, much closer to India, would not be
part of the corridor.
The Gulf Logistics Thesis
The Gulf central logistics thesis rests on four factors and trends:
1) A central geographical location. The location of GCC countries is an advantage because
transporting renewable energy over long distances, whether in the form of electricity or
hydrogen, is costly. As the cost of producing renewable electricity and hydrogen continues to
decline, transportation’s share in the overall cost structure will increase. The GCC countries offer
comparatively easy access to large import markets in both Europe and Asia, as well as to
developing markets such as those within Africa. The Gulf states benefit not only in the shifts in
inter-Asian trade occurring, as manufacturing moves from China into other Association of
Southeast Asian Nations (ASEAN) countries, but also in the Gulf's proximity to India. As higher
tech manufacturing also moves to India, the evolution of supply chains in renewable energy,
especially in EV manufacturing and solar panel components, will benefit Gulf solar companies
expanding abroad and new car manufacturing efforts at home, as well as intermediary positions
in export to Africa and beyond. As a center of a new energy market, across products from
electricity transmission (from solar and nuclear power), green and blue hydrogen fuels, and new
energy products, the Gulf has a key advantage.
2) The Gulf states benefit in their geographic location as an intermediary of trade between high
growth areas in Africa and the Middle East and Asia, but perhaps as much or more in their role as
financial intermediaries and investors in infrastructure, both at home and abroad. While the cost
of capital is rising given global inflationary pressures, Gulf governments and their state
20 Elbahrawy, F., & Shrivastava, B. (2023, January 30). "Adani enterprises FPO: Abu Dhabi’s IHC invests $400
million in Adani Share Offer," Bloomberg. https://www.bloomberg.com/news/articles/2023-01-30/abu-dhabi-s-ihc-
invests-400-million-in-adani-share-offering
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investment vehicles have a plethora of institutions on hand to access capital markets at favorable
interest rates compared to other emerging market economies. They can leverage state firms to
borrow against and can issue partial privatizations to raise capital; this strategy has been essential
to Saudi Arabia's Vision 2030 objectives, including raising the capital needed domestic
infrastructure for trade networks. GCC states can deploy capital at scale for infrastructure for the
energy transition and in transport systems. The IMF predicts that Southeast Asia, South Asia,
and Sub-Saharan Africa will be central to future trade growth. It expects China’s influence on
global trade growth to wane as trade becomes more diversified across many countries. By 2026,
it is expected that emerging economies will account for 45 percent of trade growth. The GCC
states are best positioned as investors and operators of major infrastructure projects, from ports
to power plants, in these growth areas.
3) Trade growth and density is changing with e-commerce trends, demand for sustainable
materials like green steel, materials for low carbon products like EVs, and increasing the volume
of trade between China and ASEAN and Silk Road countries. E-commerce trends across
developing economies will require additional air cargo. Gulf state carriers are capitalized and
expanding. GCC investment can also benefit from the relocation of manufacturing from China
into other Asian locations, creating new co-investment opportunities with Chinese firms and new
export routes by sea and air cargo for Gulf carriers. Air cargo is a growing market and the ability
to finance and run state-owned carriers is a critical advantage. The growing trend of e-commerce,
especially in apparel and household goods from Chinese discount retailers, is transforming the
air cargo sector. According to the IATA, one in five parcels currently transported has been
purchased online, and the figure is set to grow to one in three by 2027.21 E-commerce within the
GCC is also booming, as traditional point of sale retail is increasingly shared by on-line
purchases and delivery. In the UAE, the Ministry of Economy finds just 4.2 percent of retail is e-
commerce, the largest in the MENA region, with clear room for growth.22
As China's lower-end industrial sectors relocate towards ASEAN countries, there are
opportunities for more labor-intensive manufacturing for leather, textiles, ceramics, and glass
along with companies in solar, electric vehicles and lithium battery assembly processing. And
while countries like Vietnam, Thailand, and Indonesia benefit, so too does Morocco, Jordan, and
Egypt, as well as India as competitive labor sites. This shift in where consumption on the one
hand and manufacturing and assembly happens on the other, is rapidly changing the trade and
investment partners of the Gulf. It is an emerging markets story, but also one of geopolitics and
sound national investment strategy.
The long-term growth fundamentals for Gulf-Asia trade are robust. In the shorter term,
transporting goods to and from China via air, rail and sea continues to grow, driven by Chinese
e-commerce sites of fast fashion and discount retail. As China increases its trade with ASEAN
and its New Silk Road partners, the demand for logistics increases. Trade will increase as Asia’s
21 Goldstone, C. (2024, March 14). "A 'tsunami of e-commerce growth' on course for Air Cargo," The Loadstar.
https://theloadstar.com/a-tsunami-of-e-commerce-growth-on-course-for-air-
cargo/#:~:text=According%20to%20IATA%2C%20one%20out,one%20in%20three%20by%202027.
22 UAE Ministry of Economy. "Investing in Logistics in the UAE,".
https://www.moec.gov.ae/documents/20121/1121099/Logistics+Investment+Heatmap+%282%29.pdf/fd1ee021-
917b-b09f-e254-ef9d86769c43?t=1646194073616
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economies, middle-class populations and their demand for energy expand over the next decade.
The Gulf’s efforts to diversify their economies and develop non-oil sectors, especially in
sustainability and technology, will further drive cooperation. While the oil and gas trade
dominate growth between the Gulf and Asia now, the expansion extends beyond oil. Non-oil
sectors, particularly technology sectors that are vital for the Gulf’s economic diversification and
digitalization, have played a significant role. In 2010, for example, around 42 percent of Gulf
trade was with advanced economies, by 2022, advanced economies shared just 34 percent of
Gulf trade, with rising shares from Emerging Asia and other emerging markets.23
4) Dominating the Energy Business. The Gulf states are best positioned to continue oil and gas
production while at the same time leading investment and innovation in renewable energy
production, technology, its export, and renewable project development on a wide inter-regional
scale with advantage across emerging market economies alongside their position to be partner
investors in clean energy policy incentives, like the Partnership to Accelerate Clean Energy
(PACE) between the UAE and the United States.24
China and the Gulf: Necessary Partners25
The Gulf states are in some ways necessary but insufficient partners in China's political and
economic development ambitions. The Belt Road Initiative includes the Persian Gulf in its
geographic ambition, but the Gulf is more of an entrepot, a stopover that is not a high population
center or high-volume export market for China. For now, China's engagement in the Persian
Gulf, from Iran on one side to the Gulf Arab states on the other, has been met with a kind of
businesslike acceptance. The oil and gas exporters of the Gulf Cooperation Council find
themselves in an unenviable position: China seeks their resources but is less interested in
providing or replacing the current US security umbrella. China needs the Gulf (both the Arab
Gulf states and Iran) but has other sources of hydrocarbons. The Gulf needs China as an export
market, but any political partnership with China carries limited benefits. China will likely need
the Gulf states less in twenty years as a source of hydrocarbon resources. And China will also
seek to be in some of same businesses that the Gulf states seek to dominate, specifically in
renewable energy like solar, but also in contracting or construction businesses for infrastructure
development across the Middle East and the Horn of Africa.
There is also substantial variance among the GCC states in their economic linkages with China.
Iran's economic ties with China are even more tenuous. Given the restrictions of sanctions over
the last decade, more progress has been made in cementing China's economic links to the Arab
side of the Gulf. China is neither a monolithic presence across the Middle East, nor an equal
partner across the six GCC states. China's leverage as a provider of contracting services and
development finance is disparate. And in some cases, even when Beijing has been ready to act as
a source of finance, in providing commitments of investment, Gulf states have had second
23 Asia House (2023) The Middle East Pivot to Asia.
24 The White House (2022) Fact sheet: U.S.-UAE Partnership to accelerate transition to clean energy (PACE). The
White House. November 1, 2022. https://www.whitehouse.gov/briefing-room/statements-releases/2022/11/01/fact-
sheet-u-s-uae-partnership-to-accelerate-transition-to-clean-energy-pace/
25 Young, K. (2023) "China and the Gulf: Necessary Partners" chapter 15 in Yahia Zoubir, ed. Routledge Companion
to China and the Middle East and North Africa, Routledge: London.
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thoughts. Iraq is one example; Iran is another. In 2021, Iraq suspended a potential deal to accept
$2 billion for future deliveries of crude oil to China, despite a desperate need for external
finance.26 Likewise, the much-lauded 2021 Iran-China investment memorandum of
understanding was large on promises ($400 billion of them over 25 years), but short on specifics,
while facing considerable objections in Iranian domestic politics over concerns of a flood of
lower priced Chinese goods to the Iranian consumer market.27
My remaining testimony proceeds in the following order. First, what does China see as an
endgame in the Gulf? What is the longer-term value of political and economic ties to the Gulf
states? Second, how do we explain variance in the location and abundance of economic ties with
China, from investments and loans to contracting across the Gulf? And what are the various
sources of economic ties and what do they tell us about China's ability to partner in the
development and economic diversification goals of the Gulf states? From loans to contracting
and commitments of foreign investment, how can we measure or compare the depth of China's
economic interests in the Gulf? Third and lastly, what are areas of potential roadblocks ahead in
Gulf-China ties, specifically on investments in technology and military capability and areas of
strategic competition like electricity generation from renewable energy? And how might China's
own demographic transition fit into a larger picture of declining or plateaued demand for
traditional hydrocarbon exports from the Gulf? I would argue that while China-Gulf economic
ties are increasing, they also come at a moment of tremendous change and expected
reconfigurations of global trade, energy markets and consumer demand. These ties will not be
static and should be considered as part of larger reconfigurations of population growth and
economic activity.
China's Outward Vision for the Gulf
China, via its ruling party, has made very clear how the Middle East is just one part of a much
larger outward strategy in its foreign policy and economic growth. In January 2021, China's State
Council Information Office issued a white paper entitled "China's International Development
Cooperation in the New Era," a detailed policy description of China's approach to international
development and how to use its state institutions and private citizens and firms to more firmly
establish ties, both economic and political, in developing countries.28 For the Middle East, and
for the Gulf Arab states in particular, the Chinese approach to development emphasizes a South-
South focus. The rhetoric of a development ideal that is divorced from liberal democratic
capitalism and ideals of the West has a certain attraction to the authoritarian capitalist states of
the Gulf. There are no impositions on domestic politics, and there is a welcome role for state-
related entities, as well as private sector actors in economic development.
26 Al-Ansary, K. (2021) Iraq walks away from $2B upfront oil deal with China, World Oil, 22 February, Available at
https://www.worldoil.com/news/2021/2/20/iraq-walks-away-from-2b-upfront-oil-deal-with-china
27 Esfandiary, D. (2021) Iran’s ‘New’ Partnership With China Is Just Business as Usual, World Politics Review, 22
April, Available at https://www.worldpoliticsreview.com/articles/29593/the-iran-china-deal-isn-t-all-that.
28 United Nations Development Program (2021) Brief on White Paper on China's International
Development Cooperation in the New Era, 5 February, Available at
https://www.cn.undp.org/content/china/en/home/library/south-south-cooperation/issue-brief---brief-on-
white-paper-on-china-s-international-deve.html.
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China formalizes relationships through a hierarchy of partnership agreements. Loosely, these are
memoranda of understanding which are not legally binding, but rather aspirational in
commitments of investment and levels of diplomatic engagement. From "Friendly Cooperative
Partnership" at the lowest level to "Comprehensive Strategic Partnership" at the highest, China
engages the Middle East and the Gulf in proportion to its own development objectives.29 For that
reason, the countries with the highest level of "partnership" are those that are most valuable to
China as a source of energy products, as geographic locations for re-export with good port
infrastructure, and those that are open to awarding Chinese contracting firms opportunities.
China has a "strategic partnership", the second highest level of engagement, with at least a dozen
Middle East states. But its "comprehensive strategic partnerships" are reserved for a few: Iran,
Saudi Arabia, the United Arab Emirates, Egypt, and Algeria.
China and Iran have been slowly socializing a strategic partnership since 2016, also the year
China released its "Arab Policy Paper," outlining general areas of trade and cooperation with the
Middle East more broadly, making little distinction between Arab and non-Arab regional
partnerships. Iran was also the site of a high-level visit by President Xi Jinping in 2016, as was
Saudi Arabia.
30 Iran's "comprehensive strategic partnership" with Iran is less a breakthrough
about the 25-year, $400 billion investment commitment, which is not binding or real cash on the
table now, but about the "sanctions free" nature of the partnership. China has made an
interjection in Gulf regional politics based on economic rationale, but that is highly contentious
not just with Arab state partners, but also with the United States. China needs Iran as a source
(but not its only source) of reliable and inexpensive oil supply. Iran needs China more as a
diplomatic wedge to the United States. Iran has feared becoming a dumping ground of cheap
Chinese goods; the "sanctions free" nature of the Chinese relationship is what has been necessary
to gain Iranian domestic support for the strengthening of bilateral ties.
If US sanctions on Iran's oil exports are lifted or eased as part of a return to the Joint
Comprehensive Plan of Action, oil prices may weaken further given a global supply glut.31 But
there is some question of how much impact Iran's exports to China would have on existing
market share supplied by Saudi Arabia and other Gulf Arab states: probably not much, though
Saudi Arabia will not welcome the return of Iranian oil to markets, especially if Iran has agreed
to sell at steep discounts. China is also not likely to stop buying from Gulf Arab partners, given
shared co-investments in refineries and petrochemical facilities across the wider region. All have
become connected, willingly, or not.
29 Fulton, J. (2019) China’s Changing Role in the Middle East, Atlantic Council, June, Available at:
https://www.atlanticcouncil.org/wp-
content/uploads/2019/06/Chinas_Changing_Role_in_the_Middle_East.pdf.
30 Perlez, J. (2016) President Xi Jinping of China Is All Business in Middle East Visit, New York Times, 30 January,
Available at: https://www.nytimes.com/2016/01/31/world/asia/xi-jinping-visits-saudi-iran.html.
31 Gordon, M. (2021) Iran oil sanctions relief expected in months if Vienna talks result in deal, S&P Global, 6 May,
Available at: https://www.spglobal.com/platts/en/market-insights/latest-news/oil/050621-iran-oil-sanctions-
relief-expected-in-months-if-vienna-talks-result-in-deal.
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For the United States, China's ability to be an economic and political actor across the Persian
Gulf can be threatening. The problem with viewing China as a great power competitor in the
Middle East is that China is competing in entirely different mechanisms than the United States.
The goal for China is not to be a security umbrella, a regional alliance or solely to gain a market
for exports. China is after energy resources and strategic locations for its trade and transport
security, which means it is invested in certain choke points in the Middle East, Horn of Africa,
and Indian Ocean. And China has made relationship-building a priority, as these "comprehensive
strategic partnerships" signify.
Variance in China-Gulf Economic Ties
Iran is not nearly as attractive as an investment destination to China as the Gulf Arab states can
be. There is an energy imperative to China's investments and partnerships in the Gulf, mostly
concentrated in Saudi Arabia and the UAE for now. Interestingly, new partnerships and co-
investments include areas of potential competition, as the Gulf Arab states develop expertise in
renewable, especially solar energy production, and as Gulf national oil companies begin a
diversification strategy to privatize some pipelines and state port facility assets. Trade and
finance have come second in importance, though China has steadily increased the presence of its
banking sector in the United Arab Emirates and increased its ability to win contracting awards
for its construction companies working in the Gulf Arab states.
In data collected by fDi Markets, a Financial Times company, the stand-out recipients of Chinese
foreign direct investment from 2003-2020 are three states in the Gulf Cooperation Council
(GCC): Oman, Saudi Arabia, and the United Arab Emirates.
Figure 1: Chinese Capital Investments in the GCC (2003-2020)
source: fDi Markets
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In terms of job creation, these same three states are the most intense sites of Chinese investment
intervention in the GCC, but not necessarily in creation of jobs for nationals, as low wage foreign
workers account for most of the construction sector.
 

 Figure 2: Total Chinese Capital Investments in the GCC (2003-2020)
Source: fDi Markets

 

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In terms of the variability over time in Chinese job creation in the GCC, the sharp increase job
creation after 2016 is most evident, pointing to more contract awards in the construction sector.
Figure 3: Chinese Job Creation in the GCC (2003-2020)
Source: fDi Markets



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In terms of Chinese capital investment flows to the GCC between 2003 and 2020, we see at least
three periods of spikes or sharp increases, in the period around 2008, 2011 and 2016. The other
trendline that emerges is the variability in those states most "favored" by China in its economic
linkages.
Figure 4: Total Jobs Created by Chinese Companies in the GCC (2003-2020)
Source: fDi Markets


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16
The UAE is certainly emergent in that trend now, though competition between Gulf national oil
companies in attracting investment partners in partial privatizations means China also has a bit of
new leverage.
China's direct economic gains in the wider Middle East relied mostly on winning contracting
awards from Gulf governments, including a recent award in Etihad rail in the UAE (Bhatia,
2020). As part of strategic partnerships, there is also equal interest from the Gulf side to become
a part of the China One Belt One Road initiative. The appointment of Chinese contractors to Gulf
infrastructure projects is a complementary Gulf state policy objective, as evidenced by Dubai
Silk Road strategy, which comprises 9 initiatives and 33 projects aimed at enhancing the
emirate's trade and logistics capacity.32
After Saudi Crown Prince Mohamed bin Salman's state visit to China in 2019, investors signed
$28bn worth of MOUs for projects in Saudi Arabia, including construction sector agreements
with China State Construction Engineering Corporation (CSCEC), including an agreement to
32 Oxford Business Group (2019) Dubai Silk Road strategy to capitalise on logistics infrastructure and global
connections, Available at: https://oxfordbusinessgroup.com/analysis/sleek-strategy-dubai-silk-road-
strategy-outlined-mid-2019-aims-capitalise-emirate%E2%80%99s-trade-and.

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build housing units (worth $667m) for the Saudi National Housing Company.33 CSCEC has
completed $7.8 bn worth of projects in the Middle East in the last 15 years and has $19bn worth
of contracts according to MEED Projects. In 2019, there were $520bn worth of pre-execution
phase projects in Saudi Arabia alone.
By 2021, Chinese solar firms had gained contract awards to help Saudi Arabia reach its
ambitious solar electricity generation goals, in partnership with ACWA power, a firm partly
owned by the Saudi sovereign wealth fund, the Public Investment Fund, including a co-
ownership with China's Silk Road Fund in ACWA's renewable energy holding company.34
Outside of oil and gas, renewables have also been a focus of Chinese investment in the Gulf. In
2017, Abu Dhabi awarded a contract to a consortium led by Japan's Marubeni Corporation and
China's Jinko Solar to develop a 1,177 MW PV solar independent power project at Sweihan, the
world's largest single-site solar project.
35
China imported $6.7 bn (or 2.8 percent) of its total oil requirements from the UAE in 2018. But
more than a key export market, China is increasingly an active investor in Gulf oil and gas
infrastructure, including recent co-investments in Abu Dhabi National Oil Co (ADNOC) onshore
concession and new offshore concessions. In the summer of 2020, for the first time a dedicated
Chinese offshore oil and gas company has joined ADNOC offshore concessions. ADNOC
pointed out that PetroChina holds a 10-percent interest in the Lower Zakum concession as well
as 10 percent of the Umm Shaif and Nasr concession. With the agreement, CNOOC will hold
four percent interest in Lower Zakum and Umm Shaif/Nasr, with PetroChina holding the
remaining six percent.36
Total trade between the UAE and China totaled $50bn in 2017, and 60 percent of Chinese goods
imported into the UAE are re-exported to the Middle East and Africa, making the UAE more
central to China's trade ambitions and networks regionally. (Non-oil trade between the UAE and
China exceeded $72 billion by 2023.)37 Chinese financial institutions are also making inroads in
the Gulf finance sector. The UAE's federal government-owned development bank (Emirates
Development Bank-EDB) issued its first bond in 2018 (after a decree allowing federal debt
issuance), in which the $750m five-year bond was arranged by Emirates NBD Capital, Industrial
and Commercial Bank of China, and Standard Chartered. China’s largest state-owned
commercial banks—Industrial and Commercial Bank of China, China Construction Bank,
Agricultural Bank of China, and Bank of China—have been increasing their market share in the
33 Yiu, K. (2019) Saudi prince's trip to China highlighted by $10 billion petrochemical deal, ABC News, 22 February,
Available at: https://abcnews.go.com/International/saudi-princes-trip-china-highlighted-10-billion-
petrochemical/story?id=61233563.
34 Aguinaldo, J. (2018) Chinese contractors are becoming a dominant force, MEED, 5 December, Available at:
https://www.meed.com/chinese-contractors-relentless-pursuit-bears-fruit/.
35 AP News (2020) JinkoSolar Sells Its Stake in Abu Dhabi Sweihan Power Station, 27 November, Available at:
https://apnews.com/press-release/pr-newswire/business-brazil-corporate-news-latin-america-and-caribbean-
north-america-2401d0ed5f0c5eadbb392ed7b8f71e42.
36 Saadi, D. (2020) UAE's ADNOC adds CNOOC of China as new partner in two offshore concessions, S&P Global,
27 July, Available at: https://www.spglobal.com/platts/en/market-insights/latest-news/natural-gas/072720-
uaes-adnoc-adds-cnooc-of-china-as-new-partner-in-two-offshore-concessions.
37 UAE Ministry of Economy (2023) https://www.moec.gov.ae/en/-/uae-and-china-discuss-investment-opportunities-
in-new-economic-sectors-trade-transportation-technology
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Middle East. With their first foothold established in the Dubai International Financial Center
(DIFC), each of the Big Four have opened operating branches in the Middle East and North
Africa (MENA) region since 2008. From their branches in the DIFC, these banks run major
regional operations and continuously expand their activities. As of March 2019, the Big Four
contributed a quarter of DIFC’s collective balance sheet for banking.38
China is quickly becoming a major contender in large project development in the Middle East.
Because Chinese contractors can often bid on awards with state-backed financing, they are able
to assess and win projects with higher risks in new and less established markets. Chinese
financing has played a significant role in a railway network in Iran and other projects in Iraq,
Algeria, and Saudi Arabia, according to research by MEED in its "The Future of Middle East
Energy” report (2018). These four countries, along with the UAE, accounted for 75 percent of
the total estimated value of projects awarded to Chinese contractors in 2000-2017. China’s total
share of contracts awarded across the region was almost 13 percent, and Chinese contracting is
expected to grow further. The UAE was a prime destination for Chinese policy lenders in the last
two years, with $2.3 billion in loans, including financing towards the expansion of both Dubai
International Airport and Al Maktoum Airport. Jordan came in second, with total lending valued
at $1.7 billion, followed by Saudi Arabia with $977 million and Egypt with $890 million.
Looking towards new projects, Chinese firms are aggressively bidding on MENA infrastructure.
They bid to build part of a railway in the UAE, a rail network already linked to Huawei
technology products. MENA governments have encouraged Chinese firms to bid and often
award contracts because they are the most price competitive, given their ability to rely on state
banks for financing for projects that relate to the Belt Road Initiative. The linkages of technology
to infrastructure projects have created a sensitive collaborative model, in which companies like
Siemens agree to partner with Chinese contractors to win participation in these large projects.39
Competition and Transition: The Future of Gulf-China Economic Relations
Export-oriented growth now includes the provision of finance as a service. The Chinese strategy
of port development, large-scale construction services and the provision of state-backed finance
instruments is gaining traction in the Gulf, but it is also inspiring Gulf states to emulate this
strategy, sometimes in the same places where China is engaged. As these forces combine, their
incentives to create opportunity and development in recipient countries will differ sharply from
traditional multilateral sources of development finance.
The synergy now created by both Chinese economic statecraft and Gulf states’ increasing
orientation eastward is a powerful force that will affect patterns of investment in emerging
markets, but also practices of development finance, of post-conflict reconstruction, and ideas
about appropriate governance of markets of the Middle East. Much of this relationship involves
Gulf supply of China’s seemingly insatiable demand for energy, but China is also eying the Gulf
38 Xueqing, J. (2019) BOC unit to ramp up services in Middle East, China Daily, 29 March, Available at:
http://www.chinadaily.com.cn/a/201903/29/WS5c9d85daa3104842260b34a7.html.
39 Siemens (2018) Siemens awarded high efficiency steam turbine modernization and upgrade project in China, 27
March, Available at: https://press.siemens.com/global/en/feature/siemens-awarded-high-efficiency-steam-
turbine-modernization-and-upgrade-project-china.
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for its own industries and investment. China and Arab Gulf states are likely to use their
capacities a financiers, contractors and developers to increase ties and exert regional influence at
a time the United States signals a desire to be less engaged in the Middle East.
The future of growth for the Gulf states will rely on the control of ports and transit waterways (of
the Red Sea corridor, Arabian Sea, and Indian Ocean), of export markets for energy products in
Asia, and favorable access to the largest economies in the Middle East and Africa. Trends in
urbanization and energy demand map closely to where the Arab Gulf states are now investing
their political and economic resources. Chinese investment is symbiotic to Gulf security and
economic objectives; though they are competing for many of the same projects, they are at times
cooperative rivals.
China is a source of finance, a competitor in infrastructure projects, and a constant reminder of
the power of alternative economic organization to the West. The growth in financial flows is
compelling, but it requires constant feeding from its state-backed forces. Both China and the
Gulf states use state-owned firms, including financial entities and banks, such that constant
expansion of projects and financing serves a domestic objective on balance sheets as well. Some
scholars term the expansion of Chinese state-backed lending as "debt book diplomacy" as the
expansion serves a political goal of the Belt Road Initiative, but also gives commercial purpose
to a growing financial sector. Lending, however, is not as substantial as the gain from contracting
awards and co-investments in the energy and transport sectors.
Both Saudi Arabia and the UAE are courting Chinese investment in shared energy projects,
encompassing traditional oil production to renewable capacity and energy storage. State-owned
enterprises Aramco and SABIC aim to partner with China's Sinopec and China North Industries
Corp, creating a synergy of government firms. In the UAE, these projects include a contract
worth $1.6 billion between ADNOC and the China National Petroleum Corporation (following
an earlier $1.17 billion investment in Abu Dhabi’s offshore fields).
40 In addition, there is a
partnership and investment agreement between Dubai’s Electricity and Water Authority
(DEWA) and China’s Silk Road Fund to create the world’s largest solar energy plant.41 In
November 2018, ADNOC signed a new agreement for the sale of liquified petroleum gas (LPG)
to Wanhua Chemical Group of China, owner of the world's largest underground LPG storage
facility.
42 According to research by Qamar Energy, there are at least ten current energy projects
planned or active in the GCC with Chinese investment, from traditional and solar electricity
generation, to pipeline development in the UAE, methanol production in Oman, and uranium
exploration in Saudi Arabia.43
40 Gulf News (2018) Adnoc awards $1.6b contract to China’s CNPC, 19 July, Available at:
https://gulfnews.com/business/energy/adnoc-awards-16b-contract-to-chinas-cnpc-1.2254117.
41 Halligan, N. (2018) China's Silk Road Fund to invest in Dubai solar project, Arabian Business, 22 July, Available
at: https://www.arabianbusiness.com/energy/401242-chinas-silk-road-fund-to-invest-in-dubai-solar-project.
42 Bridge, S. (2018) UAE's ADNOC signs major LNG sales deal with China's Wanhua, Arabian Business, 12
November, Available at: https://www.arabianbusiness.com/energy/407837-uaes-adnoc-signs-long-term-lng-
sales-deal-with-chinas-wanhua.
43 Mills, R., Ishfaq, S., Ibrahim, R. & Reese, A. (2017) China’s Road to the Gulf: Opportunities for the GCC in the
Belt and Road initiative, emerge85, October, Available at: https://emerge85.io/wp-
content/uploads/2017/10/Chinas-Road-to-the-Gulf.pdf.
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The recent growth in ties is based in China's demand for energy and the Gulf's ability to provide
an important and growing market. China requires energy, especially to supply its infrastructure
and construction boom as it builds new cities. Automobile sales in China quadrupled between
2008 and 2016, and transportation needs have also increased petroleum and related product
demand. As China seeks to shift its own energy mix away from polluting coal-fired power
plants, its demand for gas has multiplied. The most important factor driving global gas
consumption in 2017 was the surge in Chinese gas demand, where consumption increased by
over 15 percent, accounting for nearly a third of the global increase in gas consumption (BP,
2018). It may create some leverage for Gulf major gas producers to shift China's attention their
way in the first phase of a post-oil transition, as liquified natural gas is considered a bridge fuel
to more renewable sources.
The Gulf states are competing to secure China as an export market for their energy products
beyond just oil and gas. The proliferation of downstream energy products in petrochemicals,
including the construction of new refineries and chemical plants, is both a diversification strategy
and a new product arena (and profit maker) for Gulf state energy companies. Despite this
synergy of interests, there is already conflict in third party states, as evidenced in the dispute over
control of shares of the Doraleh Container Terminal in Djibouti between DP World, the Dubai-
based port management company, and the Djibouti Ports Authority (PDSA). Djibouti forced DP
World out of the site by nationalizing the terminal; notably, the government partner of the port
authority, the Hong Kong-listed China Merchants Port Holdings Company Ltd, a company
overseen by Beijing’s State Assets Supervision and Administration Commission, holds a 23.5
percent ownership stake in the terminal. Effectively, the government of Djibouti made a choice
of prioritizing ties to China as an investor, over its commercial ties to DP World.
Yet, there is a demographic dilemma in China, and it could acutely affect the oil exporters of the
Gulf. It poses the most serious threat to the political economy of the region, and that includes the
legitimacy of ruling families. A report from the investment bank Natixis finds that population
aging in China will be fast and furious, with a steep decline on economic growth rates, from 6
percent a year in 2010 to 2.5 percent by 2030, with real impacts on global potential growth.44 As
domestic demand falls with an ageing population that is not replenished, that commodity demand
will fall. Saudi Arabia may still pump the last barrel of oil, but it will almost certainly be the
cheapest barrel and one that fewer consumers in China will need.
But the idea of a forced choice between superpowers, in a Cold War scenario between China and
the United States, is not realistic for the Gulf states or the Middle East. There are states that are
more vulnerable in their need for access to finance, which China might serve as an alternative,
though the provision of development finance continues to diminish. And there are states that are
simply serving their export markets and seeking longer-term investment partners. And there are
states that have few other options. The problem in pitting the US versus China in each of these
situations is ignoring a larger universe of investment sources and partners, both private,
multilateral and state-supported in nature. The GCC states themselves are equally, if not more
44 Cheng, E. (2021) China’s aging population is a bigger challenge than its ‘one-child’ policy, economists say,
CNBC, 28 February, Available at: https://www.cnbc.com/2021/03/01/chinas-aging-population-is-bigger-
problem-than-one-child-policy-economists.html.
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important as China in the Middle East as sources of capital investment and job creation, not to
mention fewer formal sources of aid and bilateral government support.
When it comes to foreign direct investment, aid, capital expenditure and job creation, China is
often characterized as the investor of choice in the Middle East. It is often erroneously labeled as
the region’s most important source of FDI. Certainly, China is a major source of FDI in a few
places, especially in the GCC. When Chinese investment does arrive, it usually targets the energy
sector and large government contracts. China's investment can be volatile, with surges and
then declines. When compared with American and European private investment efforts,
China spends less and creates fewer jobs in most of the Middle East, North Africa, and West
Asia.45 Indeed, the GCC states have higher capital expenditure and create more employment
across the Middle East and North Africa than China—and that’s not counting remittance flows,
aid, financial intervention such as central-bank deposits, and in-kind oil and gas transfers. China
is active as a regional investor and contractor where private capital doesn’t want to go—places
like Iran, Syria and, to a degree, Turkey. One notable exception is the United Arab Emirates,
where Chinese investment and contracts have surged since 2016. This skews the data and inflates
China’s reputation as a regional investor and source of capital. The view that China is the largest
investor in the Arab region overlooks the fact that Beijing has invested inconsistently over time,
and picks and chooses its engagement in the broader region, from Morocco to Pakistan. The
assertion also fails to mention that the GCC is a major source of FDI in that same geography, and
in the Horn of Africa.
China and the Gulf are linked and will continue to rely on each other for trade, investment, and
partnerships in the years ahead. But their partnerships are in no ways cemented on any
ideological basis or political or security pact. And as the energy exporters of the Gulf seek to
diversify their own economies and become more engaged in the production and expertise of
renewable energy, China could become less of a customer and less of an active local investor.
US Policy Recommendations
Instead of centering concern on China-Gulf or China-Middle East relations, we might better
frame the challenge as how to engage emerging market economies in their trade, energy, and
development needs, and to bridge policy and development finance options to support those
changes. A change in tone to recognize the vitality and centrality of growth outside of advanced
economies might also be a diplomatic advantage to the United States. There is also mutual
benefit to encouraging the growth of China+1 manufacturing and industrial capability across
emerging markets in Asia, Africa, and the Middle East.
Thank you for this opportunity and I look forward to addressing your questions.

*        *       *

China’s Strategic Objectives in the Middle East
Testimony before the US-China Economic and Security Review Commission Hearing on “China and the Middle East”
April 19, 2024

Dr. Jonathan Fulton
Associate Professor, Zayed University, Abu Dhabi, United Arab Emirates
Nonresident Senior Fellow, Scowcroft Middle East Security Initiative, Atlantic Council

The Middle East – North Africa (MENA) has emerged as an important strategic region for the People’s Republic of China (PRC), with a significant expansion of its interests and presence across the region.1 However, at this stage China remains primarily an economic actor there, with growing political and diplomatic engagement and little in the way of a security role. This economics-first approach has contributed to improved public perceptions of China across MENA; public polling data from the Arab Barometer consistently shows positive views of China as an external actor, with respondents from 8 out of 9 countries perceiving China more favorably than the US.2 At the same time, its modest involvement in regional political and security affairs, evident in its minimal response to Houthi strikes on maritime shipping, underscores its reluctance to play a more meaningful role in MENA, which has no doubt been recognized by governments that expected a more robust response given Beijing’s outsized economic presence.

This highlights an important point about how MENA features in the PRC’s broader strategic objectives. It is first and foremost a region where China buys energy, sells goods, and wins construction infrastructure contracts. These economic interests have not required a corresponding political or security role, and Chinese leaders have not indicated that they will do so; they benefit significantly from the US security architecture that underpins the region’s fragile status quo. China works closely with US allies and partners in MENA, especially the Gulf Cooperation Council states and Egypt, and in many regards Beijing’s interests in the Middle East have been consistent with those of the US.

At the same time, MENA has to be considered as part of a larger global strategy under which US- China interests diverge substantially. China’s more assertive foreign policy since the global financial crisis started under the leadership of Hu Jintao and has intensified under Xi Jinping.3 The 2017 US National Security Strategy identified China as a great power competitor, and the rivalry is playing out in MENA as elsewhere. Beijing has rolled out new global initiatives – the Global Development Initiative (GDI), Global Security Initiative (GSI), and Global Civilization Initiative (GCI), discussed

1 For an overview, see Jonathan Fulton (ed.), Routledge Handbook of China – Middle East Relations (Abingdon: Routledge, 2022).
2 Michael Robbins, “Public views of the U.S.-China competition in MENA,” Arab Barometer, July2022, https://www.arabbarometer.org/wp-content/uploads/ABVII_US-China_Report- EN.pdf.

3 See Susan Shirk, Overreach: How China Derailed Its Peaceful Rise (Oxford: Oxford University Press, 2022).

below4 – to present itself as a leader of the Global South, using a state-centered alternative to Western liberalism.

In this effort, the MENA is a region where China aims to establish a normative consensus consistent with Beijing’s preferences. As a result, we see several examples of PRC leaders promoting narratives that the US is unreliable, or that its presence in the region exacerbates tensions and conflict. After a January 2022 meeting with MENA officials, for example, Chinese Foreign Minister Wang Yi said the Middle East “is suffering from long-existing unrest and conflicts due to foreign interventions...We believe the people of the Middle East are the masters of the Middle East. There is no ‘power vacuum,’ and there is no need of ‘patriarchy from outside.’”5 Whereas in the preceding two decades the PRC rarely overtly challenged the US position in MENA, it has become a regular feature as Chinese leaders exploit pressure points between the US and regional actors in order to differentiate itself from the US and to create friction between Washington and its MENA partners and allies. This has been especially present in Chinese messaging since the October 7, 2023 Hamas attack on Israel, as PRC leaders have consistently used the crisis to undermine the US and present itself as a more reliable partner to the Arab world.6

China’s diplomatic activities in the Middle East

While it has not been widely recognized, China has developed a deep, broad and systematic approach to diplomatic engagement across MENA. It uses a range of bilateral and multilateral diplomatic tools, and these have been complemented in recent years with international organizations where Beijing has significant influence. It also has appointed special envoys for region-specific issues.

At the bilateral level, China has diplomatic relations with all regional countries. Several of these are enhanced by strategic partnerships, which are mechanisms to coordinate on regional and international affairs. Five MENA countries – Algeria, Egypt, Iran, Saudi Arabia, and the UAE – have been elevated to comprehensive strategic partners, the top level in China’s hierarchy of diplomatic relations. This results in the “full pursuit of cooperation and development on regional and international affairs.”7 To be considered for this level of partnership a country has to be seen as a major regional actor that also provides added value, such as Egypt’s control of Suez, or Saudi’s leadership role in global Islam and

4 See Michael Schuman, Jonathan Fulton and Tuvia Gering, “How Beijing’s Newest Global Initiatives Seek to Remake the World Order,” Atlantic Council, June 21, 2023, https://www.atlanticcouncil.org/in-depth-research-reports/issue-brief/how-beijings-newest-global- initiatives-seek-to-remake-the-world-order/

5 “Middle East Has No ‘Power Vacuum,’ Needs No ‘Foreign Patriarch’: Wang Yi,” Global Times, January 16, 2022, https://www.globaltimes.cn/page/202201/1246036.shtml
6 See Grant Rumley and Rebecca Redlich, “Tracking Chinese Statements on the Hamas-Israel Conflict,” The Washington Institute for Near East Policy, updated February 28, 2024, https://www.washingtoninstitute.org/policy-analysis/tracking-chinese-statements-hamas-israel- conflict

7 “Quick guide to China’s diplomatic levels,” South China Morning Post, January 20, 2016, http://www.scmp.com/news/china/diplomacy-defence/article/1903455/quick-guide-chinas- diplomatic-levels

energy markets.8 Therefore, when assessing China’s diplomatic efforts in MENA, these countries (Algeria to a lesser extent) are the load-bearing pillars of Beijing’s approach. They see more official visits, attract more investment, do more contracting, and generally support a wider range of China’s interests in the region. That China has comprehensive strategic partnerships with both Saudi Arabia and Iran means there are more frequent bilateral high-level meetings, no doubt contributing to China’s role in the Saudi-Iran rapprochement.

At the multilateral level, China uses the China Arab States Cooperation Forum, which includes all Arab League members, and the Forum on China Africa Cooperation, which includes nine Arab League members.9 These forums present China with regular ministerial-level meetings where they map out cooperation priorities. They also have several sub-ministerial level issue-specific working groups. The result is a relatively deep level of diplomatic engagement.

China has appointed special envoys for the Middle East, the Horn of African Affairs, and the Syrian Issue, all of which were designed to present the PRC as an actor with influence and interest in these issues, although the impact of each has been marginal.

Finally, two international organizations where China plays an influential role, BRICS and the Shanghai Cooperation Organization Forum, have admitted Middle Eastern states as members in recent years. BRICS expanded for the first time in 2023 to include Saudi Arabia, Egypt, Iran, the UAE, and Ethiopia, giving the organization a presence in MENA and the Horn. The SCO admitted Iran as a full member in 2023, a position it has coveted since 2005. Other MENA participants in the SCO are Bahrain, Egypt, Kuwait, Qatar, Saudi Arabia, and the UAE, all of which are dialogue partners. This does not make them SCO members; it is a position for countries that wish to participate in discussions with SCO members on specific issues that they have applied to join as dialogue partners.10 It could eventually result in full membership but that does not appear to be on the horizon for any Middle Eastern dialogue partners for now.

All in all, Chinese diplomacy has been highly active and quite successful laying the groundwork for a deeper presence in the Middle East.

China’s involvement in MENA conflict mediation

China’s efforts to position itself as a conflict mediator is part of a larger strategy, embedded in the GSI, to present the PRC as a leading global actor. As a 2023 report from MERICS cautioned, “China’s current mediation push seems to be largely a reflection of its geopolitical competition with the United

8 For more on China’s partnership diplomacy, see Georg Strüver, “China’s Partnership Diplomacy: International Alignment Based on Interests of Ideology,” The Chinese Journal of International Politics 10 (1) (2017), 31-65; Jonathan Fulton, “Friends with Benefits: China’s Partnership Diplomacy in the Gulf,” Project on Middle East Political Science: Shifting Global Politics and the Middle East, 34, (2019), pp. 33- 38.

9 See Dawn Murphy, “Chinese Diplomatic Outreach to MENA: Cooperation Forums and Special Envoys,” in Jonathan Fulton (ed.) Routledge Handbook on China-Middle East Relations, pp. 384-395 (Abingdon: Routledge, 2022).
10 Eva Seiwert, The Shanghai Cooperation Organization and China’s Strategy of Shaping International Norms, PhD Dissertation, Freie Universitat Berlin, 2021, p. 239.

States and its ambition to expand its global influence at the expense of the West.”11 In MENA as elsewhere, the results have been mixed. The Saudi-Iran rapprochement is an example of a low cost ‘win’ for China. It has been well documented that much of the negotiation that led to the March 2023 announcements in Beijing had been done through Iraqi and Omani efforts.12 China’s involvement appears to be as a great power sponsor that was broached during Xi Jinping’s December 2022 summit in Riyadh and further discussed during President Ebrahim Raisi’s visit to Beijing in February 2023. Given China’s comprehensive strategic partnerships with the Saudis and Iranians, it has significant diplomatic relations with both countries and was therefore the only major power that could play such a role. However, it has to be stressed that most of the groundwork had been laid before China’s involvement, and that the rapprochement itself was the result of domestic political and economic pressures within Saudi and Iran.

Given this highly publicized diplomatic ‘win’, Chinese analysis promoted a narrative of a “wave of reconciliation” in the Middle East as a result of Beijing’s efforts. Ding Long, a Middle East expert at Shanghai International Studies University, described China’s mediation diplomacy, guided by the GSI, as driving events in the Middle East in the wake or the Saudi-Iran deal:

Within a month since then, the Saudi-Iran rapprochement is like a key that opens the door to peace in this region. The warring parties in Yemen took a critical step toward a political solution; Bahrain and other Arab countries have restored diplomatic relations with Iran; Saudi Arabia and other Arab powers are interacting more frequently with Syria. A wave of reconciliation is also encouraging more joint efforts between China and the Middle East in pursuing peace.13

Shortly after the Saudi-Iran deal, the PRC announced that it was willing to wade into the Israel- Palestine conflict during a June 2023 visit from Palestinian President Mahmoud Abbas. Immediately following this, Israeli Prime Minister Benjamin Netanyahu announced that he had accepted an invitation to Beijing for October14; for obvious reasons the visit did not happen. China’s response to the Hamas attack, discussed below, has negated any prior work towards being a mediator on the issue; its relationship with Israel has been deeply damaged at this point and it is hard to see how Beijing could play a constructive role negotiating between the two. The March 2024 meeting in Doha between Chinese ambassador Wang Kejian and Hamas official Ismail Haniyeh further cements this.15 Any role China can play would be in support of Palestine and highly partisan.

11 Helena Legarda, “The Geopolitics of China’s Mediation Push,” MERICS China Security and Risk Tracker, May 31, 2023, https://merics.org/en/tracker/merics-china-security-and-risk-tracker- 022023
12 Niloufar Baghernia, “China’s Marginal Involvement in the 2023 Iran-Saudi Arabia Reconciliation,” Asian Affairs (2024), 1-18; Saeed Azimi, “The Story Behind China’s Role in the Iran-Saudi Deal,” Stimson Center, March 13, 2023, https://www.stimson.org/2023/the-story-behind-chinas-role-in- the-iran-saudi-deal/

13 Ding Long, “Global Security Initiative Drives Forward Deeper Reconciliation in Middle East,” Global Times, April 26, 2023, https://www.globaltimes.cn/page/202304/1289834.shtml
14 “Netanyahu Says Invited to China, with US-Israel Ties Tense,” Arab News, June 27, 2023, https://www.arabnews.com/node/2329116/middle-east

15 Dewey Sim, “Chinese Envoy Meets Hamas Political Leader in Qatar to Discuss ‘Gaza Conflict and Other Issues’,” South China Morning Post, March 19, 2024,

In any case, just over a year after Beijing’s first successful foray into Middle East diplomacy, the region is less stable that it has been in recent memory, and China’s efforts at mediation have had little tangible impact. It has little influence on Iran or its nonstate partners of Hamas, the Houthis, or Hezbollah, and is not seen as credible by Israel.16 Generally, its response to events since the Hamas attack have made China look very transactional and self-interested in the region, rather than a responsible extra- regional power with substantial Middle East interests.

A point worth considering on this topic is that China is a relative newcomer to Middle East political diplomacy. As described above, it is primarily an economic actor in the region, and despite its special envoys, cooperation forums, and strategic partnerships, it does not have the depth of regional specialization that the US or European countries do, given their longstanding involvement in MENA. As China develops a deeper pool of MENA talent this will change, but it is early days. Its area studies programs in universities and think tanks are not nearly as developed as their US counterparts, making for a much shallower pool of expertise.

China’s response to the Hamas attack on Israel

The Hamas attack on Israel had significant repercussions for China’s approach to the MENA and resulted in a more blatantly realpolitik approach to the Israel-Palestine conflict. China’s ambition to play a role in resolving this conflict was based largely on the ‘peace-through-development’ framework of the GDI/GSI.17 The attack demonstrated the need for a more robust response, but in the wake of the attack the limits of Beijing’s normative approach were evident. Since then, China has not pursued a mediator role, siding firmly with Palestine while frequently condemning Israel and the US. Pointedly, it did not blame Hamas for the attack and has seemingly made the ‘one man’s terrorist is another man’s freedom fighter’ argument; during International Court of Justice hearings Ma Xinmin, a legal advisor for the Chinese Ministry of Foreign Affairs, argued that Palestinian acts of violence against Israelis are legitimate “use of force to resist foreign oppression and to complete the establishment of the Palestinian state.”18

A point worth considering is that within China, the Israel-Palestine conflict resonates differently than it does in the US and other Western liberal democracies. The demographic composition of the West with large immigrant populations means that there are significant Jewish, Muslim, Christian and Arab

https://www.scmp.com/news/china/diplomacy/article/3255898/chinese-envoy-meets-hamas- political-leader-qatar-discuss-gaza-conflict-and-other-issues
16 Parisa Hafezi and Andrew Hayley, “China Presses Iran to Rein in Houthi Attacks in Red Sea, Sources Say,” Reuters, January 26, 2024, https://www.reuters.com/world/middle-east/china- presses-iran-rein-houthi-attacks-red-sea-sources-say-2024-01-26/; Jonathan Fulton, “China Doesn’t Have as much Leverage in the Middle East as One Thinks – at Least when it Comes to Iran,” Atlantic Council, February 1, 2024, https://www.atlanticcouncil.org/blogs/menasource/china- mena-leverage-iran-houthis-yemen/

17 On ‘peace through development’, see Sun Degang and Zhang Jieying, “‘Peace Through Development’: China’s Peace Initiative for the Middle Eastern Conflict Resolution,” China Quarterly of International Strategic Studies (2021), 7(4), 383-408.
18 “China at the World Court: Palestinians Have the Right to ‘Armed Struggle’ against Israelis,” The Times of Israel, February 22, 2024, https://www.timesofisrael.com/liveblog_entry/china-at-the- world-court-palestinians-have-the-right-to-armed-struggle-against-israelis/

communities for whom the Israel – Palestine conflict is a major issue that animates voters, NGOs, and lobbyists. Democratic leaders are expected to have positions that represent their constituents, and Middle East policy has to try to thread the needle of interests and values in a manner that balances citizens’ often deeply held convictions. In China, religious minorities - especially of the Abrahamic faiths - are comparatively insignificant in the demography, and the immigrant population from the Middle East is virtually non-existent. The Party has increased repression against Muslims, Jews, and Christians during the Xi Jinping era, making overt political action from them incredibly costly.19 This, combined with the fact that China has an authoritarian government, means the issue if Israel and Palestine does not mobilize Chinese citizens like it does in the US, and the government is less concerned with being responsive to citizens’ concerns. It is, therefore, a purely geopolitical issue. The CCP can use its policy in the region to advance its own interests while challenging the US and its Western allies without the additional consideration of managing domestic pressures. Its messaging on the war in Gaza is therefore more about China presenting itself as an alternative to the US as a global leader than it is about the war itself.

China’s global initiatives and international order

At this point China’s three global initiatives (GDI, GSI, GCI) are following the same early-stage trajectory of the Belt and Road Initiative (BRI). When it was announced in 2013 there was little understanding or awareness of it outside of China, and within China ministries, agencies and municipalities spent most of 2014 and 2015 incorporating the BRI into their missions.20 The 2015 white paper on the BRI21 and the 2017 Belt and Road Forum enhanced its global profile. The GDI, GSI, and GCI have been appearing in joint communiques across MENA and are cited by local actors as useful contributions from China, but they do not appear to be widely understood yet, nor do many local governments seem to be aware of them. It is likely that the GSI first came to a wider audience when then-Foreign Minister Qin Gang described the Saudi -Iran rapprochement as “a case of best practice for promoting the Global Security Initiative.”22

However,thenormativeframeworkoftheseinitiativeshasappealforregionalgovernments. Whereas liberal norms of global governance focus on democracy, free markets, human rights, and international institutions, China’s trio of initiatives promote sovereignty, territorial integrity, self-determination, and

19 “Government Policy toward Religion in the People’s Republic of China: A Brief History,” Pew Research Center, August 30, 2023, https://www.pewresearch.org/religion/2023/08/30/government-policy-toward-religion-in-the- peoples-republic-of-china-a-brief-history/

20 Michael Swain, “Chinese Views and Commentary on the ‘One Belt, One Road’ Initiative,” China Leadership Monitor 47:2 (2015
21 National Development and Reform Commission, Ministry of Foreign Affairs, and Ministry of Commerce of the People’s Republic of China (2015) Vision and actions on jointly building Silk Road Economic Belt and 21st-Century Maritime Silk Road. March, https://www.fmprc.gov.cn/eng/topics_665678/2015zt/xjpcxbayzlt2015nnh/201503/t20150328_7 05553.html. Accessed 18 December 2023.

22 Embassy of the People’s Republic of China in the Islamic Republic of Iran, “Qin Gang Has a Group Meeting with Saudi Arabia’s Foreign Minister Faisal bin Farhan Al Saud and Iranian Foreign Minister Hossein Amir-Abdollahian,” April 6, 2023, http://ir.china- embassy.gov.cn/eng/zyxw/202304/t20230409_11056460.htm

noninterference in the domestic affairs of states. Essentially, it rejects the universalism of liberal norms and promotes a statist vision instead. For governments and societies long frustrated by the inconsistent promotion of liberal values from the west, or by those that reject liberalism altogether, China’s model is attractive.

The impact of China’s global initiative and the BRI should also be considered as a consequence of a global order transition. During the Cold War, bipolarity meant governments in need of development assistance could turn either to the West or the Soviets. The end of the Cold War meant the developing world was limited to Western institutions underpinned by liberal values that imposed conditions, often inconsistent with local norms. The emergence of China and its global initiatives provides alternatives, and that Beijing presents these initiatives in contrast to liberal institutions is appealing to many governments in the Middle East.

The issue of Xinjiang

The CCP identified its ‘core interests’ in a 2011 white paper, “China’s Peaceful Development”. These core interests are state sovereignty, national security, territorial integrity, national reunification, maintenance of its political system and social stability, and maintaining safeguards for sustainable economic and social development. Importantly, all of these are domestic concerns. In practical terms, anything another country does to undermine these – especially including support for independence movements in Xinjiang, Tibet, Hong Kong and Taiwan – will damage the relationship. The CCP faces numerous challenges from issues of domestic governance, and pressure from within is the most significant threat to its continued rule. When foreign governments apply pressure on Beijing on domestic issues there is pushback, typically in the form of coercive economic statecraft.23

All of this is to say that Middle Eastern governments have shown no inclination to speak or act on the issue of repression of Uyghurs or other Muslim minorities in China. No regional government wants to jeopardize a bilateral relationship with one of its most important trading partners on an issue that few feel is relevant to their own core interests of building sustainable economies and improving governance in the face of significant domestic pressures. Engagement with China is largely seen as an opportunity for regional governments to address these challenges, and China’s own experience of development since the Reform Era began in 1978 is perceived as a model for this.

Another consideration here is that Beijing frames its repression of Uyghurs as a response to a conservative religious ideology that promotes separatism and has used terrorism in an attempt to establish an independent state. In doing so, it addresses a concern for many Middle Eastern governments, most of which are deeply concerned about the spread of political Islam in their own countries. As such, the issue is less about any notion of pan-Islamic solidarity than it is about challenges to the state from an ideology seen with deep hostility from regional governments.

Policy Recommendations

• Provide explicit support for MENA countries in their development programs.

23 Evan A. Feigenbaum, “Is Coercion the New Normal in China’s Economic Statecraft?” Macro Polo, July 25, 2017, https://macropolo.org/coercion-new-normal-chinas-economic-statecraft/

  • Encourage more investment into MENA from private US companies.

  • Improved messaging on what the US does in the region beyond the realm of security.

  • Improved messaging on how MENA features in US interests and policy.

  • Enhance public diplomacy – bring more MENA students to US on training and education

    programs.

  • Draw upon the narratives of other extra-regional allies and partners that have interests in

    MENA and have also had challenges in dealing with China. They can help with the messaging – what have their experiences with China been? What issues should MENA countries be considering?

  • Where possible, align approaches to MENA with US allies to provide a greater range of investment, development, and trade options.

*       *       *

China’s Military Objectives and Operational Experience in the Middle East
Grant Rumley
Meisel-Goldberger Fellow, Diane and Guilford Glazer Foundation Program on Great Power
Competition and the Middle East
The Washington Institute for Near East Policy
Testimony submitted to the U.S.-China Economic and Security Review Commission
April 19, 2024
Rumley USCC Testimony 2
Distinguished commissioners and staff, thank you for the invitation to present my testimony on
this important topic. It is an honor to testify alongside the experts on these panels today. My
name is Grant Rumley and I am the Meisel-Goldberger Fellow at the Washington Institute for
Near East Policy, where I focus on military and security issues in our Diane and Guilford Glazer
Family Program on Great Power Competition and the Middle East.
Today my testimony will focus on China’s military and security presence in the region. I have
structured this testimony to answer the commissioners’ questions directly.
What are China’s military interests and/or objectives in the Middle East? How important are
these compared to its interests in other regions of the world? Please be sure to address the
importance of securing sea lines of communication (SLOCs) in your answer.
Broadly speaking, China has five core interests in the Middle East. The first is in securing its
access to the region’s energy resources. China is careful to not over-rely on any single source or
form of energy to meet its domestic needs, but the Middle East is nevertheless a key source for
its energy supply. In 2022, China produced 5.1 million barrels of petroleum and other liquid
products per day while importing 10.2 million barrels per day.1 Middle Eastern countries
represented a significant portion of these imports, making up 56% of China’s crude oil and
condensate imports, 29% of its petroleum product imports, and 15% of its natural gas imports.
2
The second interest is in advancing China’s non-energy trade and investment. China is the top
trading partner for nearly every country in the Middle East, and since 2005 has poured over $250
billion in investment and construction projects into the region.3 The Middle East has also been a
leading recipient of investment under China’s Belt and Road Initiative (BRI): in 2023 the region
was second only to Africa globally.
4 And, of course, the region is a transit point for a majority of
China’s exports to Africa and Europe.
5 Considering these economic ties to the region, China’s
third interest is in securing the sea lanes of communication and free flow of commerce in and out
of the region. While it has not joined U.S.
-led military efforts to counter efforts by Yemen’s
Houthi rebels to close the Red Sea to maritime traffic, Beijing has reportedly engaged in
diplomatic efforts to protect its own shipping in those waterways.
1 “China Country Analysis Brief,” U.S. Energy Information Agency, November 2023.
https://www.eia.gov/international/analysis/country/CHN
2 Ibid.
3 “China Global Investment Tracker,” American Enterprise Institute (AEI), accessed March 2024.
https://www.aei.org/china-global-investment-tracker/
4 Wang, Christoph Nedopil, “China Belt and Road Initiative (BRI) Investment Report 2023,” Green Finance &
Development Center, February 5, 2024. https://greenfdc.org/china-belt-and-road-initiative-bri-investment-report-
2023/
5 “Chinese Money is Behind Some of the Arab World’s Biggest Projects,” The Economist, April 20, 2019.
https://www.economist.com/middle-east-and-africa/2019/04/20/chinese-money-is-behind-some-of-the-arab-worlds-
biggest-projects
Rumley USCC Testimony 3
Beyond the economic, China’s fourth interest in the region lies in what the West would consider
counterterrorism, but for Beijing equates to both protecting its assets in the region from threats
from violent non-state actors as well as ensuring that groups in the region do not threaten China’s
internal domestic stability. China has looked to the region for approval of – and even at times
cooperation in – its persecution of the Uyghur Muslims. Finally, China’s fifth interest in the
region is in utilizing it as a platform to advance its image as a global power. China has long-
viewed the region as an important proving ground for global powers, and has trumpeted its
diplomatic achievements – such as the Saudi Arabia-Iran agreement – as an example of China’s
global standing.
Like many great powers preceding it, China has gradually developed a military and security
presence to protect its interests abroad. In recent years, Chinese leaders have directed the
People’s Liberation Army (PLA) to increase its forward presence in order to project power,
protect commercial interests, and improve the image of the state. Chinese President Hu Jintao
first directed the PLA to begin focusing on “new historic missions” in 2004, urging the military
to begin preparing to protect Chinese interests beyond its borders.6 The 2010 Defense White
Paper directed the PLA to safeguard China’s “maritime rights and interests.” 7 Likewise, the
2015 paper on China’s Military Strategy called for the development of a modern maritime force
that could “protect the security of strategic SLOCs and overseas interests.”8 China’s 2019
Defense White Paper took this concept a step further, declaring that “to address deficiencies in
overseas operations and support” the PLA “builds far seas forces, develops overseas logistical
facilities, and enhances capabilities in accomplishing diversified military tasks.”9
Given the importance of the Middle East to China’s economy, it is perhaps only natural that
Beijing would increasingly deploy its security apparatus to the region to protect these interests.
Today, China’s military and security presence in the region is comprised of three main efforts:
Traditional military presence and security cooperation. China has rarely deployed its
troops beyond the Indo-Pacific in recent years, but when it has deployed them it has been
to the Middle East. In response to the wave of piracy in the Red Sea and Gulf of Aden in
2007-2008, China began deploying its Naval Escort Task Force (NETF) in December
2008. As described by Chinese military officials in 2010, the mission was “mainly
6 Hartnett, Daniel M., “The ‘New Historic Missions’: Reflections on Hu Jintao’s Military Legacy,” in “Assessing
the People’s Liberation Army in the Hu Jintao Era,” ed. Roy Kamphausen et al., U.S. Army War College Press,
2014.
7 “China’s National Defense in 2010,” Information Office of the State Council, The People’s Republic of China,
March 2011. https://english.www.gov.cn/archive/white_paper/2014/09/09/content_281474986284525.htm
8 “China’s Military Strategy,” Information Office of the State Council, The People’s Republic of China, May 2015.
https://english.www.gov.cn/archive/white_paper/2015/05/27/content_281475115610833.htm
9 “China’s National Defense in the New Era,” Information Office of the State Council, The People’s Republic of
China, July 24, 2019.
https://english.www.gov.cn/archive/whitepaper/201907/24/content_WS5d3941ddc6d08408f502283d.html
Rumley USCC Testimony 4
charged with safeguarding the security of Chinese ships and personnel passing through
the Gulf of Aden and Somali waters.”10 This deployment is ongoing, and today represents
China’s longest continuous deployment beyond its borders.11 Since its inception it has
kept largely the same configuration of two surface combatants and a refueling ship,
though at times has augmented this presence with unconventional forces (in 2014, for
instance, the NETF was accompanied by a Song-class diesel-electric submarine).
12
Sustaining the NETF operationally led China to pursue an agreement with Djibouti for
the establishment of its first overseas base in 2017. This base, just miles away from the
U.S. base at Camp Lemonnier, became the primary support node for supporting the
NETF as well as other Chinese military operations in the region, whether that is joint
training exercises with regional partners, the 2014 escort of a ship carrying Syrian
chemical weapons, or the 2015 evacuation of Chinese civilians from Yemen.
13 Upon its
establishment, the DoD noted the facility included “barracks, an underground facility, a
tarmac and eight hangars for helicopter and UAV operations,” but that it notably lacked
“a dedicated naval berthing space, requiring PLA ships to dock at the commercial port [in
Doraleh].”14 Since its founding, the base’s capabilities have been gradually expanded.
The base originally included a contingent of PLAN Marine Corps (PLANMC). In 2020,
the U.S. noted a PLANMC special operations forces (SOF) unit had joined the base.15
The base’s pier has likewise been expanded and in 2022 supported its first resupply of a
PLAN supply ship.16 According to the U.S., the pier is now likely “able to accommodate
the PLA Navy’s aircraft carriers, other large combatants, and submarines.”17
The base and NETF represent the core of China’s traditional military footprint in the
region. It should be noted this is still modest in comparison to the U.S. footprint in the
region. China’s presence centers around several narrow objectives: protect Chinese
10 “China’s National Defense in 2010.”
11 “Annual Report to Congress: Military and Security Developments Involving the People’s Republic of China
2021,” U.S. Department of Defense, 2021. https://media.defense.gov/2021/Nov/03/2002885874/-1/-1/0/2021-
CMPR-FINAL.PDF
12 Herzinger, Blake and Ben Lefkowitz, “China’s Growing Naval Influence in the Middle East,” The Washington
Institute for Near East Policy, February 17, 2023. https://www.washingtoninstitute.org/policy-analysis/chinas-
growing-naval-influence-middle-east
13 Shah, Khushbu and Jason Hanna, “Chinese Ship Arrives to Help in Removal of Syrian Chemical Weapons
Materials,” CNN, January 8, 2014. https://www.cnn.com/2014/01/08/world/asia/china-syria-chemical/index.html;
Rajagopalan, Megha and Ben Blanchard, “China Evacuates Foreign Nationals from Yemen in Unprecedented
Move,” Reuters, April 3, 2015. https://www.reuters.com/article/idUSKBN0MU09M/
14 “Annual Report to Congress: Military and Security Developments Involving the People’s Republic of China
2018,” U.S. Department of Defense, 2018. https://media.defense.gov/2018/Aug/16/2001955282/-1/-1/1/2018-
CHINA-MILITARY-POWER-REPORT.PDF
15 “Annual Report to Congress: Military and Security Developments Involving the People’s Republic of China
2023,” U.S. Department of Defense, 2023. https://media.defense.gov/2023/Oct/19/2003323409/-1/-1/1/2023-
MILITARY-AND-SECURITY-DEVELOPMENTS-INVOLVING-THE-PEOPLES-REPUBLIC-OF-CHINA.PDF
16 Ibid.
17 Ibid.
Rumley USCC Testimony 5
shipping interests, project Chinese military might (typically via port calls and joint
exercises), and be prepared to support Chinese commercial entities in any crisis scenario.
Chinese officials likely see this current footprint as sufficient to meet these objectives.
Investments in critical infrastructure. One way China’s security presence manifests itself
is in investments in large, critical infrastructure projects. These can typically include but
are not limited to ports, industrial parks, and airports. This is a uniquely Chinese security
footprint, as these investments reflect a blending of civilian enterprises with government
access and control. Chinese regulations require Chinese companies abroad to be prepared
to service the Chinese military. For instance, the 2010 National Defense Mobilization
Law gives broad powers to the military over commercial assets, mandating that “all
citizens and organizations are obligated to accept the requisition of civilian resources.”18
The 2016 National Defense Transportation Law further improved the PLA’s legal ability
to commandeer civilian entities in times of crisis – in the words of one analyst the law
“placed obligations on Chinese transportation enterprises located abroad or engaged in
international shipping” and “required them to provide logistical support for PLA forces
operating overseas.”19
One former Biden administration official has noted that China’s investment in ports “are
made cautiously and with an eye toward their future potential for military access.”20
According to some analysts, Chinese firms now own or operate over a hundred ports
around the world, and the PLAN has made port calls at over a third of these ports.21 Of
course, the type of servicing to the PLA a Chinese owned or operated foreign port could
provide is theoretically limited by host nation considerations and the capabilities of the
port in question. Still, that these regulations provide the legal framework for Chinese
commercial entities to support Chinese military operations presents a different dilemma
for measuring China’s overseas power projection.
In the Middle East, this phenomenon is most often observed in Chinese investments in
ports and industrial zones. Chinese firms have signed operating agreements at ports in
18 Mulvenon, James, “2010 National People’s Congress Highlights: Defense Budgets and the New National Defense
Mobilization Law,” The Hoover Institution, 2010.
https://www.hoover.org/sites/default/files/uploads/documents/CLM32JM.pdf
19 Kennedy, Conor M., “China Maritime Report No. 4: Civil Transport in PLA Power Projection,” U.S. Naval War
College, 2019. https://apps.dtic.mil/sti/trecms/pdf/AD1148864.pdf
20 Doshi, Rush, “The Long Game: China’s Grand Strategy to Displace American Order,” Oxford University Press,
2021. 207.
21 Kardon, Isaac B., “Statement for the Record Before the U.S.-China Economic and Security Review Commission
Hearing: ‘China’s Military Diplomacy and Overseas Security Activities’,” U.S.-China Economic and Security
Review Commission, January 26, 2023. https://www.uscc.gov/sites/default/files/2023-
01/Isaac_Kardon_Statement_for_the_Record.pdf
Rumley USCC Testimony 6
Israel, Egypt, the UAE, Turkey, Saudi Arabia, Iraq, Kuwait, Morocco, and Algeria.22
China has invested in industrial parks in Egypt, Oman, Saudi Arabia, and the UAE.23
China frames these investments as taking place on the “Maritime Silk Road” between
Beijing and Europe, further solidifying connectivity and control for Chinese commerce.
At the opening of the 2018 China-Arab States Cooperation Forum (CASCF) summit in
Beijing, China’s foreign minister Wang Yi described a vision of a network of “industrial
park-port interconnection” across the region.24
Arms transfers. Like many countries, China has utilized arms sales and transfers to
advance its defense industrial base, gain leverage in relationships, and boost its military’s
image. For decades, China was a minor player in the global arms market given its
reliance on arms imports. Yet China’s decades-long defense modernization effort has
gradually reached a point where its indigenously produced platforms are becoming
competitive on the global market. In 2019, the U.S. noted China was the world’s fastest-
growing global arms exporter.25 Today China markets and sells a wide variety of
platforms, including fighter jets, advanced missiles, and naval vessels. According to the
Stockholm International Peace Research Institute (SIPRI), China was the fourth largest
global arms exporter from 2019-2023, behind the U.S., France, and Russia.26
Like many arms exporters, China has found the Middle East to be an appealing market
for arms sales. Historically, the Middle East provided a boost to Chinese defense
industry: in the 1980s, sales of fighter jets to Iraq and Iran rocketed Beijing to briefly
becoming the fourth largest global arms exporter at the end of the Cold War.27 Though
that was short-lived, in recent years China has made slow but steady progress breaking
back into the market through a shrewd marketing strategy. The appeal for Beijing is two-
fold: the region is consistently home to some of the top arms importers in the world,
22 Sly, Liz, “China Has Acquired a Global Network of Strategically Vital Ports,” The Washington Post, November 6,
2023. https://www.washingtonpost.com/world/interactive/2023/china-ports-trade-military-navy/
23 Fulton, Jonathan, “China’s Gulf Investments Reveal Regional Strategy,” The Arab Gulf States Institute in
Washington, July 29, 2019. https://agsiw.org/chinas-gulf-investments-reveal-regional-strategy/
24 “Wang Yi: China and Arab States Should Jointly Forge the Cooperation Layout Featuring ‘Industrial Park-Port
Interconnection, Two-Wheel and Two-Wing Approach’,” Ministry of Foreign Affairs of the People’s Republic of
China, July 10, 2018.
https://www.fmprc.gov.cn/mfa_eng/gjhdq_665435/2675_665437/2903_663806/2905_663810/201807/t20180712_5
36469.html
25 “Annual Report to Congress: Military and Security Developments Involving the People’s Republic of China
2019,” U.S. Department of Defense, 2019. https://media.defense.gov/2019/May/02/2002127082/-1/-
1/1/2019_CHINA_MILITARY_POWER_REPORT.pdf
26 Wezeman, Pieter D., Katarina Djokic, Mathew George, Zain Hussain, Siemon T. Wezeman, “Trends in
International Arms Transfers, 2023,” Stockholm International Peace Research Institute, March 2024.
https://www.sipri.org/publications/2024/sipri-fact-sheets/trends-international-arms-transfers-2023
27 Rumley, Grant, “China’s Security Presence in the Middle East: Redlines and Guidelines for the United States,”
The Washington Institute for Near East Policy, October 2022. https://www.washingtoninstitute.org/policy-
analysis/chinas-security-presence-middle-east-redlines-and-guidelines-united-states
Rumley USCC Testimony 7
many of whom have security partnerships with the U.S. that China can attempt to
undermine. China has wisely offered platforms the U.S. has not generally offered, such as
armed UAVs, on terms and conditions the U.S. typically does not match. As the U.S. has
noted, “many Chinese systems are offered with enticements such as gifts, donations, and
flexible payment options.”28
Today, China has made inroads selling to several countries in the region. The top
purchasers of Chinese weaponry between 2011 and 2021 were Saudi Arabia, Sudan, the
UAE, Qatar, and Iran, according to SIPRI.29 Chinese platforms are generally of a lesser
quality, but that has not stopped customers from purchasing. The CH-4 UAVs purchased
by Iraq were largely sidelined due to crashing or maintenance issues during the country’s
fight against the Islamic State, while similar Chinese UAVs kept crashing for Algeria and
the UAVs purchased by Jordan were eventually resold.30 Yet Chinese UAVs continue to
be sold across the region, including to Egypt, the UAE, and Saudi Arabia, the latter of
which is due to take possession of the Wing Loong-10 UAVs this year.31 At the World
Defense Expo hosted by Saudi Arabia in February, China sent over 70 defense companies
(second only to Saudi firms) to market their platforms and flew an exhibition of the J-10
fighter jets, the first time they’ve demonstrated the J-10s at an expo abroad.32 Regional
customers understand the trade-offs with Chinese platforms, but still consider them for a
number of reasons, including gaining access to Chinese technology, securing a typically
lower price point, fostering a security relationship with China, expressing dissatisfaction
with its other arms suppliers, and/or operating weaponry without end-use restrictions.
What range of military activities does the People’s Liberation Army (PLA) undertake in the
Middle East? Please include the following in your answer:
a. PLA Navy’s “counter-piracy” task force in the Gulf of Aden;
As discussed above, the NETF stemmed from a realization in Beijing that China’s overseas
economic interests were subject to the volatility of the region. The spate of piracy in the Red Sea
in the late 2000s also affected China: several Chinese merchant vessels were either hijacked or
28 “Annual Report to Congress: Military and Security Developments Involving the People’s Republic of China
2019.”
29 Rumley, “China’s Security Presence in the Middle East.”
30 Rumley, “China’s Security Presence in the Middle East.”
31 Parakala, Askshara, “WDS 2024: AVIC WL-10B to be Delivered to Royal Saudi Air Force,” Janes, February 9,
2024. https://www.janes.com/defence-news/news-detail/wds-2024-avic-wl-10b-to-be-delivered-to-royal-saudi-air-
force
32 Meyer, Henry and Christine Burke, “China Grabs Spotlight with Major Presence at Saudi Weapons Show,”
Bloomberg, February 7, 2024. https://www.bloomberg.com/news/articles/2024-02-07/china-grabs-spotlight-with-
major-presence-at-saudi-weapons-show?embedded-checkout=true
Rumley USCC Testimony 8
attacked by Somali pirates in the Red Sea and Indian Ocean.33 When the Libyan civil war
erupted in 2011 China was forced to conduct a massive evacuation of over 30,000 of its citizens
in the country and in the immediate aftermath Chinese officials were primarily focused on
tallying up all the millions lost in investment in the country.34 Establishing and deploying a
presence to mitigate these security concerns became a crucial imperative for Beijing. As Xi
Jinping said at the start of his third term as president: “security is the bedrock of development,
while stability is a prerequisite for prosperity.”35
In 2022, Chinese state media claimed that since the NETF began, the PLAN has deployed more
than a hundred ships and 30,000 service members in escorting over 7,000 commercial ships.36 As
piracy attacks gradually decreased in the years following its initial 2008 deployment, so too did
the NETF’s escort missions. As of 2020, the NETF had escorted just forty-nine ships according
to the U.S.37 Yet from the success of the NETF came the establishment of the PLA logistics base
in Djibouti, and from there the PLAN has supported other traditional military options in the
region, including the 2013 escort of a ship removing chemical weapons from Syria, the 2015
evacuation of Chinese nationals from Yemen’s Port of Aden, and the 2023 evacuation of
Chinese nationals from Sudan to Saudi Arabia.
38 The PLAN’s 46th iteration of the NETF
departed China in February 2024 for the region and follows a routine formula: two surface
combatants and a supply ship depart China while the previous NETF finishes its deployment to
the region, thus providing a near continuous presence in the region.39
b. Chinese participation in peacekeeping operations; and
33 “China to Send Warships to Gulf of Aden,” France 24, December 21, 2008.
https://www.france24.com/en/20081221-china-send-warships-gulf-aden-; Rice, Xan, “Somali Pirates Capture
Chinese Ship and 25 Crew in Indian Ocean,” The Guardian, Oct 19, 2009.
https://www.theguardian.com/world/2009/oct/19/somali-pirates-hickjack-chinese-ship
34 Collins, Gabe and Andrew S. Erickson, “Implications of China’s Military Evacuation of Citizens from Libya,”
The Jamestown Foundation, March 11, 2011. https://jamestown.org/program/implications-of-chinas-military-
evacuation-of-citizens-from-libya/; Jingjing, Huang, “China Counting Financial Losses in Libya,” The Global
Times, March 4, 2011. https://www.globaltimes.cn/content/629817.shtml
35 Law, Elizabeth, “Security is the Foundation for China’s Development: President Xi,” The Straits Times, March
13, 2023. https://www.straitstimes.com/asia/east-asia/security-is-the-foundation-for-china-s-development-president-
xi
36 “Chinese Naval Escort Task Forces Conduct Mission Handover at Gulf of Aden,” PLA Daily, June 13, 2022.
http://english.pladaily.com.cn/view/2022-06/13/content_10162772.htm
37 “Annual Report to Congress: Military and Security Developments Involving the People’s Republic of China
2020,” U.S. Department of Defense, 2020. https://media.defense.gov/2020/Sep/01/2002488689/-1/-1/1/2020-DOD-
CHINA-MILITARY-POWER-REPORT-FINAL.PDF
38 Shah and Hanna, “Chinese Ship Arrives to Help in Removal of Syrian Chemical Weapons Materials.”; “Yemen
Crisis: China Evacuates Citizens and Foreigners from Aden,” BBC, April 3, 2015.
https://www.bbc.com/news/world-middle-east-32173811; Xuanzun, Liu and Guo Yuandan, “PLA Navy’s Routine
Escort Operations Not Related to Regional Situation: Spokesperson,” The Global Times, February 29, 2024.
https://www.globaltimes.cn/page/202402/1307939.shtml
39 Xuanzun and Yuandan, “PLA Navy’s Routine Escort Operations Not Related to Regional Situation:
Spokesperson.”
Rumley USCC Testimony 9
China views peacekeeping operations as a useful way to improve its image, gain military
experience, and in some cases, protect its overseas economic interests. China has participated in
UN PKOs since 1990, and Chinese officials claim they have sent over 50,000 peacekeepers to 20
countries (notably suffering losses of 25 Chinese peacekeepers) in the years since.
40 China also
offers training to foreign peacekeepers at its academies.41 In 2015, Xi Jinping offered 8,000
Chinese soldiers as potential available peacekeepers in his General Assembly address, yet as of
November 2023 China had only 2,267 peacekeepers deployed on service with the UN.
42 The
majority of China’s peacekeepers are deployed to Africa, specifically in countries with sizable
Chinese investments.43 In the Middle East, 409 Chinese peacekeepers are currently deployed to
south Lebanon in support of the UN Interim Force in Lebanon (UNIFIL), while 5 peacekeepers
are deployed to Jerusalem as part of the UN Truce Supervision Organization (UNTSO).44
c. Naval and other military exercises with regional partners
Naval diplomacy is a relatively new phenomenon for China. The PLAN only first demonstrated
its capability as a blue water navy in a 2002 circumnavigation of the globe, and in 2004 was still
unable or unwilling to provide maritime support to Indonesia following the tsunami.45 The
PLAN made only eleven foreign port calls from 2003 to the establishment of the NETF in 2008.
In 2015 alone, the PLAN conducted forty port calls.46 The establishment of the NETF and its
base in Djibouti has likewise expanded China’s operating environment and provided a
foundation for further military operations in the region, including naval exercises. The PLAN has
conducted joint naval exercises in the region with Iran, Saudi Arabia, Egypt, Russia, and
Pakistan.47 Some of these exercises are more symbolic than practical, such as the recent joint
exercise with Iran and Russia that featured tactical maneuvering drills and a hostage rescue
40 “Foreign Ministry Spokesperson Mao Ning’s Regular Press Conference on May 30, 2023,” Embassy of the
People’s Republic of China in the United States of America, May 30, 2023. http://us.china-
embassy.gov.cn/eng/fyrth/202305/t20230530_11086032.htm
41 Zhou, Bo, “How China can Improve UN Peacekeeping,” Foreign Affairs, November 15, 2017.
https://www.foreignaffairs.com/articles/china/2017-11-15/how-china-can-improve-un-
peacekeeping?check_logged_in=1
42 Note: Chinese officials claim they’ve made good on Xi’s pledge by establishing a stand-by force of 8,000 PLA
troops ready to contribute to PKOs. “China’s Xi Says to Commit 8,000 Troops for UN Peacekeeping Force,” CNBC,
September 28, 2015. https://www.cnbc.com/2015/09/28/chinas-xi-says-to-commit-8000-troops-for-un-
peacekeeping-force.html; “Troop and Police Contributors,” United Nations Peacekeeping, November 30, 2023.
https://peacekeeping.un.org/en/troop-and-police-contributors
43 Dyrenforth, Thomas, “Beijing’s Blue Helmets: What to Make of China’s Role in UN Peacekeeping in Africa,”
Modern War Institute at West Point, August 19, 2021. https://mwi.westpoint.edu/beijings-blue-helmets-what-to-
make-of-chinas-role-in-un-peacekeeping-in-africa/
44 “Troop and Police Contributors,” United Nations Peacekeeping.
45 Erickson, Andrew S. and Justin D. Mikolay, “Welcome China to the Fight Against Pirates,” USNI Proceedings,
March 2009. https://www.usni.org/magazines/proceedings/2009/march/welcome-china-fight-against-pirates
46 McCaslin, Ian Burns, Andrew S. Erickson, “The Impact of Xi-Era Reforms on the Chinese Navy,” Chairman Xi
Remakes the PLA, National Defense University Press, 2019.
https://ndupress.ndu.edu/Portals/68/Documents/Books/Chairman-Xi/Chairman-Xi.pdf
47 Rumley, “China’s Security Presence in the Middle East.”
Rumley USCC Testimony 10
scenario.
48 Others, like the 2019 three-week joint counter-piracy exercise with Saudi Arabia, are
more sophisticated and have led to reciprocal exercises in China.49 Some have expanded beyond
the maritime domain, such as the first-ever joint China-UAE air exercise in Xinjiang in August
2023.
50 All are designed to showcase the capabilities of the Chinese military, build up PLA
experience, and improve China’s image as a security partner.
Why and where might China seek to establish military bases or logistics facilities in the Middle
East? Is there a high likelihood that China will seek to establish one in the region in the future?
It is clear that China is looking to protect its overseas assets, occasionally with a conventional
military force. Sometimes this protection can take the form of an economic investment in a third-
party country’s infrastructure, however. At times the line between these two methods of overseas
protection is blurred due to the nature of China’s civil-military fusion. The revelation in 2021
that the U.S. had discovered a secret Chinese facility under construction at the al Khalifa port in
Abu Dhabi, just miles from U.S. forces at al Dhafra Air Base, demonstrates the dilemma of
China’s dual-purpose overseas infrastructure.
51
In 2020, the DoD annual report to Congress was the first to confirm publicly that China was
seeking another overseas base, noting Beijing was “seeking to establish a more robust overseas
logistics and basing infrastructure to allow the PLA to project and sustain military power at
greater distances.”52 It also listed several locations China had “likely considered” for future
overseas military facilities – the only Middle Eastern country listed was the United Arab
Emirates (UAE).53 In October 2023, however, Bloomberg noted Chinese officials had reached
out to Oman about potentially establishing a Chinese military facility, and that Omani officials
had been “amenable” to China’s overtures.54
48 Mahadzir, Dzirhan, “Russia, China and Iran Finish Drills in Gulf of Oman,” USNI News, March 14, 2024.
https://news.usni.org/2024/03/14/russia-china-and-iran-finish-drills-in-gulf-of-oman
49 “China, Saudi Arabia Launch Joint Naval Exercise – Media,” Reuters, November 19, 2019.
https://www.reuters.com/article/china-saudi-military-idUSL3N28010M/; “Saudi, Chinese Navies Launch Military
Drill in Zhanjiang,” Arab News, October 10, 2023. https://www.arabnews.com/node/2388781/saudi-arabia
50 Lau, Jack, “China, UAE Set for Joint Air Force Training in Military First, as Beijing Forges Closer Middle East
Ties,” South China Morning Post, July 31, 2023. https://www.scmp.com/news/china/military/article/3229485/china-
uae-set-joint-air-force-training-military-first-beijing-forges-closer-middle-east-ties
51 Lubold, Gordon and Warren P. Strobel, “Secret Chinese Port Project in Persian Gulf Rattles U.S. Relations with
UAE,” The Wall Street Journal, November 19, 2021. https://www.wsj.com/articles/us-china-uae-military-
11637274224
52 “Annual Report to Congress: Military and Security Developments Involving the People’s Republic of China
2020.”
53 Ibid.
54 Jamrisko, Michelle and Jennifer Jacobs, “Biden Briefed on Chinese Effort to Put Military Base in Oman,”
Bloomberg, November 7, 2023. https://www.bloomberg.com/news/articles/2023-11-07/biden-briefed-on-chinese-
effort-to-put-military-base-in-oman?embedded-checkout=true
Rumley USCC Testimony 11
More broadly, it is likely China will try to solidify another node in the region for protecting its
interests given the region’s importance to China’s economy and Xi’s prioritization of protecting
overseas interests. In 2013, the PLA’s Science of Military Strategy paper called for building
“strategic strongpoints that rely on mainland, radiate out into the periphery, and go into the two
oceans [i.e. Pacific and Indian Oceans], providing support for military operations or serving as a
forward base for the deployment of military forces overseas, as well as exerting political and
military influence in relevant regions.”55 Whether that takes the form of a declared military base,
ala Djibouti, or a dual-use facility will depend on China’s aims and the third-party country’s
receptivity.
Assess Chinese naval operations in the Middle East amid the ongoing war between Hamas and
Israel:
a. Is the PLA providing protection to Chinese commercial ships that are vulnerable
to attacks from the Houthi rebels?
The primary mission of the PLAN ships in the region is to protect Chinese commercial shipping.
PLAN ships started escorting select Chinese commercial vessels in January, according to one
Chinese maritime tracker, and as of March had escorted at least five commercial vessels.56 As
the Pentagon spokesperson noted in November 2023, PLAN ships had not responded to nearby
distress calls from non-Chinese ships.57 Beijing has navigated the turbulence caused by the
Houthis’ attacks using non-military means as well. China has repeatedly sent messages to Iran
for the Houthis to restrain from threatening its commercial vessels. Chinese commercial ships
have been broadcasting their nationality and announcing their presence as they enter the vicinity
of potential Houthi attacks.58 China also notably refused to join the U.S. and UK condemnation
of the Houthi attacks at the UN in January, and one report in March noted China and Russia had
reached an understanding with the Yemeni group to avoid being targeted in exchange for
potential political support.59 The cumulative effect has been the relative safety of Chinese
commercial shipping. Indeed, apart from the seemingly errant targeting of a Chinese vessel in
55 Doshi, “The Long Game.” Page 206.
56 Babb, Carla, “Where is China in the Red Sea Crisis?,” Voice of America News, March 1, 2024.
https://www.voanews.com/a/where-is-china-in-the-red-sea-crisis-/7510435.html
57 “Pentagon Press Secretary Brig. Gen. Pat Ryder Holds an Off-Camera, On-the-Record Press Briefing,” U.S.
Department of Defense, November 27, 2023.
https://www.defense.gov/News/Transcripts/Transcript/Article/3598749/pentagon-press-secretary-brig-gen-pat-
ryder-holds-an-off-camera-on-the-record-p/
58 Longley, Alex, “Ships Advertise Chinese Links to Avoid Houthi Attack in Red Sea,” Bloomberg, January 11,
2024. https://www.bloomberg.com/news/articles/2024-01-11/ships-advertise-chinese-links-to-avoid-houthi-attack-
in-red-sea?embedded-checkout=true
59 Dagher, Sam and Mohammed Hatem, “Yemen’s Houthis Tell China, Russia Their Ships Won’t be Targeted,”
Bloomberg News, March 21, 2024. https://www.bloomberg.com/news/articles/2024-03-21/china-russia-reach-
agreement-with-yemen-s-houthis-on-red-sea-ships?embedded-checkout=true
Rumley USCC Testimony 12
March, Chinese commercial vessels have not been purposely targeted by the Houthis since
November 2023.60
b. Is the PLA adjusting its own operations in the area in response to the conflict?
Chinese leaders likely assess that the current PLA posture in the region – to include the NETF –
is sufficient to match the current risks to Chinese interests. Chinese media reported that PLA
officials pledged to continue “standard operations” during the current Red Sea crisis.61 Beijing
may consider augmenting its presence in the region, of course, if Chinese commercial entities
were directly attacked or had become collateral damage in a regional escalation. China could
also decide to change the operating principles of its military presence if the UN Security Council
issued a resolution calling for a halt in the Houthi attacks. In such a scenario, it is likely China
would want to be seen as contributing to a UNSC effort, whether or not that contribution was
meaningful militarily. Barring these scenarios, it is likely China will seek to maintain the status
quo.
c. Is the PLA providing any military assistance to either side?
There is little public evidence that China is providing overt military assistance to Israel or
Hamas. Arms trade between Israel and China is minimal. Chinese small arms have shown up in
Hamas weapons caches and Chinese components have, of course, turned up in weapons systems
throughout the region but these are more likely a result of illicit small arms trade and sanctions
evasion techniques by non-state actors than a concerted effort by Beijing to sell conventional
military weaponry.62
Is the PLA “learning any lessons” from the ongoing conflict between Hamas and Israel?
One of the lessons Chinese military planners could take from Hamas’ October 7 attack on Israel
is how complacency and a distracted leadership can increase a country’s susceptibility to attack.
Israel had a de facto arrangement in place with Hamas, whereby it facilitated economic
incentives to the Gaza-based leadership in exchange for calm. That Hamas violated this
arrangement at a time of seeming mutual benefit, and that it conducted its attack as effectively as
it did, may cause China to consider the implications for its own geopolitical contests. Another
60 Raydan, Noam, Farzin Nadimi, “Tracking Maritime Attacks in the Middle East Since 2019,” The Washington
Institute for Near East Policy, February 12, 2024. https://www.washingtoninstitute.org/policy-analysis/tracking-
maritime-attacks-middle-east-2019
61 Dang, Yuanyue, “China PLA Stationed Up to 6 Warships in Middle East Over Past Week Amid Rising Tensions
from Israel-Gaza War: Reports,” South China Morning Post, October 19, 2023.
https://www.scmp.com/news/china/military/article/3238536/6-chinese-warships-present-middle-east-over-past-week
62 Biesecker, Michael, “Hamas Fights with a Patchwork of Weapons Built by Iran, China, Russia and North Korea,”
The Associated Press, January 15, 2024. https://apnews.com/article/israel-hamas-war-guns-weapons-missiles-
smuggling-adae9dae4c48059d2a3c8e5d565daa30
Rumley USCC Testimony 13
lesson could be in the U.S. response to the attack against Israel. The U.S. repositioned two
carrier strike groups, dramatically accelerated the delivery of military aid, and sent a wave of
senior officials – including the president – to Israel in order to reinforce a message of deterrence
to Israel’s adversaries. Chinese officials could attribute this response to the close relationship
between the U.S. and Israel, or they could posit – correctly or incorrectly – that this is how the
U.S. would likely respond to Chinese aggression against Taiwan.
Does China’s leadership perceive the United States’ shift away from the Middle East and toward
the Indo-Pacific as an opportunity to establish itself as an alternative security partner in the
region? Are there any indications that China may be reconsidering its approach given the
ongoing war between Hamas and Israel?
It is possible to look at the repeated directives from Chinese leadership for the PLA to become a
more global force, coupled with the rapid build-up and modernization of the PLA, and conclude
that Chinese military power projection may start reaching areas like the Middle East soon. This
discounts, however, the premium Chinese leaders place on their own regional issues. The bulk of
Chinese military might remains decidedly focused on the Indo-Pacific, where China has
maritime disputes with almost all of its neighbors, an ongoing land border dispute with India,
and the constant desire to dial up pressure on Taiwan.
The reality for China in the Middle East is that it greatly benefits from the U.S. security
architecture. This architecture promotes freedom of navigation, stability, and the integration of
like-minded state actors. It is in China’s interest for this security architecture to remain in place.
Further, it is arguably in China’s interest for the U.S. to commit even more resources to
maintaining this security architecture, as doing so not only helps preserve the free flow of
commerce in a region crucial to China’s economy, but also potentially siphons away U.S.
military capabilities from the Indo-Pacific. So long as this architecture remains in place and
China can continue to augment its presence through a combination of modest military
deployments and investments in critical infrastructure, Chinese leaders are likely to remain
satisfied with the level of security protection for their economic interests in the region.
The war between Hamas and Israel and subsequent regional escalation has given Middle Eastern
countries another example of what a security partnership with China offers and exposed the
limits of China’s role as a security provider. Chinese officials were quick to condemn Israel and
champion the Arab countries’ talking points, but were largely unable to make any meaningful
progress on de-escalating regional tensions. Further, China’s military actions demonstrated yet
again that its security presence in the region is designed to protect China’s economic interests
first and foremost. With the exception of a tenuous relationship with North Korea and its “no
limits” partnership with Russia, China strictly follows a ‘no allies’ policy set forth in the Cold
Rumley USCC Testimony 14
War.63 Beijing is unlikely to change this policy for the conflict-prone Middle East. China is,
therefore, highly unlikely to offer countries in the region the type of military support the U.S. has
in the past. Beijing will, of course, continue to offer these countries access to select weaponry,
investment in critical infrastructure (so long as this infrastructure serves China’s interests), and
potentially political support on select issues. But, the recent and ongoing regional escalation has
hopefully revealed to countries in the region that a security partnership with China offers little by
way of security or partnership.
Please describe China’s professional military education and training programs with Middle
Eastern partners.
The exact numbers of foreign participants in China’s professional military education (PME)
programs is difficult to ascertain publicly. China’s 2019 Defense White Paper offers the most
detail publicly, noting that “more than 10,000 foreign military personnel from over 130 countries
have studied in Chinese military universities and colleges.”64 Beyond that, however, information
on exact attendance by participant country and year is scarce. By comparison, according to the
U.S. State Department, the U.S. trained approximately 10,000 foreign military personnel in 2021
alone.65
The general consensus remains that PME opportunities in the U.S. or Russia are still more
valuable than in China. PME offerings in China are limited by language restrictions, typically
separate foreign students from Chinese students, and avoid issues sensitive to Beijing. According
to the U.S., Chinese schools “rarely teach students about the root causes of security problems.”66
Still, China is looking to incentivize attendance through higher stipends and “greater exposure to
Chinese technological and scientific innovations.”67 To date, the PLA has prioritized attendance
from Africa and Latin America.68 Were China to seek greater attendance from the Middle East
and North Africa, its approach may gain traction in coming years.
63 Keith, Ronald C., “The Origins and Strategic Implications of China’s ‘Independent Foreign Policy’,”
International Journal, Vol. 41, No. 1, 1985-1986. Pages 95-128.
64 “China’s National Defense in the New Era,” Information Office of the State Council, The People’s Republic of
China.
65 Of these, approximately 2,800 military personnel were from the Middle East and North Africa. “Foreign Military
Training and DoD Engagement Activities of Interest, 2020-2021,” U.S. Department of State, 2022.
https://www.state.gov/reports/foreign-military-training-and-dod-engagement-activities-of-interest-2020-2021/. Note,
the Defense Security Cooperation Agency (DSCA) claims that it trained nearly 25,000 international military
students through its own separate programs in 2022. “DSCA Fast Facts: Fiscal Year 2022,” Defense Security
Cooperation Agency, 2022. https://www.dsca.mil/sites/default/files/2023-
01/DSCA%20Fast%20Facts%202022%20-%20FINAL%20FOR%20PRINT.pdf
66 “Annual Report to Congress: Military and Security Developments Involving the People’s Republic of China
2023,” U.S. Department of Defense.
67 Ibid.
68 Nantulya, Paul, “China’s ‘Military Political Work’ and Professional Military Education in Africa,” Africa Center
for Strategic Studies, October 30, 2023. https://africacenter.org/spotlight/china-pla-military-political-work-pme-
africa/
Rumley USCC Testimony 15
The Commission is mandated to make policy recommendations to Congress based on its
hearings and other research. What are your recommendations for Congressional action related
to the topic of your testimony?
1) Support defense modernization efforts in the region. For a variety of reasons, several
countries in the region are looking to develop their own defense industrial bases. In
pursuit of these ambitions, countries have sought a combination of foreign investment,
diverse suppliers, and external partnerships that include technology transfers, research
and development, and co-production agreements. U.S. security cooperation is notoriously
inflexible when it comes to the latter. China and Russia, on the other hand, are perceived
to be more flexible. Further, some U.S. partners see Washington entering into creative
defense agreements with other countries – whether that is the AUKUS arrangement with
Australia and the UK or INDUS-X with India – and perceive a general lack of interest in
similar agreements in the Middle East.
For the U.S., shedding this inflexibility and sharing technology with regional partners is
one way to reinforce the security partnership beyond simply committing military
resources on the ground. To date, the U.S. has been wary of such commitments given
select countries’ ties to China and the subsequent risk to proprietary U.S. defense
information. Yet a defense technology sharing arrangement, if done carefully, could
accomplish two objectives at once in both boosting the defense relationship with the
partner country while also adding another structural constraint – i.e. the requisite
safeguards on U.S. information – on a third-party country’s relationship with Beijing.
2) Coordinate China-related messaging to regional countries with global partners.
Regional partners have heard the U.S. talking points regarding China for years. Some are
receptive, others are not. Some view the U.S. as a non-objective actor in this domain,
given the U.S. competition with China. One way to circumvent this phenomenon is for
other global partners, in particular those with experience dealing with China, to convey
their own experiences and subsequent warnings to Middle Eastern countries. Some of
these countries, like Japan or Singapore, have established relationships in the Middle East
and a history of navigating China’s practices. Coordinating their messages to countries in
the region could foot-stomp U.S. talking points. Congress should – in the course of its
engagement with such U.S. partners – emphasize the importance of imparting these
lessons to third-party countries around the world, including in the Middle East.
3) Synchronize efforts between the legislative and executive branches to limit China’s
influence in the Middle East. In January, the House Select Committee on the Chinese
Communist Party asked the Department of Commerce to investigate the Emirati firm
Rumley USCC Testimony 16
Group 42 Holdings (G42) regarding its reported ties to China.69 This followed years of
bipartisan concern from the executive and legislative branches regarding the firm, which
is led by the UAE’s national security advisor, and its relationship with China.70 A month
later, G42 announced that its investment arm had divested entirely from Chinese
companies.71 The episode is an example of the potential power unified, clear, and patient
messaging can have in addressing China-related concerns with U.S. partners. Congress
and the administration should expand efforts to identify specific China-related concerns
in the region and coordinate subsequent messaging.
69 “Gallagher Calls on USG to Investigate AI Firm, G42, Ties to PRC Military, Intelligence-Linked Companies,”
House Select Committee on the Chinese Communist Party, January 9, 2024.
https://selectcommitteeontheccp.house.gov/media/press-releases/gallagher-calls-usg-investigate-ai-firm-g42-ties-
prc-military-intelligence
70 Mazzetti, Mark and Edward Wong, “Inside U.S. Efforts to Untangle an A.I. Giant’s Ties to China,” The New York
Times, November 27, 2023. https://www.nytimes.com/2023/11/27/us/politics/ai-us-uae-china-security-g42.html
71 “Abu Dhabi AI Group G42 Sells its China Stakes to Appease US,” Financial Times, February 9, 2024.
https://www.ft.com/content/82473ec4-fa7a-43f2-897c-ceb9b10ffd7a

*       *       *

April 19, 2024
Dr. Dawn C. Murphy
Associate Professor of National Security Strategy, US National War College
Testimony before the U.S.-China Economic and Security Review Commission
USCC Hearing on “China and the Middle East”
Disclaimer: The views expressed in this testimony are those of the author and do not reflect the
official policy or position of the National Defense University, the Department of Defense, or the
US Government.
China’s Engagement with Middle Eastern Countries in Regional and International
Organizations
Thank you for the opportunity to participate in this hearing on “China and the Middle East.” My
testimony today focuses on China’s engagement with Middle Eastern countries in regional and
international organizations. I have structured my testimony around the questions put forward by
the commission staff.
Why does China engage with Middle Eastern states through regional and international
organizations? What interests or initiatives is it seeking to advance?
China engages with Middle Eastern states through a wide range of multilateral regional and
international organizations. For this testimony, the Middle East includes members of the League
of Arab States (Algeria, Bahrain, Comoros, Djibouti, Egypt, Iraq, Jordan, Kuwait, Lebanon,
Libya, Mauritania, Morocco, Oman, Palestine, Qatar, Saudi Arabia, Somalia, Sudan, Syria,
Tunisia, United Arab Emirates, and Yemen), Iran, Israel, and Türkiye. This testimony focuses on
a sub-set of China’s interactions with regional and international organizations, including
cooperation forums (the China-Arab States Cooperation Forum- CASCF and the Shanghai
Cooperation Organization- SCO), the Gulf Cooperation Council (GCC), the League of Arab
States (LAS), the BRICS (Brazil, Russia, India, China, and South Africa), and the United
Nations (the United Nations Security Council and the United Nations Human Rights Council).
Through these regional and international organizations, China seeks to advance its interests in
the Middle East and globally. Those interests include ensuring access to resources and markets
across the region; fostering support for China’s goals and behavior in the broader international
system; ensuring silence or supportive statements from states in the region about China’s actions
in Xinjiang and Hong Kong; maintaining and developing support for China’s stance on issues of
territorial integrity such as Taiwan and South China Sea territorial disputes; and promoting
China’s global initiatives of Belt and Road, the Global Development Initiative (GDI), Global
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Security Initiative (GSI), and Global Civilization Initiative (GSI).1 One important driver of
China’s behavior in these organizations is to promote regional stability in the Middle East. It
tends to see the region as having a high potential for turmoil and interstate war. It also views it as
a breeding ground for non-state actor security threats, such as terrorism, that could threaten
China’s interest in the Middle East and beyond.
China’s interactions with regional and international organizations generate many benefits in the
Middle East. These organizations provide China with an efficient and effective way to interact
with a large number of countries and better understand their needs and positions. Through these
organizations, China can amplify its voice and join together with other states to coordinate
positions on issues. These organizations give China a platform to highlight the shared norms it
wants to promote in the international system, including a strict interpretation of Westphalian
sovereignty, South-South cooperation, and a heavy role for state involvement in economic
interactions. Operating through regional organizations and international organizations on security
issues also gives the PRC an opportunity to emphasize that it does not seek to play a unilateral
security role in the region and differentiate itself from other great powers, such as the United
States and Russia.
Assess China’s interactions with the Gulf Cooperation Council (GCC), which includes
Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates. How does
China’s engagement with the GCC advance its energy and economic interests?
China interacts with GCC states through regional organizations in two ways, through
cooperation forums and direct interactions with the GCC.
Established in 2004, the China- Arab States Cooperation Forum (CASCF) is China’s primary
multilateral coordination mechanism with the Arab States, including the GCC states.2 The Forum
on China-Africa Cooperation Forum (FOCAC), established in 2000, also encompasses North
African states (Algeria, Djibouti, Egypt, Libya, Mauritania, Morocco, Somalia, Sudan, and
Tunisia), but this testimony focuses on the CASCF.
The LAS represents its twenty-two members in the CASCF. All of those states recognize the
People’s Republic of China (as opposed to Taiwan). Due to coordination by the Arab League in
the CASCF, the Arab States have the opportunity to communicate with China in a unified voice
and the ability to actively negotiate for the inclusion of collective projects involving multiple
Arab countries.
CASCF conducts ministerial meetings every two years. In 2022, CASCF conducted its first
summit level meeting with Xi Jinping in attendance. The next meeting of the CASCF is planned
for later this year in 2024.
1 For an in-depth discussion of China’s interests in the Middle East, see Dawn C. Murphy, China’s Rise in the
Global South: The Middle East, Africa, and Beijing’s Alternative World Order, Stanford University Press, 2022, ch.
3.
2 For an in-depth discussion of the China-Arab States Cooperation Forum, see Murphy, China’s Rise in the Global
South, Ch. 4.
3
This testimony focusses on the political, economic, and security aspects of the CASCF. That
said, almost every type of state-to-state interaction is in scope for this organization, including
environment, health, education, culture, foreign aid, media, legislature cooperation, science and
technology, policing, and a wide range of other functional issues.
The CASCF emphasizes political cooperation with China. The foundational norms of political
cooperation in the CASCF are China’s Five Principles of Peaceful Coexistence (5POPC) and
South-South Cooperation. The 5POPC represent a very conservative interpretation of
Westphalian norms of sovereignty, territorial integrity, and non-interference. The 5POPC are:
mutual respect for territory and sovereignty, mutual non-aggression, mutual non-interference in
internal affairs, equality and mutual benefit, and peaceful coexistence.
The CASCF also explicitly includes cooperation on key Arab political issues, in particular the
Middle East peace process. The Palestinian-Israeli conflict is the most important political issue
addressed in the forum and China has constantly emphasized the issue. China also seeks support
from Middle Eastern states in the CASCF for its behavior in Xinjiang.
Through the CASCF, China also solicits support from Middle Eastern states for its approach to
territorial claims. One clear example of this type of behavior was the inclusion of wording in
CASCF documents supporting China’s position on territorial disputes in the South China Sea in
2016. 3
The CASCF is also the primary multilateral mechanisms through which China coordinates
economic activities with the Middle East. The main areas of economic cooperation in the forum
are trade, investment, finance, infrastructure, economic security, and BRI. CASCF also
encourages energy cooperation between China and Arab states.
Finally, CASCF officially promotes security cooperation but compared to economic and political
interactions, this activity is minimal. The forum calls for establishing a nuclear-free zone in the
Middle East. CASCF documents also highlight the need to combat global terrorism, but unlike
the Shanghai Cooperation Organization (SCO), CASCF forums do not contain actual
mechanisms for bi-lateral counter-terrorism activities.
The CASCF is the primary multilateral mechanism for China’s interactions with the GCC
members, along with the rest of the LAS, but China now is also setting up standalone
mechanisms to interact directly with the GCC. In 2022, immediately following the CASCF
summit, Xi Jinping held a summit with the GCC leaders in Riyadh. Also, although China already
has a strategic partnership with the LAS, it is now pursing one with the GCC as an organization.4
3 The 2016 CASCF declaration states "Arab states support China and relevant countries to peacefully settle
territorial disputes and maritime issues using friendly consultations and negotiations through bilateral agreements
and regional consensus; emphasize the need to respect the right of sovereign States and States parties to the United
Nations Convention on the Law of the Sea to choose dispute settlement methods." See “China-Arab Cooperation
Forum Ministerial Conference of the Seventh Doha Declaration,” (2016), section 6, www.cascf.org.
4 “HE GCCSG: Conditions for Establishing GCC-China Strategic Partnership Are Based on Political Trust, Mutual
Respect, Strong Understanding Among them and Their Weight in Global Economy, Building on Outcomes of 1st
4
China has also been negotiating a free trade agreement with the GCC since 2004 and both sides
hope to finalize the agreement soon.
China’s recent push to set up organizations to interact with the GCC reflects the rising role of the
Arab Gulf in China’s Middle East strategy, the importance of GCC states as economic partners
with China, and increasing cohesion among GCC members since the ending of the embargo
against Qatar. The aim of these new GCC-focused organizations is to pursue China’s economic,
energy, and political instruments with a block of countries that are increasingly important to
China’s economic and political interactions with the Middle East.
Why have several Middle Eastern states become members, dialogue partners, or observers
of the Shanghai Cooperation Organization (SCO)? How could relationships through the
SCO potentially amplify China’s influence in the Middle East?
In 2023, the SCO expanded to include Iran as a formal member.5 Turkiye is already a dialogue
partner and has expressed an interest in membership.6 Five out of six GCC member states
(Bahrain, Kuwait, Qatar, Saudi Arabia, and the United Arab Emirates) together with Egypt have
become dialogue partners in the last few years. Saudi Arabia has expressed an interest in joining
the SCO as a full member in the medium term.7 Each of these states has different motives for
joining the SCO.
Before 2023, the only Middle Eastern states that were not yet part of a Chinese cooperation
forum in the Middle East were Iran, Turkiye, and Israel. China’s CASCF already encompassed
all of the League of Arab States members, including all GCC members, and North African states
are also already in scope for the FOCAC.
Joining the SCO provides Iran opportunities to further institutionalize its relations with China,
Russia, the Central Asian states, India, and Pakistan. As a result, it offers the possibility of more
robust economic, political, and security cooperation with these states. Due to Iran’s relative
isolation from the international system, joining this organization provides it with more
opportunities to build relations with regional countries and legitimize its role in the international
arena.
GCC-China Summit in Saudi on Dec. 09, 2022,” GCC website at https://www.gcc-sg.org/en-
us/MediaCenter/NewsCooperation/News/Pages/news2023-10-22-1.aspx
5 Jonathan Fulton, “Iran joining the SCO isn’t surprising. But Beijing’s promotion of illiberal norms in Eurasia
should get more attention,” Atlantic Council blog, July 13, 2023,
https://www.atlanticcouncil.org/blogs/iransource/iran-sco-china-bri-illiberal-norms/
6 “Turkey's Erdogan targets joining Shanghai Cooperation Organisation, media reports say,” Reuters, September 17,
2022, https://www.reuters.com/world/middle-east/turkeys-erdogan-targets-joining-shanghai-cooperation-
organisation-media-2022-09-17/; and Umut Uras, “Can the SCO be Turkey’s alternative to the West?” Aljazeera,
September 21, 2022, https://www.aljazeera.com/news/2022/9/21/turkey-shanghai-cooperation-organisation-
membership-nato-west-alternative
7 “Riyadh joins Shanghai Cooperation Organization as ties with Beijing grow,” Reuters, March 29, 2023,
https://www.reuters.com/world/riyadh-joins-shanghai-cooperation-organization-ties-with-beijing-grow-2023-03-29/
5
Turkiye also does not currently participate in the other Chinese-led cooperation forums in the
Middle East. Although Turkiye is a NATO member, full membership in the SCO would provide
Turkiye more opportunities for economic, political, and security cooperation with regional
countries. Through joining SCO, Turkiye can demonstrate it has options for relations with
multiple great powers outside the US and NATO.
There are three primary drivers for GCC states and Egypt to join the SCO as dialogue partners
and possible future full members. First, it provides a way for these Arab States to balance against
potential Iranian influence in the SCO. Next, as states in the Arab World become increasingly
concerned about perceived lack of attention to the Middle East, joining the SCO is a way to build
stronger ties with China. Also, as states in the Arab Gulf and Egypt become more important in
China’s overall foreign policy, SCO provides yet another venue for demonstrating the
importance of the countries to China and coordinating policy positions with the states the PRC
sees as key regional actors.
What is the significance of the recent admission of four Middle Eastern countries to the
BRICS (Brazil, Russia, India, China, and South Africa) grouping? How could relationships
through the BRICS potentially amplify China’s influence in the Middle East?
In August 2023, the BRICS (Brazil, Russia, India, China, and South Africa) announced plans to
expand to include members from the Middle East. Four out of six of the new invited members
were from the region: Iran, Saudi Arabia, Egypt, and the UAE.
8 The other two proposed
members were Argentina and Ethiopia. Although Argentina ultimately decided to decline the
invitation, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates all confirmed that
they plan to join.9
The fact that six of the new members invitations for the BRICS were extended to Middle Eastern
countries indicates the importance of key regional powers from the Middle East (Saudi Arabia,
the UAE, Egypt, and Iran) to BRICS members in general and China in particular. Historically,
China has viewed Egypt and Saudi as the two leaders of the Arab World, Iran as an important
regional power, and the UAE as an economic powerhouse with increasing reginal influence and
economic development plans that align well with China’s own economic priorities. Iran and
Egypt’s inclusion in the list with Saudi Arabia and the UAE likely indicates that the PRC is not
wanting to pick sides between states in the region and is attempting to maintain a balanced
approach.
8 Julian Borger, “Brics to more than double with admission of six new countries,” The Guardian, August 24, 2023,
https://www.theguardian.com/business/2023/aug/24/five-brics-nations-announce-admission-of-six-new-countries-
to-bloc.
9 “South Africa says five countries confirm they are joining BRICS,” Reuters, January 31, 2024,
https://www.reuters.com/world/south-africa-says-five-countries-confirm-they-are-joining-brics-2024-01-31/
6
Assess China’s efforts to cultivate Middle Eastern countries’ support for its initiatives and
positions at the United Nations. Where has Middle Eastern countries’ support proven most
valuable?
In the United Nations, Middle Eastern countries’ support for China’s positions has been most
valuable in the UN Human Rights Council to shield China from criticism about its behavior in
Xinjiang. For example, in July 2019, after twenty-two countries formally condemned China for
its mass detention of ethnic and religious minorities in China, thirty-seven states signed a letter
praising China’s “remarkable achievements in the field of human rights.” Signatories included
several Middle Eastern states, such as Algeria, Bahrain, Egypt, Kuwait, Oman, Qatar, Saudi
Arabia, Syria, and the UAE.10 Also, in 2022, Middle Eastern states (Qatar and the UAE) voted in
the UN Human Rights Council to prevent debate of China’s behavior in Xinjiang.11
Address China’s use of its UN Security Council veto to block U.S. sponsored moves in the
organization, such as the October 2023 U.S.-sponsored draft resolution calling for pauses in
fighting to allow humanitarian aid access, the protection of civilians and a stop to arming
Hamas and other militants in the Gaza Strip.
China’s voting behavior in the United Nations Security Council since October 7, 2023, needs to
be considered in the broader historical context of China’s approach to the Palestinian-Israeli
conflict. During the Mao era, China provided material support to various Palestinian groups
seeking national liberation. China recognized the State of Palestine in 1988 and established
robust state-to-state relations with Israel in 1992. Since at least 1997, China has articulated its
contemporary views on the Palestinian-Israeli conflict, and in 2002 it established a Special
Envoy for Middle East Issues to attempt to contribute to resolution of the contemporary
conflict.12 The Palestinian-Israel conflict has been a centerpiece of China’s political discourse
with the Arab States, reflected in declarations of the China-Arab States Cooperation Forum.
China’s approach to events after October 7, 2023, including its voting behavior in the United
Nations Security Council, mirrors its longstanding approach to the Palestinian-Israeli conflict.
China views the current Israel-Hamas war as a flare-up in the Palestinian-Israeli conflict and
Arab-Israeli conflict. China considers the Palestinian-Israeli conflict as the core threat to peace
and security in the Middle East. For over twenty years, the PRC has advocated for peaceful
negotiations, an end to violence, a two-state solution with an independent Palestinian state based
on pre-1967 borders with East Jerusalem as the capital, a return of the Golan Heights to Syria, a
cessation of Israeli settlements in occupied territories, the establishment of an international
supervisory mechanism, and the utilization of a multilateral mechanism to resolve the conflict.
10 Joshua Berlinger, “North Korea, Syria and Myanmar among countries defending China's actions in Xinjiang,”
CNN, July 15, 2019.
11 “China: Xinjiang vote failure betrays core mission of UN Human Rights Council, Amnesty International, October
6, 2022, https://www.amnesty.org/en/latest/news/2022/10/china-xinjiang-vote-failure-betrays-core-mission-of-un-
human-rights-council/; and Emma Farge, “U.N. body rejects debate on China's treatment of Uyghur Muslims in
blow to West,” Reuters, October 6, 2022, https://www.reuters.com/world/china/un-body-rejects-historic-debate-
chinas-human-rights-record-2022-10-06/
12 For an in-depth discussion of China’s Special Envoy for the Middle East, see Murphy, China’s Rise in the Global
South, ch. 5.
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Although it is different from its material support for Palestinian groups during the Mao era,
China’s behavior over the last twenty years has been Palestinian-leaning, including in its United
Nations Security Council voting. Since 1991, China’s votes in the UNSC about issues involving
the Palestinian-Israel conflict often vary from the US. Over the years, it has consistently
criticized what it considers to be Israel’s disproportionate responses towards the Palestinians and
violations of international law. It considers its approach to the Palestinian-Israeli conflict to be a
long-standing principled stance to stand up for the Palestinians.
Starting immediately after October 7, 2023, China’s official statements from the Ministry of
Foreign Affairs, Special Envoy to the United Nations (Zhang Jun), Special Envoy for the Middle
East Issue (Zhai Jun), and Xi Jinping were all consistent with its past stance on the Palestinian -
Israeli conflict. China emphasizes that it condemns violence against civilians, but it refuses to
characterize Hamas (or other Palestinian groups) as terrorists. China tends to frame Palestinian
actions as part of an armed struggle for national liberation rather, not terrorism. In the 2023
UNSC vote referenced in this question, and other cases where China’s vote differs from the US
on this issue, China vetoed the resolution, because it does not align with China’s longstanding
stance on the Palestinian-Israeli conflict. China’s complaint about that particular resolution was
that it did not call from an unconditional cease fire.13
At this point, the PRC is deeply concerned the Israel-Hamas war could escalate into a much
broader conflict. China views the Middle East as a region of instability that is ripe for conflict. In
particular, it expresses concerns that violence could increase between Israel and Hezbollah in
Lebanon, Iranian-backed groups in Syria and Iraq, as well as the Houthi in Yemen.14 The PRC
also likely worries that conflicts between those Iranian proxies and Israel could ultimately draw
Iran into direct conflict with Israel or the United States. A broader war in the region could further
threaten China’s shipping through the Middle East, cause global oil prices to rise, and pose a
danger to Chinese citizens and businesses in countries involved in the conflict. China’s top
interests in the Middle East are economic. A regional war would pose significant risks to those
interests.
Since October 7, the PRC has highlighted how its approach to the Palestinian-Israeli conflict
differs from the US. It often leverages debate in the UNSC to highlight those differences. Much
of the framing of this issue is centered on criticism of the US role in the Middle East, support for
Israel, and broader US international behavior that the PRC considers to be hegemonic. Although
China’s relations with Israel may be damaged by its current approach to the Palestinian-Israeli
conflicts, it is likely Beijing’s position on the Israel-Hamas war and its UNSC voting on this
issue will positively resonate with the Arab World, the Muslim-majority world, and many
countries in the Global South more broadly.
13 Michelle Nichols, “Russia, China veto US push for UN action on Israel, Gaza,” Reuters, October 25, 2023,
https://www.reuters.com/world/un-security-council-vote-rival-us-russian-plans-israel-gaza-action-2023-10-
25/#:~:text=UNITED%20NATIONS%2C%20Oct%2025%20%28Reuters%29%20-%20Russia%20and,Hamas%20a
nd%20other%20militants%20in%20the%20Gaza%20Strip
14 Dewey Sim, “Israel-Gaza war: China will ‘do anything’ to restore peace, but ‘prospects are worrying’, envoy
says,” The South China Morning Post, October 23, 2023,
https://www.scmp.com/news/china/diplomacy/article/3238893/israel-gaza-war-china-will-do-anything-restore-
peace-prospects-are-worrying-envoy-says
8
The Commission is mandated to make policy recommendations to Congress based on its
hearings and other research. What are your recommendations for Congressional action
related to the topic of your testimony?
• Congress should make efforts to better understand China’s role in regional organizations
in the Middle East and the ways in which China’s interactions with these organizations
translate into influence in the region.
• Congress should consider urging the US government to establish multilateral
organizations in the Middle East similar to China’s cooperation forums in order to fully
engage with members of the League of Arab States and the Gulf Cooperation Council.
Those new organizations could be leveraged to pursue a wide range of joint activities
with states in the region across functional issues.
• Congress should avoid overreacting to China’s engagements with regional organizations.
Many of China’s activities with these regional organizations are viewed in a positive light
by members of the LAS and GCC. The US government should triage which Chinese
behavior in multilateral organizations is most problematic for US interests and focus on
addressing those specific issues.
• Congress should make efforts to better understand how China’s Palestinian-leaning
behavior in the United National Security Council resonates with states in the Middle East
and the Global South more broadly.
• Congress should make efforts to better understand the role of GCC states in China’s
broader strategy for the Middle East. Increasingly, China is incorporating GCC states into
a number of multilateral organization formats. The US government needs to better assess
the significance of those actions and how to interpret them relative to China’s relations
with other states in the Middle East (e.g., Iran, Egypt, Israel, Turkiye).

*       *       *

‘’China and the Middle East’’
Testimony before the U.S.–China Economic and Security Review Commission
April 19, 2024
China’s Security Interests Panel III
Dr Alessandro Arduino,
Affiliate lecturer Lau China Institute King’s College London, visiting professor Geneva Graduate Institute
I want to start by thanking co-chairs Commissioner Aaron Friedberg and Commissioner Jonathan Stivers,
as well as all the Commissioners, for giving me the opportunity to testify today. The views I'll be
presenting are solely my own and should not be seen as representing any organization I'm affiliated
with.
Setting the Stage. Chinese Private Security Companies Presence in the Middle East
Once more, the Middle East teeters on the edge, stirring China's unease over escalating regional
instability. With porous borders, rampant transnational crime, attacks on the sea lanes of
communications, and the relentless spread of terrorist networks, the threat to China's Belt and Road
Initiative (BRI) looms large. While Beijing is gradually moving away from its longstanding policy of non-
interference and becoming more reactive, it remains cautious about actively involving itself in the
Middle East security quagmire.i
To address security concerns without committing Chinese military personnel, China is turning to private
security companies (PSCs) as a convenient security gap filler. In the Middle East, Chinese oil and gas
state-owned enterprises (SOEs) have been utilising these firms to protect Chinese engineers from
kidnapping and to safeguard infrastructure from attacks by terrorist or criminal groups. This approach
predates the specific security needs of the BRI. Still, the evolution and expansion of the Chinese private
security sector, especially from the Middle East to Africa, is indicating China's proactive stance in
mitigating risks without the necessity to deploy the People’s Liberation Army (PLA) overseas. Initially,
the Chinese private security sector defending Chinese oil fields in the Middle East aimed to emulate the
role played by US Private Military Companies (PMCs) in Iraq. At that time several security companies
from the US, UK and Israel supported with armed guards, security analysis and training the Chinese PSCs
protecting national energy companies, mostly in the southern part of Iraq. Yet, increasing tensions with
the US have made Chinese SOEs more hesitant to engage with Western security contractors. In this
respect, the emergence of Russian quasi-PMCs and especially the Russian Wagner Group presented a
2
novel approach, combining mercenary activities with quasi-private proxy services for authoritarian
regimes. In this respect, Russian quasi-PMCs attempted to enter the profitable market of safeguarding
the BRI in the Middle East, especially against maritime piracy from the Red Sea to the Gulf of Guinea.
However, this approach lost its allure relatively quickly, particularly after Wagner’s boss Yevgeny
Prigozhin's armed mutiny cast a shadow over the Wagner Group's loyalty, raising concerns in Beijing
about the potential threats spanning from unaccountable heavily armed contractors returning home.
The growing presence of Chinese PSCs along the Belt and Road Initiative in the Middle East reflects
Beijing's desire to cultivate a professional private security sector capable of operating effectively in
complex environments far from China’s borders while keeping intact the decades-old principle of non-
interference. In this respect, the challenge lies not in determining the presence of Chinese PSCs
overseas, but rather in distinguishing where the involvement of the State ends and the private sector
starts.
In the Middle East, China’s PSCs have a lesser presence compared to their activities in Asia and Africa.
For example, in the affluent Gulf States, Chinese PSCs are primarily tasked with guarding offices and
warehouses, as local police adequately ensure the safety of Chinese workers. However, in more volatile
environments like Iraq, experienced Chinese PSCs support national oil and gas companies by leveraging
longstanding relationships with Iraqi popular mobilization units (PMU), particularly when direct support
from Baghdad is not feasible. In Syria and Yemen, Chinese investments have dwindled amid civil wars,
with the possibility of seeing a surge in the Chinese private security sector only once Beijing commits to
participating in post-conflict reconstruction efforts. Despite claims from various quarters, including
Beirut, Damascus, and Sana'a, that Chinese billions in foreign direct investment (FDI) will revolutionise
national economies' rebuilding, Beijing remains cautious. Simultaneously, Israel holds significance for
Chinese PSCs not primarily as a market, but rather as service providers. Israeli companies and individuals
possess valuable expertise in counter-terrorism and cybersecurity, which they can transfer to Chinese
PSCs seeking to enhance their capabilities on a global scale.
According to Chinese scholars, since the onset of ‘’the Arab Spring, optimism can still be hard to find in
the Middle East.’’ii Russia returning to the Middle East as a major power through the military
intervention in Syria and the US reorienting its Middle East strategy is accompanied by regional powers
such as Saudi Arabia, Turkey, and Iran striving for power and security. Nevertheless, due to the large
influx of capital and Chinese workersiii, ‘’the protection of overseas Chinese citizens has emerged as a
new diplomatic imperative."iv The 2018 State Council Report on the Protection of Overseas Chinese
Rights and Interests emphasises that "the overseas Chinese have an irreplaceable and vital role in
realising the Chinese dream," therefore for China, safeguarding nationals in the Middle East has become
a cornerstone of its foreign policy. Amid rising terrorist threats and conflicts, the interconnectedness
between China's human and economic presence in the Middle East and its security policy is of growing
significance.
Compared to their Western counterpart the Chinese PSCs are latecomers into the international private
security arena. In 1993 the operational scope of PSCs with ‘’Chinese characteristics’’ was restricted,
primarily allowing former military and police personnel to register such companies. However, since
2009, subsequent laws have broadened their operational horizons. These changes include loosening
restrictions on weapon access and easing the stringent registration procedures that were in place
earlier. However, the majority of the several thousand Chinese PSCs operating in mainland China are still
established and managed by former security officers, with key personnel recruited from the People’s
Liberation Army, People’s Armed Police, and the police force. Simultaneously, while there exists a
3
detailed law governing the operation of PSCs within China, there is a lack of precise rules and regulations
for those operating overseas. This ongoing legal vacuum exposes the entire sector to competition from
semi-legal Chinese private security companies that establish themselves overseas without proper
licensing domesticallyv. Nevertheless, while the Chinese private security sector is increasing its
professionalisation, it's improbable that Chinese PSCs will attain in the short term the same level of
expertise and capability as their Western counterpartsvi.
The Party Controls the Gun. Regulating the Evolution of the Chinese Private Security Sector
Prior to President Xi Jinping’s flagship foreign policy initiative, the Belt and Road, Chinese investments in
the Middle East and North Africa (MENA) primarily targeted natural resource extraction and trade.
However, since 2013’s surge in infrastructure investments driven by the BRI, aiming to connect the
MENA region with Chinese trade routes like the estimated 63 billion US$ China-Pakistan Economic
Corridor (CPEC), Central Asia, the Red Sea, the Indian Ocean and the Mediterranean basin has also
heightened risks and threats to Chinese personnel and infrastructures. In this respect, Beijing’s position
on MENA is ‘’shifting away from harvesting economic benefits while avoiding political entanglements …
albeit in a cautious way’’vii. Therefore, China is gradually increasing its political, securityviii and economic presence in the region, with economic cooperation still the centrepiece of this effort.
While China trails behind the US as the primary security provider in the MENA region and across Africa,
it stands as one of the leading economic actors. In 2018, the MENA region ranked second globally in
terms of investment and Chinese construction projects, following closely behind Europe, with this trend
on the rise. However, security remains a significant challenge. Complicating Beijing’s development-
security approach is the increasing presence of over one million Chinese expatriates in the region,
spanning from construction workers to businesspeople, students, and even religious pilgrims visiting
Saudi Arabia and Iran.
In this respect, Chinese security pundits are increasingly vocal on Chinese social media that it is time that
China’s private security sector increases its capability and footprint abroad to protect Chinese nationals
against terrorist threats. Yet, the Chinese Communist Party (CCP) remains resolute, adhering to the
Maoist principle that "the party controls the gun."ix Despite Beijing's scepticism, Chinese private security
firms are poised to assume an important role in safeguarding Chinese interests overseas and bolstering
security capabilities in a domain where the boundary between private and public realms is often
blurred.
While the private security sector with ‘’Chinese characteristics’’ is adapting to meet increasing
challenges abroadx, Beijing's imposed limitations on access to weapons are still forcing the Chinese PSCs
to rely on armed personnel hired from local or international sources. Consequently, Chinese PSCs
primarily engage in passive roles such as asset protection against various threats like riots, theft,
kidnapping for ransom, terrorism, and maritime piracy. This restriction has prompted numerous Chinese
security experts over the past decade to advocate for the professionalisation and restructuring of the
sector, potentially modelling it after Western private military frameworks or incorporating elements
from the Russian approach to PMCsxi.
Following the launch of the BRI, the Chinese private security sector briefly experimented with a model
akin to Blackwater. This was evident in the establishment of Frontier Services Group (FSG), a Hong Kong-
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based joint venture co-founded by Erik Prince the founder of US PMC Blackwater in collaboration with
the Chinese state conglomerate CITIC. However, as tensions between China and the US escalated, the
prominence of the Blackwater-inspired model began to decline.
Also, the Russian model did not find fertile ground. Before the Wagner Group armed mutiny, several
Chinese security firms had started contemplating collaborations with Russian counterparts. They were
attracted to three main advantages offered by Russian security providers: skilled contractors with a
demonstrated combat track record, a lack of evident Western ties that might jeopardize the
confidentiality of SOEs, and competitive pricing. Nevertheless, Chinese foreign investments demand
stability while the Wagner Group's promise of ‘’armed stability’’ thrives in chaos. This presents a
paradoxical challenge for Beijing and Moscow's "no-limits friendship," while simultaneously making it
difficult for the Chinese private security sector to maintain a low profile.
In the Middle East, wherever there are Chinese economic interests, Chinese PSCs are there operating
alongside local or international armed contractors. These Chinese contractors usually consist of a small
number of unarmed security managers who serve as contact points between the Chinese company's
workers located in a gated compound and the local security forces. In cases where regulations in the
host country prohibit the registration of independent Chinese PSCs or joint ventures with local private
security firms, it's not uncommon for a limited number of Chinese security managers to operate under
working visas granted to the Chinese SOE. The risk management approaches of Chinese companies vary,
with state-owned enterprises (SOEs) in natural resource exploitation being better funded and equipped
to procure necessary security servicesxii.
Maritime Security: From Anti-piracy to Anti-drones.
Since the surge of piratical activities along the Somali coast the Chinese private security sector has
provided guards to Chinese commercial vessels, mostly related to Chinese commercial shipping lines and
China’s State energy companies. Since 2019, with Somali pirate activities nearly eradicated due to the
efforts of Combined Naval Task Force 151, Chinese PSCs have shifted their focus to addressing the
maritime security needs of the BRI in response to the increase in piracy incidents in Western Africa.
The most common maritime incidents in the region involve boarding ships to steal valuables from crews,
but hijackings and kidnappings also occur. Various types of pirates still operate around maritime
chokepoints, leaving vessels with limited options for navigation. However, rising insurance costs to
protect sea lines of communication from piracy are compelling the private security sector to enhance
their capabilities at sea. Nevertheless, in 2024, the Middle East is back in the global spotlight after a
Yemeni militant group, the Houthis, began engaging in marauding activities in the Red Sea. The Bab al
Mandab chokepoint is a crucial link in one of the world’s most important maritime routes connecting
the Mediterranean to the Indian Ocean facilitating the continuous transportation of millions of barrels
of oil daily and contributing to 12% of global trade.
In this respect, the Chinese PSCs have been forming their own response to armed drone attacks and
hijack attempts on Red Sea shipping. Providing security service in the maritime domain entails logistic
constraints to carry weapons onboard when commercial vessels dock into national waters. In contrast
to Chinese PSCs operating on land, a select few engaged in maritime security boast a vast international
network of partners. This includes offering logistical services aimed at bolstering maritime security,
exemplified by the presence of floating armouries. In the past decade, the proliferation of floating
5
armouries has increased in response to rampant piracy in high-seas areas and stringent national
regulations regarding the transportation of heavy firearms. These armouries play a vital role in coping
with the restrictions on private security forces carrying firearms into the ports of numerous countries.
The onslaught of Houthi attacks has intensified the imperative to safeguard the crucial sea lanes
responsible for over 40% of China’s hydrocarbon transport. In response, Chinese PSCs are getting ready
to deliver advanced services, including deploying jammers to disrupt transmission signals between
controllers and drones, along with kinetic options such as anti-aircraft guns.
Chinese PSC as Chinese Security Technologies Ambassadors
In China's Arab Policy Paper of 2016xiii, Beijing outlined its strategy for economic and cultural
development with Arab states, emphasizing enhanced connectivity within the BRI. The paper discusses
security cooperation briefly, focusing on enhancing capabilities to address nontraditional security
threats and supporting efforts against piracy, cyber security, and maintaining maritime security in the
Gulf of Aden and off Somalia. Although China's defence cooperation in the Middle East remains limited
compared to the United States and Russia, there is a growing trend in military cooperation. Chinese PSCs
are positioned as ambassadors for Chinese high-tech security products. According to the Stockholm
International Peace Research Institute (SIPRI), China accounted for only 5% of arms transfers to the
MENA region between 2014 and 2018, significantly lower than the United States (54%) and Russia
(9.6%)xiv. However, China's military hardware sales and transfers in the region focus on niche sectors,
including combat-armed and scouting drones and missiles, such as the transfer of an armed drone
production line to Saudi Arabia.
While the Chinese private security sector is a latecomer in the international private security market, the
Chinese PSCs, could lean toward a high-tech evolutionary model. Chinese PSCs are becoming
ambassadors of China’s crowd management technologies, such as facial recognition and sooner could be
the entry point for Chinese AI’s ‘’safe cities’’ product.
In the Middle East, when States have the option to choose a partnership with China in the cyber realm it
is possible to predict that it will follow an ongoing trend of relations balancing with Beijing and
Washington. For example, ‘’the UAE is a small yet ambitious state, both powers are crucial to its strategy
for maintaining security and diversifying its economy.’’xv As the UAE prioritizes its security ties with the
US, particularly concerning the Iranian threat, it's one of only five countries in the Middle East and
North Africa to have a 'comprehensive strategic partnership' with China. In navigating this dynamic, the
UAE effectively balances between relying on the US security umbrella and leveraging Chinese ICT and AI technologies, which are pivotal to its development policies and contribute significantly to digital
advancements in the region.
The UN's 2022 call for enhanced oversight on the trade of military-grade cybertechnologies is a case in
point, with at its core the reevaluation of the conventional regulatory approach toward dual-use
technologiesxvi. Given that most technologies have multiple potential applications, there's an urgent
need for revised regulations that clearly distinguish between commercial uses and national security
imperatives.
6
However, the real challenge lies in distinguishing between legitimate private cybersecurity firms and
cyber mercenaries, and determining when private sector initiatives to enhance government espionage
capabilities cross ethical boundaries. The inherently chaotic nature of the Internet only exacerbates this
challenge.
In the realm of cyber security, both state and non-state actors are tapping into defensive and offensive
capabilities provided by the private sector. Nevertheless, distinguishing between offensive and
defensive cyber services is even more complexxvii due to the inherent opacity of the sector. Since the
inception of the Internet, states have sought to leverage cyberspace for intelligence and coercive power.
Nonstate cyber operators can traverse borders with minimal digital traces and at low costs, presenting
an attractive option for states aiming to wield influence in cyberspace. In both times of peace and
conflict, certain cyber activities blur the lines with mercenary-like activities. In this respect, the
emergence of Big Data applied to border management profiling and new surveillance technologies is
already prone to abuses.
The emergence of cyber mercenaries is already evident, although they are not yet formally recognized
as such. In this respect, the UN Working Group on Mercenary Activities defines cyber mercenaries as
companies using military-grade cyber weapons to carry out tasks for foreign powers, nonstate actors, or
even criminal and terrorist groupsxviii
.
In the Western world, particularly in the US, the liberal attitudes towards cyberspace create a vast grey
area ripe for exploitation. This isn't just by cyber mercenaries but also by PMCs and PSCs seeking to
capitalize on a lucrative and rapidly expanding market. Conversely, authoritarian regimes provide no
insight beyond their firewalls, tightly guarding Big Data under the guise of national security.
Cyber Security and Cyber Mercenaries
The expansion of the Digital Silk Road within the BRI is promoting "digitization with Chinese
characteristics." This initiative aims to position China at the forefront of the fourth industrial revolution,
encompassing digital security, e-services, and integration into smart cities. It involves various
components, ranging from underwater fibre-optic cables to the Beidou satellite navigation systemxix
.
Amidst escalating strategic rivalry between the United States and China, Beijing is increasing its strategic
presence in the MENA region not only to safeguard its energy security but also to assert its dominance
in the digital realm. While many countries are striving to balance the utilization of Chinese technology
against American efforts to block such systems, Chinese PSCs are a component of Beijing’s push in the
digital domain.
The smart cities sector presents a potential clash of interests between China, the US, and regional
actors. The integration of Chinese sensors, Big Data analytical software, and narrow AIs into smart cities
has broader national security implications. For instance, Chinese PSCs are transitioning from offering
basic guarding services to providing comprehensive high-tech solutions, such as semi-autonomous
patrol robots equipped with sensors and narrow AI. However, this raises concerns about privacy issues
stemming from the use of collected video feeds and biometric data.
China's ambition to become a "cyber great power" and its implications for data access fuel suspicions
regarding Chinese PSCs operating high-tech equipment abroad. While China's role as a security provider
7
in regions like the Middle East is still evolving, its digital influence in the region, from 5G to cybersecurity
and Big Data analytics, is rapidly expanding. Consequently, the operational space for Chinese PSCs
venturing abroad is increasing.
Chinese security companies are transitioning from offering low-cost bids to providing additional high-
tech services, leveraging competitively priced AI-enabled facial recognition and surveillance drones,
which are unavailable in the US market due to regulatory restrictions. The use of CCTV and Big Data
analysis is shifting the private security sector toward a more proactive approach, focusing on predictive
analysis and preventive solutions.
However, challenges arise from the Chinese National Cybersecurity Law, especially in countries with
their own cybersecurity frameworks. Concerns about the gathering and processing of personal data by
Chinese PSCs abroad persist, with doubts lingering regarding the security of sensitive information. The
ongoing algorithm weaponization is reshaping the development of smart cities and society, prompting
Middle Eastern monarchies to weigh their exposure to Chinese technologies within the Digital Silk Road.
Blurring the distinction between security and military roles presents a significant risk, particularly in the
realm of cyberspace, where private security firms often operate. These firms, untroubled by potential
labels like "private military entities" or even "cyber mercenaries," operate without fear of
consequences. Unlike PSCs with boots on the ground, who can face swift repercussions for bolstering
the military capabilities of sanctioned governments or non-state actors, those operating in cyberspace
do not fear backslashes.
On the global stage, while mercenaries on the ground sow disorder, their cyber counterparts capitalise
on the demand for easily deployable offensive cyber capabilities. These professionals, enticed by
lucrative opportunities in the private sector, often prioritize financial gain over national allegiance.
However, in China, monetary gain and nationalistic pride are closely intertwined. As China increasingly
favours the use of private security firms with boots on the ground to protect President Xi’s flagship
foreign policy initiative, it appears to also be employing the same strategy in cyberspace. In this respect,
Beijing is discovering the hard wayxx, as the West has, the perils and advantages of outsourcing security
to private companies to maintain plausible deniability. A February 2024 data dump of files from a
Chinese cyber security firm revealed alleged hacking exploits. Like the West, Beijing is finding out the
hard way the perils and advantages of outsourcing to private cyber security firms to maintain plausible
deniability.
As it is happening in the boots on the ground private security sector, there's a similar trend occurring in
the cyber security sector in China. The debate is anchored on whether to follow a Western approach or
a Russian one. In China, there's been some interest in the idea of privatizing cybersecurity, however,
adopting the Russian model would be more challenging for China as Beijing heavily emphasizes control
over its security providers. On the contrary, Moscow's cyber capabilities rely on a close relationship with
skilled cybercriminal organizations. This relationship is based on two principlesxxi: first, the state protects
criminal hackers who avoid targeting national interests, and second, hackers must carry out operations
for the Kremlin when needed.
Moreover, amidst the ongoing debates within the Chinese government regarding the increased
involvement of private security firms in protecting Chinese interests globally, also in the digital realm, it
revolves around the extent of "the Party control the cyber gun," echoing the longstanding Maoist
principle.
8
Recommendations
China primarily expands its influence in the Middle East through economic means, leveraging its
economic prowess as a key tool. Meanwhile, the region is open to the idea of increasing China's cultural
soft power footprint, as long as it doesn't pose a challenge to existing local power dynamics. In this
respect, China believes that its vision of global order and the solutions it proposes could find fertile
ground in the Middle East. China is steadfast in out-competing the West, and given the region's
perceived openness to China's global ambitions, its engagements on the continent are expected to
intensify. Nevertheless, Beijing's economic tools are severely constrained by a rapidly deteriorating
security environment and unpredictability.
Apart from the recent brokered detente between Saudi Arabia and Iran, Beijing is hesitant to actively
involve itself in the security complexities of the Middle East.
The rise in violence against Chinese nationals abroad has prompted a call for the professionalisation of
the private security sector. While some top Chinese security firms operate internationally, most PSCs
struggle due to late entry into the global security sector and difficulty in finding competent Chinese
contractors, often relying on local fixers. Challenges include training personnel with local knowledge and
security skills, limited lucrative contracts, and few PSCs providing internationally accredited training
certifications to staff. Moreover, the notion of "private" in China is influenced by the pervasive presence
of the CCP in businesses, dealings with SOEs, and government bureaucracy shaping the private sector.
While Chinese PSCs may not pose an immediate challenge to Western counterparts in shaping the
Middle Eastern private security sector, their presence demands a clearer understanding of their role and
future development trajectories. Therefore, to compete effectively in the region, strategic policies must
be crafted, focusing on three pivotal aspects.
Firstly, there's the imperative of ongoing monitoring of the Chinese private security sector. Across the
expanse from the Middle East to Africa, the progression of Chinese PSCs adhering to global standards
and attaining internationally recognised certifications could prove advantageous not just for China but
also for local stakeholders and the international community. A small window of opportunity for
collaboration with Western counterparts still exists in promoting transparency and accountability. For
example, the maritime domain along the Red Sea presents a prime opportunity to enhance existing
collaborations that vertically integrate security services, risk mitigation, negotiation, and the insurance
sector. However, neglecting to seize this chance promptly might crack the door open to alternative
evolving models for the Chinese private security sector, such as the assertive Russian approach, which
already forcefully imposes its Wagner model in supporting autocratic regimes to stay in power in
exchange for local resources and access to strategic logistic hubs. Regulating the ascent of Chinese PSCs
through comprehensive norms reduces the risk of adverse consequences overseas and amplifies
potential advantages, particularly in situations where China must uphold its proclaimed "principle of
peaceful rise."
The second aspect revolves around the cyber realm. While there might be room for cooperation with
the Chinese private security sector boots on the ground in cyberspace is far more complex. The murky
nature of cyber operations blurs the lines between state and private entities, particularly when passive
security measures morph into active military engagements. Hence, strengthening international
regulations is paramount to curb and punish cyber actors who cloak themselves as private cybersecurity
9
entities but function as cyber mercenaries, especially as AI integration in cybersecurity becomes
ubiquitous.
The last aspect pertains to the potential integration of Chinese PSCs in the Middle East, particularly
those assigned to guard logistic hubs, into the PLA’s multi-domain operations. Although Chinese PSCs
currently maintain a passive stance, primarily focused on supporting the economic and trade
endeavours of Chinese SOEs and companies abroad, there exists the possibility of future involvement in
safeguarding ports, collecting local intelligence and providing ground support for non-combatant
evacuation operations. Such developments could further blur the distinction between private security
and private military services.
i Alessandro Arduino, ‘’Chinese private security companies in the Middle East.’’ in Routledge Handbook on China–Middle East Relations. Edited By Jonathan Fulton. Routledge, September 2023. (Part VI, Cap.21)
ii Dandan Zhang, China’s Security Protection of Chinese Nationals in the Middle East. Asian Journal of Middle Eastern and Islamic Studies, (2023) 17(1), 66–82. https://doi.org/10.1080/25765949.2023.2196194
iii Dandan Zhang and Degang Sun, “China’s consular protection in the Middle East: innovation in concept, practice and mechanism,”West Asia and Africa (4), (2019)
iv Shaio Zerba,“China’s Libya evacuation operation: a new diplomatic imperative—overseas citizen Protection,” Journal of Contemporary China 23(90), (2014), p. 1094
v Alessandro Arduino, ‘’ Money for Mayhem: Mercenaries, Private Military Companies, Drones, and the Future of War’’ Rowman & Littlefield. October 15, 2023. https://rowman.com/ISBN/9781538170311/Money-for-Mayhem-Mercenaries-Private-Military-Companies-Drones-and-the-Future-of-War
vi Sergey Sukhankin ,‘’An Anatomy of the Chinese Private Security Contracting Industry’’ The Jamestown Foundation January 3, 2023. https://jamestown.org/program/an-anatomy-of-the-chinese-private-security-contracting-industry/
vii Degang Sun, "China’s Approach to The Middle East: Development Before Democracy,” in China’s great game in the Middle East, ECFR, October 21, 2019, https://www.ecfr.eu/publications/summary/china_great_game_middle_east
viii Cortney Weinbaum, John V. Parachini, Melissa Shostak, Chandler Sachs, Tristan Finazzo, and Kate Giglio, ‘’China's Weapons Exports and Private Security Contractors.’’ Santa Monica, CA: RAND Corporation, 2022. https://www.rand.org/pubs/tools/TLA2045-1.html.
ix Daniel C. Mattingly, ‘’How the Party Commands the Gun: The Foreign–Domestic Threat Dilemma in China.’’ American Journal of Political Science, October 21, 2021. 68: 227-242. https://doi.org/10.1111/ajps.12739
x Christopher Spearin ,‘’China’s Private Military and Security Companies: “Chinese Muscle” and the Reasons for U.S. Engagement.’’ National Defense University Press PRISM Vol. 8, No. 4 June 11, 2020
10
xi Alessandro Arduino, ‘’ Money for Mayhem: Mercenaries, Private Military Companies, Drones, and the Future of War’’ Rowman & Littlefield. October 15, 2023. https://rowman.com/ISBN/9781538170311/Money-for-Mayhem-Mercenaries-Private-Military-Companies-Drones-and-the-Future-of-War
xii “Report of the State Council of Protection of Overseas Chinese Rights and Interests,”the National people’sCongress, (25 April 2018),http://www.npc.gov.cn/npc/xinwen/2018-04/25/content_2053574.htm
xiii China's Arab Policy Paper January 2016. English version: http://www.china.org.cn/world/2016-
01/14/content_37573547.htm
xiv Pieter D. Wezeman et al., “Trends in International Arms Transfers, 2019,”SIPRI Fact Sheet, March 2020, https://www.sipri.org/sites/default/files/202003/fs_2003_at_2019.pdf.
xv Mohamed Bin Huwaidin, ‘’ UAE’s Balancing Strategy Between the United States and China.’’ Middle East Policy 2024;31:88–101. https://doi.org/10.1111/mepo.12724
xvi UN, “Group of Governmental Experts on Advancing Responsible State Behaviour in Cyberspace in the Context of International Security (GGE),” in Michael Smith, “The Sixth United Nations GGE and International Law in Cyberspace,” Just Security, June 10, 2021, https://www.justsecurity.org/76864/thesixth-united-nations-gge-and-international-law-in-cyberspace/.
xvii Shane Harris, @War: The Rise of the Military-Internet Complex (Boston: Mariner Books, 2015).
xviii Report of the Working Group on the Use of Mercenaries as a Means of Violating Human Rights and Impeding the Exercise of the Right of Peoples to SelfDetermination, “The Human Rights Impacts of Mercenaries, Mercenary-Related Actors and Private Military and Security Companies Engaging in Cyberactivities,” A76/151, July 15, 2021, https://documents-ddsny.un.org/doc/UNDOC/GEN/N21/192/08/PDF/N2119208.pdf?OpenElement
xix Alessandro Arduino, ‘’ Money for Mayhem: Mercenaries, Private Military Companies, Drones, and the Future of War’’ Rowman & Littlefield. October 15, 2023. https://rowman.com/ISBN/9781538170311/Money-for-Mayhem-Mercenaries-Private-Military-Companies-Drones-and-the-Future-of-War
xx J. Edward Moreno, ‘’China’s Hacker Network: What to Know.’’ The New York Times, February 22, 2024 https://www.nytimes.com/2024/02/22/business/china-hack-leak-isoon.html
xxi Francesco Varese, ‘’La Russia in quattro criminali.’’ Einaudi, 2022 https://www.einaudi.it/catalogo-libri/problemi-contemporanei/la-russia-in-quattro-criminali-federico-varese-9788858441046/

*       *       *

 Mohammed Soliman
Director, Middle East Institute

USCC Testimony

Good morning,
Chair Cleveland, Commissioners Friedberg and Stivers, and Honorable Members of the
Commission,
Thank you for the opportunity to appear before you today to discuss China’s energy, investment,
and economic interests in the Middle East. My name is Mohammed Soliman, and I am the
Director of the Strategic Technologies and Cyber Security Program at the Middle East Institute.
Founded in 1946, the Middle East Institute is the oldest Washington-based institution dedicated
solely to the study of the Middle East. It is a non-partisan think tank providing expert policy
analysis, educational and professional development services, and a hub for engaging with the
region's arts and culture.
At the Middle East Institute’s Strategic Technologies and Cyber Security Program, we study how
emerging technologies are impacting the region, analyze the rise of new tech powers, and seek to
open up opportunities for new tech cooperation between the U.S. and leading regional actors.
Myself and the other scholars in the program have been deeply engaged in studying and
analyzing the tech cold war and decoupling between the U.S. and China, as new geopolitical
fault lines emerge based on technology networks and the flow of information. This has critical
implications for the Middle East as the region seeks to become an inflection point for the new
digital order and a key arbiter in building the global digital architecture.
Before I begin, I will first say that the views and opinions expressed in my testimony today are
my own, and should not be taken as official positions of the Strategic Technologies and Cyber
Security Program nor the Middle East Institute as a whole. Now, on to today’s topic.
Throughout these opening decades of the 21st century, China has steadily expanded its presence
in the Middle East. Although it has traditionally focused its engagement with the Middle East
primarily around economic and energy interests, Beijing is increasingly becoming involved in
the region’s political and security matters, technological landscape, and broader strategic
direction.
China’s relationship with the Middle East – and vice-versa – is absolutely and inextricably
linked to its broad-spectrum global competition with the United States, which has increasingly
transformed into a hostile rivalry. In the technological sphere, this has sparked growing
discussions and accumulating steps on both sides toward so-called “technological decoupling”
— a reduction in asymmetrical reliance or interdependencies and, in some cases, a complete
severing of their ties in the technology and cyber spheres. With the acute impacts of this process
Mohammed Soliman
Director, Middle East Institute
between the two tech superpowers becoming clearer, the Middle East and North Africa (MENA)
is slowly emerging as an important region to watch. Economic and geopolitical ties with the
West have long dictated the shape of the region’s digital environment, but the rise of great power
competition and Middle Eastern countries’ pursuit of economic and technological sovereignty
have slowly deconstructed these dynamics.
The emergence of U.S.-China great power competition is clearly relevant to the new orientation
of Middle Eastern countries - particularly Gulf state actors including the United Arab Emirates
(UAE) and Saudi Arabia - yet I want to emphasize that the movement of these states’ attention to
the East represents a broader shift of the world order’s center of gravity to Asia that goes beyond
great power competition.
The implication of this ‘Asianization’ of MENA states is that, while China’s share of
geoeconomic power is undeniably important, it is precisely the geopolitical risks and baggage
that China carries in its competition with the U.S. that MENA states wish to avoid. Instead, their
more central interest in asserting their sovereignty and autonomy in areas including critical and
emerging technologies drives their Eastward orientation.
At the same time, the proliferation of nimble and focused partnerships – the I2U2, the France-
India-UAE Trilateral, and the India-Middle East-Europe Corridor (IMEC), to name a few -
reflects the perceived importance of linking the Middle East and South Asia and the Arabian Sea
with the Indo-Pacific, as well as forming an intricate transregional economic order, in a manner
that does not exclude the U.S. during this process of Asianization.
Although China’s relationship with MENA states is absolutely evolving beyond its energy-
centric past, the flow of technological elements such as telecommunications, advanced batteries,
and high-capacity computing tools is very much from China to the region, not the other way
around. While countries like Saudi Arabia are certainly aiming to develop their own domestic
abilities to manufacture and export similar items, they are still in the early stages of this process.
Moreover, their ambitious timetables for creating cutting-edge, technologically advanced
economies and societies necessitates the immediate procurement of read-to-deploy infrastructure
such as Huawei cloud data centers. Sovereign wealth funds across the Gulf are investing billions
of dollars in Chinese telecommunications, EV battery, and AI companies not only to diversify
their holdings, but to supercharge their own growth.
The large-scale use of export controls by the U.S. against Chinese firms to contain the latter’s
development of advanced computing technologies puts some MENA states in a delicate position:
walking the fine line between obtaining the hardware needed to construct emerging technologies
like artificial intelligence while complying with the American desire to not see such hardware or
technology fall into Chinese hands. The U.S. itself is also in a delicate position with respect to
export controls: If we prevent MENA states – particularly Gulf states – from accessing critical
tech products like AI chips due to concerns about such states’ warm relations with China, we risk
not only alienating our critical partners in the region, but driving them further towards Beijing.
Again, MENA governments see advanced technology as essential in their national development
pursuits, and such export controls could cause officials in these governments to perceive the US
as sabotaging their futures. In the end, they will not hesitate to purchase exactly what they
require, be it from China or the US.
Recommendation for the Commission here
I propose the following actions be taken by the U.S.:
First, The United States and its MENA partners stand to benefit from one another in these joint
technological endeavors. The U.S. should explore these benefits without viewing its partners in
the region solely through the lens of great power competition.
Second, concomitant with a tech dialogue is the creation of a coordination mechanism for
compliance and licensing for critical technologies. While the United States seeks to expand its
export controls in areas from AI to biotechnology, such regulations should be constructed and
managed in coordination with MENA partners. A coordination mechanism of this kind would
signal to the U.S.’s partners in the region that there is a shift in our perception of their strategic
importance.
Third, the United States should propose the establishment of bilateral or multilateral academic
working groups that will further the efforts outlined above. I recommend that these working
groups draw from multidisciplinary talent for collaboration on the refinement of benchmarks
used to evaluate competencies of state-of-the-art AI systems in commercially sensitive subfields,
including Natural Language Processing and Computer Vision.
Finally, the United States should also establish scientific collaboration through working groups
and workshops to construct a research agenda for “small-data” AI techniques. While the big-data
approach embodied in systems like OpenAI’s ChatGPT will continue to have their potential
scoured by researchers around the globe, non-negligible inefficiencies in hardware, data, and
energy requirements should be mitigated in the long-run.
The United States and its MENA partners stand to benefit from one another in these joint
technological endeavors. The U.S. should explore these benefits without viewing its partners in
the region solely through the lens of great power competition.

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