Middle East geopolitical commentary often falls into the trap of sensationalist eulogies over the supposed demise of U.S. regional influence in face of China’s mounting heft and unstoppable sway. This narrative is frequently echoed in Chinese state speeches and media reports set against a backdrop of beautifully choreographed events and photo-ops. In the diplomatic equivalent of reality TV, Beijing presents itself as the newly minted great-power mover-and-shaker of the Middle East, albeit “with Chinese characteristics”.
A recent example of this trend was the July convening of 14 Palestinian factions in the Chinese capitol that produced the “Beijing Declaration on ending division and strengthening Palestinian unity”. Like taken from an episode of a diplomacy reality TV show, and despite the hyperbolic media and punditry, the event has, for now, (fortunately) had little tangible impact in real life, particularly regarding intra-Palestinian “reconciliation”. Notably, this was the second “Beijing Declaration” regarding the Middle East in the span of barely three months, the first being the joint statement of the May meeting of the Foreign Ministers of the China Arab Countries Cooperation Forum. Intriguingly, neither document has been officially published, which apparently has become a recurring theme in China’s Middle East diplomacy. Even the attention-grabbing China-Iran “Comprehensive Strategic Partnership” pact, signed in March 2021, remains unpublished. One can only wonder why.
Despite its limited real-world impact, July’s “Beijing Declaration” is a useful case in point for understanding shifting regional dynamics. Contrary to the “China rising and U.S. declining” myth, the regional balance of power pendulum has not dramatically swung. The main regional shift seems to be the growing impact of the great power rivalry on the region and how this is shaping the actions of its two primary protagonists, the U.S. and China. In turn, the rivalry has affected the choices of the regional powers.
So far, the great power competition’s regional balance sheet does not favor China, and its current “reconciliation” initiative aimed to tip the scales. “Palestinian reconciliation” was apparently a Chinese euphemism for re-legitimizing Hamas and scuttling a U.S.-led post-war framework that excludes the terror organization that masterminded the October 7 atrocities.
China seemed to have thought that October 7 and what followed – —the war in Gaza, Hezbollah and Houthi attacks, and other subsequent flare-ups – would further its strategic ambitions in the Middle East. Instead, the past eleven months have demonstrated a considerable demand for, and supply of, U.S. regional leadership in the Middle East. This mostly unanticipated development stems from a recalibration of the geostrategic positioning of the Middle East by the U.S. and its allies and partners in Europe and the Indo-Pacific. The great power rivalry redirected Western attention to the Middle East as their adversaries – China, Russia, and Iran – grew increasingly closer. Just as the war in the Ukraine embedded the understanding that Europe and the Indo-Pacific are “one front”, the war in Gaza and its wider ramifications have demonstrated that the Middle East is also part of that “one front”. The war in Gaza became the first Middle East war in the current era of great power competition.
China’s Middle East Gambit
Over the past decade, China has increasingly prioritized the Middle East and steadily bolstered its economic and diplomatic presence. Beijing’s interests in the region extend beyond its swelling demand for hydrocarbon energy, to embedding an intricate web of IT and physical infrastructure and cultivating joint ventures and investments in almost every field of commerce and industry – from petrochemicals and manufacturing, through solar energy and EVs, onto R&D in space and AI. As the U.S. and Europe began imposing restrictions on their trade and investments with China, Beijing identified the Arab Gulf as a crucial hedge and an increasingly vital alternative for investments and a possible conduit for global supply chains.
China made considerable regional strategic headway. The Middle East is a stronghold of support for China’s “core interests” (“One China Principle” and Xinjiang). Beijing also considers the countries of the Middle East (barring Israel) as a key constituency of the “Global South”, which it purports to lead. From Beijing’s perspective, diplomatic activism on the Palestinian issue is not just about regional influence but also about cultivating its leadership role across the Global South even if this activism leads to implicit discontent of most Arab leaders, who are opposed to the rehabilitation of Hamas. This is the context for China’s recent convening of 14 Palestinian factions for high-profile talks and staging the “reconciliation” ceremony.
Just over a year ago, China celebrated its role in brokering the Iran-Saudi détente deal. This was followed by championing the invitation of the three most important Arab countries to join BRICS (Egypt, Saudi Arabi, and the UAE). Beijing was – and remains – determined to demonstrate how important the Arab Midde East is for its global diplomacy.
Notably, China sought these achievements not only to enhance its influence and burnish its reputation, but also to validate the principles of the new world order it is promoting through a series of global initiatives – the Global Civilization Initiative (GCI), the Global Development Initiative (GDI), and the Global Security Initiative (GSI). These all consist of seemingly benign ideals that serve specific Chinese purposes. Beijing, therefore, ensured that the GSI was embedded into the rapprochement agreement it brokered between Iran and Saudi Arabia.
China viewed the pact as a step toward establishing an alternative Middle East regional security architecture under its tutelage. Addressing both its domestic audience and the Global South, Beijing repeatedly accuses the U.S. of being the root cause of Middle East tensions. In contrast, ‘China’s way’ is portrayed as one of mutual respect, aiming to deliver security and stability. Chinese official discourse frames the Saudi-Iran deal as a prime example that allegedly strengthens the security of Arab Gulf countries by neutralizing the threat of Iranian attacks on their oilfields.
The American Comeback
Following the botched withdrawal from Afghanistan in August 2021, the Biden administration prioritized curbing Chinese influence in the Middle East, particularly in the Persian Gulf. The Saudis and Emiratis came under mounting American scrutiny for their dealings with China. Despite agreeing to provide state-of-the-art F-35 fighters in return for the UAE joining the “Abraham Accords”, the Biden administration refused to deliver unless the UAE dismantled its China-made 5G cellular network. Not only did the UAE choose to suspend the F-35 negotiations, but it also encouraged Emirati tech companies to pursue joint AI ventures with Chinese counterparts.
As China’s inroads persisted, the U.S. began to quietly communicate its red lines to its Arab allies and partners – no Chinese military facilities (or “look-alikes”), and no major AI joint ventures. At first, the U.S. reportedly compelled UAE authorities to forego Chinese plans to set up what American intelligence presumed to be a military facility at Abu Dhabi’s Khalifa Port. The U.S. then moved to put pressure on Emirati companies carrying out joint AI ventures with Chinese counterparts. Initially, it seemed that U.S. messaging was unheeded.
Meanwhile, the U.S. was intent on anchoring Saudi Arabia—the Gulf’s dominant power— in its strategic orbit. Despite labelling it a “pariah state” during the presidential campaign, in the face of China’s inroads, President Biden was willing to grant the Saudi kingdom the two top items on its “wish-list” – a bilateral defense pact with the U.S. and a civilian nuclear program – provided that Riyadh distanced itself from Beijing. To secure U.S. Senate approval and ratification, normalization between Israel and Saudi Arabia was added to the package – a move reflecting the administration’s conviction that the Abraham Accords were “inoculating” the Middle East against Chinese influence.
Thus, the October 7 massacre occurred at a critical juncture in the U.S.-China competition over Middle Eastern influence, just as the U.S. came close to finalizing the deal with Saudi Arabia. The disruption of this historic development was a major factor in shaping the respective responses to the massacre and the war – Washington’s engagement and unprecedented support to Israel as opposed to Beijing’s support of Iran and Hamas and hostile rhetoric towards Israel.
China’s Downswing
Since October 7, China has sought to use the atrocity to distinguish itself from the U.S., effectively adopting the Iranian strategic view that the massacre and its aftermath are tools to thwart normalization between Israel and Saudi Arabia. This alignment reinforced Beijing’s perception of shared interests with Iran and the ‘Axis of Resistance,’ as evidenced by recent Chinese efforts to ‘whitewash’ Hamas. Contrary to China’s hopes, however, Saudi Arabia never abandoned the path of normalization with Israel, nor its desire for a formal defense pact with the U.S., or American patronage in setting up a nuclear program on its soil.
Moreover, several American initiatives and actions have significantly harmed China’s regional standing. The first of these is the initiative to establish an “Economic Corridor” between India and Europe through the Middle East (India-Middle East-Europe Economic Corridor – IMEC). The project remains alive and kicking despite the war – and in no small part due to the war – and the Houthis’ attacks on Red Sea shipping.
Launched at the September 2023 G20 summit in India, IMEC aims to connect India to Europe through the UAE, Saudi Arabia, Jordan, and Israel via railways, pipelines, and IT infrastructure. Three Mediterranean European countries – France, Italy, and Greece – are competing among themselves to host IMEC’s European hub. In February, President Macron appointed a special presidential envoy to promote IMEC. India and the UAE continue conducting a dialogue at the level of senior officials to promote “their part” in IMEC. In fact, in December, the land corridor began to operate in a limited capacity through trucks making their way from Abu Dhabi to Haifa via Saudi Arabia and Jordan. The trucks arrive at the Jordanian-Israeli border crossing where the containers are transferred between Arab and Israeli trucks, all coordinated through a dedicated Israeli application (Trucknet).
The IMEC story demonstrates one of the key recent developments – that the U.S. does not stand alone in competing with China over influence in the Middle East. Rather, like India, America’s European allies recognize their own stakes in the competition. The growing ties between Beijing, Moscow, and Teheran – and against the backdrop of the war in Ukraine, another regional war amid the Sino-American rivalry – only serve to reinforce Europe’s growing, albeit still tepid, consideration of the Middle East. Those following the proceedings at NATO’s 75th Anniversary Summit in Washington D.C. noted the attention to Iran and the region.
The second key development was the U.S.-commanded operation to deny the mass Iranian missile and drone attack on Israel on April 13-14, utilizing a regional missile defense mechanism. The U.S. and Israel have maintained ambiguity regarding the role of the Arab countries, apart from Jordan, in thwarting the Iranian attack although some of the tracking and countermeasures were most likely carried out over the territories of the Arab Gulf countries, if not actively by them. It is difficult to exaggerate the importance of this event in the context of the great power competition. Despite the tension between Israel and the Arab countries and the harsh criticism of the conduct of the war in Gaza, the U.S. managed to lead an unprecedented intensive multinational military-to-military interoperable operation to thwart a mass Iranian missile and drone attack. Iran’s choice – four months later in August – not to retaliate the killing of a Hamas leader in Teheran (or postpone it) might be considered to demonstrate the deterrent effect of American and Israeli show of military power. China’s support for the Iranian attack positioned it in the opposing camp vis-à-vis its main partners in the Middle East – Saudi Arabia and the UAE. China’s intra-Palestinian “reconciliation” initiative shows how determined China remains to scuttle the possibility of the U.S. installing a mechanism to stabilize a post-war Middle East. These outcomes diminished the appeal of what China had to offer in terms of security to it Arab partners operation and dealt a blow to Beijing’s ambition to use the region to advance its GSI.
The third accomplishment is the American success in pushing China out of joint AI ventures with the UAE and Saudi Arabia. In coincidental but perfect timing, two days after the foiling of the Iranian attack, Microsoft and the Emirati corporation, G42, launched a major joint AI venture officiated by the U.S. Secretary of Commerce. G42 is a private corporation but is controlled by the ruling family of the Emirates, and the Emirati National Security Advisor serves as G42’s board chairman. Shortly after signing the Abraham Accords, G42 announced a joint venture with Raphael, one of Israel’s leading defense companies (and government-owned). However, the venture did not last long, apparently due to the deep Chinese involvement in G42. Reportedly, G42 was closely monitored by American authorities due to their ties with China. In the summer of 2023, the U.S. National Security Advisor warned his Emirati counterpart that the company he chairs will be blacklisted due to its dealing with China. In January, U.S. lawmakers appealed to the Department of Commerce to investigate G42. Since then, G42 vowed to sever all its transactions and business operations with China (including selling a major stake in ByteDance, the owner of TikTok), paving the way to the joint venture with Microsoft with the in-person endorsement by the U.S. Secretary of Commerce.
Furthermore, in recent months, Saudi industry leaders and senior officials have made it publicly clear that as far as AI ventures are concerned, they prefer U.S. and Western corporations, even at the price of dissolving certain transactions with Chinese counterparts. This is a significant transformation those senior officials’ positions reflecting a broader trend: despite China’s growing influence, a September 2023 poll showed that over 50% of Saudi respondents would prefer alignment with a U.S.-led bloc over a China-led one. Furthermore, one can fairly assume that Beijing is deeply concerned that Saudi Arabia might have to distance or “decouple” from China – at least to some extent in sensitive tech areas in exchange for the nuclear program and the American security umbrella – a significant setback for China’s Middle East advances.
Nevertheless, Saudi Arabia and the UAE have increased their investments in in China, with both nations’ sovereign wealth funds exploring expanded opportunities in the Chinese market. However, China still represents only a relatively small share of these funds’ overall investments.
China – The Arabs’ Plan B?
Notwithstanding, the Sino-American competition in the Middle East will persist. The U.S. must still “deliver” on a ratified pact with Saudi Arabia that has yet to be concluded. Furthermore, if the current trajectory of U.S. regional engagement shifts back, the myth of declining American influence in the face of China’s rise in the Middle East could eventually become a self-fulfilling prophecy.
China, for its part, remains keen on using the region to bolster its leadership credentials among the Global South and validate its global initiatives. Therefore, China will likely pursue its pro-Palestinian diplomatic activism.
One should also expect the Arab Gulf leaders to continue exploiting the global power rivalry to advance their interests and positions. A useful illustration is the question of Saudi Arabia’s participation in BRICS. Unlike Egypt and UAE that acceded to BRICS in January 2024 shortly after being invited, Saudi Arabia has yet to officially determine how to respond to the invitation. Meanwhile, Saudi officials participate in some BRICS meetings and events. For example, in a recent BRICS foreign ministers meeting in July, Foreign Minister Faisal bin Farhan Al Saud showed up late and chose to attend only the second day of sessions. One may presume that the “hybrid” nature of Saudi Arabia’s participation in BRICS has much to do with the ongoing deliberations with the U.S. over the bilateral defense pact. Keen to conclude a formal pact with Washington, Riyadh seems to be both hedging and exerting pressure on Washington.
In summary, a nuanced assessment would suggest that China’s Middle East presence and involvement have indeed multiplied, but the main Arab powers still strongly prefer the U.S.-led regional security architecture. For the Saudi-led Arab Middle East, China has become the leverage for retaining U.S. interest and a hedge for the contingency of losing U.S. interest in the region. In laymen terms, China is the Arabs’ “Plan B”. This dynamic underscores China’s rising influence over the past two decades, though it stops short of validating the narrative of China’s inevitable dominance.
This reading of the great power rivalry in the Middle East entails a broader lesson. Although several Arab Middle East countries may have been smitten by “Chinese wisdom” and China’s remarkable economic development, most of them prefer a U.S.-led order. On a larger scale, while China may have accomplished considerable inroads across the Global South, there are clear limits to its reach and appeal. Thus, China’s leadership of the Global South is neither preordained, nor inevitable.
Tommy Steiner is the Policy Director of SIGNAL Group
September 2024
Cover photo by VCG