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China’s Interest in the Middle East: From Barrels to Bytes

China’s relations with the Middle East have long revolved around securing the energy it needs to fuel its economic development. But in recent years, Beijing has been securing another critical resource from the region: data. 

China’s leadership understands that data is the oil that fuels the Fourth Industrial Revolution, the key to achieving technological supremacy, and a source of power in the digital age. China’s 2015 ‘Action Plan to Promote the Development of Big Data‘ even designated data “a fundamental strategic national resource,” calling for the country to “comprehensively advance the development and application of big data” and “accelerate the construction of a strong data country.” 

Under the umbrella of its Digital Silk Road (DSR), a component of the Belt and Road Initiative, Chinese companies have been rolling out digital infrastructure that facilitates the gathering, transportation, storage, and processing of massive amounts of data from partner countries. Such infrastructure includes e-commerce platforms, mobile payment systems, intelligent data centers, fifth-generation telecommunication networks (5G), undersea cables, satellites, cloud storage, smart cities, and artificial intelligence (AI). 

Since the DSR was introduced in a whitepaper jointly issued by China’s National Development and Reform Commission (NDRC), Ministry of Foreign Affairs, and Ministry of Commerce in 2015, the initiative has gained significant traction in the Middle East. 

In Saudi Arabia, Huawei is working with the Ministry of Hajj and Umrah to develop digital infrastructure designed to streamline pilgrimage to Mecca, including control rooms in Mecca and Medina reception centers. Over in Dubai, the company is building a Modular Data Centre Complex Project at its international airport and has teamed up with Dubai Electricity and Water Authority (DEWA) to support the construction of fiber-optic infrastructure and video surveillance. 

Huawei also plans to build the largest solar-powered Uptime Tier III-certified data center in the Middle East and Africa at the UAE’s Mohammed bin Rashid Al Maktoum Solar Park and is working with the Abu Dhabi City Municipality (ADM) to construct a Municipal Disaster Recovery Data Center.

In Egypt, Huawei opened its first cloud data center in February 2019. Meanwhile, China State Construction Engineering Corporation (CSCEC) is building an entire city to serve as the country’s new administrative capital. The new capital is expected to integrate a range of Chinese smart city tech. 

According to research conducted by the RWR Advisory in 2020, China has exported smart city technology to 15 countries in the Middle East.

The Israeli cities of Ashdod, Netanya, and Rishon Lezion have either established partnerships or are planning to establish partnerships with Chinese tech companies on the smart city front and “maintain ‘twin city’ links with Xiamen, Wuhan and Tianjin, respectively,” according to the Institute for National Security Studies. Israel’s Ministry of Labor, Social Affairs, and Social Services, and even the police and Israeli Defense Forces have installed camera technologies from the Chinese surveillance company, Hikvision. 

In Oman, Alibaba has signed an agreement backed by the sultanate’s Ministry of Transport, Communications and Information Technology to partner with the corporations Datamount and International Emerging Technology Company to establish a cloud computing center. Local companies will manage the center, but the data will be stored on Alibaba servers. Alibaba has also been expanding its presence significantly in Saudi Arabia. The Saudi Data and Artificial Intelligence Authority (SDAIA) has signed an agreement with Alibaba Cloud to “empower Saudi cities with intelligence-driven smart city solutions.”

On the e-commerce front, both Alibaba and Jollychic have become digital hubs for commerce across the Middle East. Alibaba, in particular, has been expanding its influence by investing in local enterprises. For example, the Chinese tech giant increased its already majority stake in the popular Turkish e-commerce platform Trendyol in 2021 to 85.6%. 

Meanwhile, Jollychic’s platform has gained prominence in the UAE, Qatar, Saudi Arabia, Egypt, Oman, Bahrain, and Lebanon, providing services to 50 million users across the region. Of their 1.5 million monthly users in 2018, approximately half were located in Saudi Arabia. The company is also active in Jordan thanks to its acquisition of local e-commerce platform MarkaVP for an undisclosed dollar amount in 2017. Jollychic has extended its services by creating a digital payment wallet and plans to expand its ecosystem to include on-demand food delivery, online travel, and transportation booking.

In recent years, Chinese mobile payment platforms have also made inroads into the region. In 2018, Israel Credit Card (ICC, CAL) and OneBill partnered with Alibaba to introduce Ali-Pay to the country. This development establishes a foundation for future engagement with Chinese QR code payment methods like WeChat that may be rolled out for the Israeli public in future. In 2019, Jollypay received authorization to be used in the UAE and Saudi Arabia. Meanwhile, WeChat-Pay launched in Turkey in July 2020 to facilitate Mainland-Chinese tourists transactions across the country. 

Efforts along China’s Digital Silk Road are substantially data-driven and data seeking, centrally focused on the aggregation (and disaggregation) of large data sets feeding into Chinese machine learning initiatives. Sensors and cameras embedded in smart city infrastructure transmit reams of data that can be used to understand many dimensions of their host societies. Meanwhile, end-user data from digital payment and e-commerce platforms create incredibly rich maps of consumer behavior that can serve as key economic indicators. 

The collection of personal data can train a machine-learning algorithm to improve the quality of service provided to others, including those who have not shared their data. But such processing of data can also raise serious privacy issues. 

In nations with Chinese-built infrastructure as well as Chinese digital and telecommunications technologies, a feedback loop can occur: Chinese companies collect sensitive end-user data from applications and structures that can then be processed for use in various sectors, including national security and R&D of Chinese products and services. These products and services can be offered back to partner countries in further iterations of BRI and the Digital Silk Road. By harnessing the power of data, China is able to understand facets of the populations and geopolitics of nations better than the governments of those nations themselves. 

Middle Eastern countries show less concern regarding data transfer than is seen in other parts of the world. According to a 2021 report by Access Now, a non-profit with a mission to defend and extend the digital civil rights of people around the world, “across the Middle East and North Africa (MENA), data protection legislation is still in its infancy, and it remains a low priority.”

As many countries in the region seek to modernize and diversify their economies, officials have welcomed cooperation with their Chinese counterparts in the digital realm. Discussing the arrival of Chinese tech to Saudi Arabia, the country’s Minister of Communications and Information Technology, Abdullah A. Alswaha, remarked, “[w]e’re very proud of our strategic relationship with China…and definitely they’re helping us leapfrog to becoming an innovation-based economy.” 

America has not been as enthusiastic as its Middle Eastern partners about these developments. Amid escalating tensions between the world’s two largest economies, Washington has told Egyptian, Emirati, and Bahraini officials that Huawei 5G is a “Trojan Horse” and that enlisting the company to build their countries’ networks could threaten their ties with the US. America has also called for Jerusalem to limit its technology cooperation with China. 

However, it seems Washington’s efforts have failed to achieve their desired results. Huawei has teamed up with local telecommunication providers in the UAE, Oman, Kuwait, Bahrain, and Lebanon to construct their 5G networks, while Qatar’s leading operator, Ooredoo, has enlisted ZTE to assist with its 5G rollout. Israel will not be enlisting Chinese companies to roll out its 5G network. But Jerusalem has welcomed Huawei’s participation in its solar panel industry, despite warnings from US officials that “the data that is collected off of those solar panels could be used to determine other things.” 

Covid-19 has accelerated the need for digital infrastructure and healthcare technologies, and much of the region’s tech-ties with China have deepened. Beijing Genomics Institute (BGI), a company that specializes in AI, is one such company that has made inroads throughout the Middle East. In April 2020, BGI and Israel’s AID Genomics received approval from Israeli and Palestinian Authorities to establish an emergency COVID-19 testing lab in Gaza. Back in 2019, BGI signed a cooperation agreement with Abu Dhabi’s Group 42. A year later, Group 42 announced that it would be establishing an office in Israel. 

BGI’s expansion in the Middle East has not escaped Washington’s scrutiny. American officials have described the company as the “Huawei of genomics.” According to Bloomberg, ​​the US has raised concerns about the company with its Middle Eastern partners, warning that “Beijing could glean information of intelligence value and share it with their adversaries like Iran, one of China’s top trading partners in the region.” 

These concerns are not entirely unfounded. A 2018 study published in the journal Science revealed that with just 2% of the target population’s genetic data, researchers were able to identify almost everyone in that population, including those who had never undergone genetic testing. BGI maintains that its customers will manage patient samples and access patient data, not the company. BGI was set to team up with Israel’s MyHeritage, a genealogy and health DNA testing company, to build a coronavirus testing lab in Israel, but Israel’s Health Ministry shelved the project for reasons undisclosed. 

Beijing has dismissed Washington’s criticism as a “purely groundless accusation.” China’s Foreign Ministry told Bloomberg that America is nothing more than “a thief calling the other a thief,” asserting that “the US government has long been stealing the private information of its own people and foreigners.” 

Against the backdrop of a sweeping crackdown on China’s tech industry, Beijing has implemented new data laws to regulate how big tech companies’ use people’s private information. But these laws do not necessarily prevent the government from acquiring such data. Article 28 of China’s Cybersecurity Law remains in effect. The law states that “[n]etwork operators shall provide technical support and assistance to public security organs and national security organs that are safeguarding national security.” 

As countries in the Middle East become more entangled in China’s transnational digital infrastructure network and welcome the many benefits such digital integration affords, they must also confront the challenges. Prioritizing data protection is perhaps a good place to start.

Dale Aluf is the Director of Research and Strategy at Sino Israel Global Network and Academic Leadership

SIGNAL Summer Associate Sam Pekats contributed to this article

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