- Tomasz Rydelek
The Chinese Middle East
The complex web of links, relationships, and disputes in the Middle East can make many dizzy. However, the presence of the People's Republic of China in these structures is usually presented one-dimensionally. Beijing enters, buys hydrocarbons, pays, and leaves all while maintaining friendly relations with everyone, as if China is immune to all the challenges posed by this important region. Yet, China is not immune and also has to face them constantly. So much so that, paradoxically, the United States can be portrayed as China's ally in the Middle East. How is this possible?
Tough Beginnings
Today, China has friendly relations with both Iran and Saudi Arabia, as well as all Gulf countries. However, this was not always the case. As late as the late 1980s and early 1990s, some Arab countries did not have official relations with Beijing and instead recognised authorities in Taipei as the legitimate representatives of China on the international stage. But, let us start from the beginning.
In 1949, the Communists won a civil war in China. The newly formed People's Republic of China viewed the Middle East through the prism of the Cold War, or East and West rivalry. The Arab monarchs and the Shah of Iran appeared to the communists in Beijing as allies of the US and the West. Not unreasonably, the first Arab country with which the People's Republic of China established relations was revolutionary Iraq in 1958, just one month after the assassination of King Faisal II and the seizure of power by the Iraqi military.
Beijing also supported a number of Middle Eastern revolutionary groups, such as the Popular Front for the Liberation of the Occupied Arabian Gulf that was active in Oman during its civil war. The local revolutionaries supported by the USSR and China were on one side while on the other, the Sultan of Oman was backed by Britain and Iran.
The normalisation of relations with the People's Republic of China was hampered not only by Beijing's sponsorship of revolutionary movements, but also by the attitude of the Gulf countries, in particular Saudi Arabia, towards Taiwan. During the Chinaese Civil War, most Chinese Muslims fought on the Kuomintang’s side often rising to high positions. A good example is Ma Bufang who sat on the Kuomintang's central committee and went on to serve as Taiwan's ambassador to Egypt and then to Saudi Arabia.
For many years after this war, the Saudis supported the government in Taiwan, only withdrawing their recognition in 1990. However, there is still an Office of Economic and Cultural Representation of Taiwan in Riyadh which acts as a de facto embassy.
It was not until the regime of Deng Xiaoping when China embarked on a path of reform and began to open up to the world that relations between China and the Gulf monarchies changed. With the Chinese economy’s rapid development, Beijing decided to meet the increased demand for energy resources by importing oil and gas from the Middle East.
Strategic Cooperation
In 1978, a revolution broke out in Iran, ousting the Shah from power and the country being transformed into the Islamic Republic. This had major implications for the continued dynamics of relations between Beijing and the Middle East. The Chinese relationship with the ever-rich Arab monarchies developed at a different pace than with the permanently sanctioned Iran. These two perspectives require separate commentary. We will first focus on the current state of Arab-Chinese relations.
In 1990, when China established diplomatic relations with Saudi Arabia, trade between China and all the Gulf Cooperation Council (or GCC) countries was only around $1.5 billion. As of 2021, it is up to $230 billion. In 2020, China overtook the EU and became the GCC's largest trading partner.
GCC countries account for as much as 40% of China's oil imports. Moreover, China has signed cooperation agreements with all GCC countries, except Bahrain. In recent years, there has also been a growing interest among Gulf countries in Chinese electronics and industrial machinery.
The relationship culminated with Xi Jinping's visit to the Gulf in 2016 during which the Chinese leader provided more details on the Middle East aspects of the One Belt and One Road project. In the same year, Beijing also published China's Arab Policy Paper which outlined a vision for its cooperation with the region. The paper indicated that the model for Beijing's cooperation with Arab countries should be a '1+2+3' format, in which '1' is energy, '2' is cooperation in infrastructure development and trade, finally '3' is cooperation in nuclear energy, high-tech industries, and satellites.
Participation in such cooperation formats is all the more attractive as there are intense discussions in almost all of the Gulf monarchies about diversifying local economies and reducing dependence on energy exports. A good example of Chinese initiatives is the Saudi Vision 2030 project, one of the pillars of which - as Mohammed bin Salman himself put it - is participation in the 'One Belt and One Road' initiative. The New Silk Road is being looked at in a similar way in the neighbouring Emirates or Oman.
In doing so, Beijing pays no attention to the democratisation of the region, respect for human rights or transparency, which is a big bonus when dealing with the Arab world. The Arabs repay the Chinese likewise and don’t criticise Beijing's repression of the Uighurs.
However, this does not mean that China's cooperation with the GCC is unproblematic. It is important to remember that the GCC countries do not remain a monolith and conflicts often arise within the organisation. An example is the dispute between Saudi Arabia and the United Arab Emirates against Qatar which almost led to an armed confrontation in 2017. For China, cooperation with both the Kingdom of Saudi Arabia and Qatar is crucial thus Beijing must be extremely careful not to be drawn into such internal disputes. Both countries are key energy partners with Riyadh supplying around 17% of China's oil needs and Doha around 25% of its LNG needs.
A much more serious challenge for Beijing, however, are the wider regional conflicts that are far beyond any quarrels within the Arab community. In addition to Saudi Arabia, China also maintains close ties with the Saudis' arch-enemy, Iran. This often puts Beijing in a very uncomfortable position.
Tehran’s Dilemma
No matter how the international situation changes, China's will to build a comprehensive and strategic partnership with Iran will remain unshaken. - Xi Jinping in 2019.
China and Iran have much in common. Both countries are heirs to ancient cultures dating back thousands of years. They are also jointly opposed to the unipolar concept of international order in which the USA is the only global hegemon and, together with Russia, opt for a multipolar world.
China is widely seen as a close ally of Iran and is, after all, Iran's largest trading partner. Beijing is also helping Teheran to circumvent US sanctions. The crowning evidence of the close Sino-Iranian alliance is supposed to be the 25-year cooperation agreement signed by the two countries in 2021. However, a closer look at Beijing-Tehran relations reveals that China's policy towards Iran is largely based on opportunism and instrumental use of Iran in the wider US-China rivalry.
While China is Iran's largest trading partner, the relationship is dominated by energy commodities. It is estimated that as much as 75% of Iranian exports to China are crude oil and oil products. This is estimated to be over 1 million barrels per day. Yet Beijing's assistance in circumventing sanctions in fields other than oil is limited.
Tehran is particularly annoyed by the small scale of Chinese investment in Iran. When President Trump withdrew from the nuclear deal and sanctioned Iran in 2018, Western European companies withdrew from many lucrative investments in Iran. Tehran hoped that Chinese investors would take the place of the Europeans. The Chinese indeed did take over some investments, such as the contract for the development of the South Pars field, but - in fear of US sanctions - did not fulfil their commitments. A year after taking over the South Pars development contract, the Chinese CNPC withdrew from the contract.
The small scale of Chinese investment in Iran is best illustrated by numbers. Since President Raisi took power in Iran in August 2021, the Chinese have invested a mere $131 million in Iran - a figure smaller than that invested by Afghanistan! By comparison, Russia - during the same period - invested nearly $2.7 billion in Iran. With that said, it should be noted that before the invasion of Ukraine, Russia was also sceptical about investing in a sanctioned country. It was only Russia's exclusion from Western markets that changed the situation and emboldened Russian investors.
In 2021, news circulated about China's alleged willingness to start investing up to $400 billion in Iran. Indeed, China and Iran signed a 25-year cooperation agreement which Iranian diplomats, led by Minister Javad Zarif, tried to present as a watershed moment in Sino-Iranian relations, but proved to be much ado about - almost - nothing. Chinese diplomats immediately cooled their excitement, pointing out that the agreement does not contain any specific commitments and only defines the general direction of Iran-China relations over the next 25 years. And indeed, no major Chinese project in Iran has been announced since the agreement was signed. China's attitude is causing disappointment and even irritation in Iran.
Between the Saudis and Iranians
However, this is only part of a larger dilemma. A much bigger problem is the rapid deepening of China's relations with the - Iran-hostile - GCC countries. Tehran worries that the rate of expansion of Arab-Chinese relations is disproportionately greater than that of Sino-Iranian relations. Put simply, Iran is afraid of being left behind.
An example of Tehran's growing distrust of China could be seen in December 2022 during the Arab-Chinese summit in Riyadh. Participants issued a joint statement supporting the UAE's diplomatic efforts to resolve the conflict with Iran over three islands in the Persian Gulf that Iran seized militarily in the 1970s. The islands in question were Abu Musa along with Greater and Lesser Tunb. The Chinese also signed the statement which Iran strongly protested and summoned the Chinese ambassador to the Foreign Ministry. The Iranian press began to wonder about the future of relations between Tehran and Beijing.
Abdolreza Faraji Rad, a former Iranian diplomat, commented on the behaviour of Chinese diplomats as follows: "If this trend of strengthening relations with the Arabs continues in Chinese politics, in less than a decade, China will become as much of a problem for Iran as America."
Iranian concerns over the expansion of Arab-Chinese relations are justified. Cooperation with rich and modernising Arab countries is far more attractive to Beijing than cooperation with sanctioned Iran. However despite growing frustration, Tehran's options are limited. The Iranians can demonstrate their discontent, but they cannot stand up to the Chinese as it is oil exports to China that save the Iranian budget.
The December Arab-Chinese summit appears to herald a further rapprochement between Beijing and the GCC. Contacts with sanctioned Iran will probably recede into the background. However, it is doubtful that Beijing will completely abandon its partnership with Tehran. After all, the Chinese can always use Iran with its ballistic missile and the nuclear programme as a tool to pressure the US or the Arab monarchies should there be some sort of Arab-Beijing crisis.
China's Middle East?
That said… what is the ultimate goal of Chinese policy towards the Middle East?
Some circles in Washington fear that the Chinese are not only interested in economic cooperation with the region, but also in taking over America's role and building a new 'Chinese Middle East.' The truth, in reality, is less sensational.
Paradoxically, China is the main beneficiary of the security architecture established by the Americans in the Middle East. As the US Navy ensures freedom of navigation in the Persian Gulf, China can safely import vast quantities of energy resources from the region. In turn, US military presence in the region provides security for Chinese investments.
Beijing fully understands that it is, as President Obama put it, a 'free rider,' enjoying the 'benefits' of the US military presence in the region. Quite simply, China has been active on several occasions in maintaining this American dominance in the Gulf, for example by voting in favour of UNSC Resolution 1441 which the Americans later used as a justification to invade Iraq. The Chinese also took part in international operations against Somali pirates and pressured Iran on the nuclear deal.
The invasion of Iraq is a particularly interesting example. After the fall of Saddam Hussein, China became Iraq's main trading partner. Chinese companies are now involved in oil fields which account for about 59% of Iraq's oil production. This way, China and Iran have become the main beneficiaries of the American toppling of Saddam Hussein's regime.
It is true that the US military presence in the region has brought China huge economic benefits. However, Chinese strategists point out that - in the long term - US dominance in the Middle East could pose a critical threat. In a theoretical US-China war, the US navy could block the key Straits of Hormuz and Bab al-Mandab, thus drive the Chinese economy into collapse. China's dependence on Middle Eastern energy resources makes the Gulf region a de facto 'soft underbelly' for China.
Therefore, Beijing's relations with the GCC countries appear to be crucial to securing China's interests in the region. It is in these countries (along with Israel) that the US’s regional security architecture is based. Whoever has the GCC countries in his sphere of influence has a strategic advantage in the Gulf region. At the moment - despite the pivot towards Asia - America still wields enormous influence over the Council countries. However, this situation may not last forever. Arab leaders, notably Mohammed bin Zayed, and Mohammed bin Salman, are trying to become independent of the US and build their own strategic self-reliance. The US-China balancing policy plays a key role in strengthening this Arab self-reliance.
Rather than competing militarily with America in the Gulf, the Chinese are helping the Arab monarchies to strengthen their strategic self-reliance, for example by assisting the Saudis with their ballistic missile programme. At the same time, Beijing is trying to build a thread of understanding between the Saudis and Iran. A Saudi-Iranian war would be a disaster for the Chinese economy as it would block China’s supply of Middle Eastern energy resources. Therefore, the Chinese have decided to mediate between Riyadh and Tehran leading to an agreement to resume diplomatic contact in March 2023.
Rather than completely destroying the American security architecture in the region, the Chinese would prefer to reshape it in such a way so that the Arab countries take over the Americans' existing responsibilities. A scenario in which the Arabs shoulder the stabilisation of the energy commodity market and ensure freedom of navigation in the Gulf would be ideal for the Chinese.
China is very sceptical about the idea of military competition with the US in the Gulf. This seems to be mainly due to the already described alignment of US-Chinese interests in the area, as well as historical issues. Being richer from the result of US military interventions in Iraq and Afghanistan, Beijing is negatively disposed towards even symbolic military involvement in the Middle East. The Chinese probably believe that sending their troops to the Gulf - riddled with various animosities (not only Saudi-Iranian) - will draw China into regional conflicts and undermine the economic benefits Beijing derives from the region.
The Chinese, therefore, want to remain a free rider in the Gulf for as long as possible. Hoping that even if the Americans gradually reduce their military involvement in the region, stability in the energy market and freedom of navigation will be maintained by the GCC countries which are constantly expanding their armed forces. And China will continue to reap huge economic benefits from cooperation with the Gulf at almost zero political and military costs.
Sources:
W. Green, T. Roth, China-Iran Relations: A Limited but Enduring Strategic Partnership, U.S.-China Economic and Security Review Commission, 2021
T. Rydelek – Chiny i arabskie monarchie Zatoki Perskiej. Zagrożenie dla USA?, Układ Sił, Nr 26, 2021
J. Fulton, China’s changing role in the Middle East Atlantic Council Rafik Hariri Center for the Middle East, 2019
J. Reardon-Anderson (Red.) The Red Star and the Crescent China and the Middle East, Oxfrod University Press, 2018
