China’s Economic Impact in Middle East

Throughout the twenty-first century, China’s economic presence in the Middle East has grown significantly. Beijing has built upon previously modest bilateral relationships to establish deeper economic, diplomatic, cultural, and security ties. The result is transformational: a country once perceived to be of marginal importance has now become a major regional player.

In recent years, China has increased its economic and political presence in the MENA region. Numerous countries in the region have become its largest trade partners and foreign direct investors. Although China has played a relatively small role in regional security matters, it will likely have to take an increasingly active role in conflict resolution over the next decade if it intends to protect its economic interests.

Chinese growth and modernization rely heavily on energy supply, and close to half of its requirements come from the Middle East. It will remain dependent on the region for many years to come. It is likely that China will expand its economic relationships with major MENA energy suppliers given its energy needs. Although Africa will remain China’s major “sphere of influence,” the MENA region will remain its primary energy source.

The majority of MENA’s exports to China are hydrocarbons or petroleum-products, while they import a wide variety of Chinese consumer and industrial products. As many Gulf countries plan to transition to post-hydrocarbon economies, the centrality of energy in their trade with China poses a long-term challenge. Carbon consumption in China is expected to peak before 2030 before being carbon neutral by 2060, which illustrates the long-term challenge facing Gulf energy exporters.

With the Silk Road Economic Belt and 21st-Century Maritime Silk Road, China has already planned out its MENA policy objectives of being a major regional player. However, it faces major obstacles in implementing them, including conflicts and wars, and rivalries between regional and international actors. A litmus test for China’s great power status will be how it addresses these obstacles in the face of a potential U.S. withdrawal.

Among China’s biggest challenges in the coming decade will be maintaining one of its most fundamental foreign policy principles: non-interference. A fundamental value of Chinese foreign policy is respect for sovereignty and territorial integrity, nonaggression, noninterference, mutual benefit, and peaceful coexistence.  While China will certainly strive to maintain a neutral stance in the region, it will eventually have to engage in effective mediation diplomacy. A tightrope must be walked by China when dealing with the multifaceted challenges presented by the United States and the EU, as well as its decision to cooperate or compete with Russia, which has gained more prominence in MENA.

It is also crucial that China protects its economic interests without any military expansion to avoid appearing expansionist. Ultimately, China will continue to engage in the MENA region economically and politically, while maintaining caution not to undermine the security architecture that the United States has implemented.