China begins the 2020s as an important power in the Gulf region[1], with deep and multifaceted relations with each of the eight regional states (Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates [UAE]). While this has been the case in economic terms throughout much of the 21st Century, its influence in political, security, and cultural matters has also been on the rise. While it may have been possible to describe China’s Gulf interests with an oil-for-trade narrative ten years ago[2], the transition to a fuller set of relations has long been underway, and the process has intensified with the 2013 introduction of the Belt and Road Initiative (BRI).

This is remarkable given the relative speed with which China has moved beyond an extra-regional power of marginal influence in the Gulf. The late 20th Century was a period of consolidation, slowly developing relations with the Gulf monarchies[3] between 1971 (Kuwait) and 1990 (Saudi Arabia). [4] The first two decades of the 21st Century have witnessed a significant upswing.

In the 2000s trade – especially energy trade – drove relations and political coordination. At the same time, relations between the Gulf monarchies and the United States, their most important extra-regional partner, were especially tense given the disastrous invasion and occupation of Iraq, which the monarchies opposed. As a result, outreach to China became more frequent and its regional role began to develop, with a security agreement signed between Beijing and Riyadh during a 2006 state visit from President Hu Jintao. Relations have further developed through two multilateral mechanisms. The first is the China Arab States Cooperation Forum (CASCF), a multilateral platform established in 2004 to strengthen ties between China and the 22 member states of the Arab League. The other is the China - GCC Strategic Dialogue, which was created in 2010.

During the 2010s, deeper ties have been the result of ongoing and intensifying Gulf concerns about the future of U.S. commitments to the region, combined with a more muscular Chinese foreign policy under President Xi Jinping. A series of decisions in Washington have contributed to a fear of abandonment in the Gulf: the casual demise of American support for the Hosni Mubarak regime in Egypt during the Arab uprisings, the announcement of the pivot or rebalance to Asia, an inconsistent Syrian policy, and the lack of a GCC role in negotiating the Joint Comprehensive Plan of Action (JCPOA) with Iran all angered leaders in the monarchies during President Obama’s administration. Under President Trump they enjoyed more support but a lack of a coherent regional policy from his administration also was a source of concern. His calls for a total troop withdrawal from Syria and Afghanistan signaled an intention to reduce America’s Middle East presence, and his attempt to establish the Middle East Strategic Alliance was perceived as another move towards a reduced MENA role. Pulling out of the JCPOA satisfied several Gulf leaders, but the so-called “maximum pressure” campaign lacked any kind of strategy for dealing with Iran other than trying to force an unlikely regime collapse. The Iranian response targeted the interests of America’s Gulf partners, including tanker attacks in the UAE port of Fujairah and in the Gulf of Oman, as well as the spectacular 2019 drone attack on Saudi Aramco facilities in Abqaiq and Khurais. While the U.S. condemned each attack, there was no tangible response, further contributing to a concern about the long-term viability of the U.S. security architecture in the Gulf.

Throughout this decade, Xi Jinping’s China has transitioned from the modest foreign policy that it had followed since Deng Xiaoping rolled out the Reform Era in 1978. The 韬光养晦 (tao guang yang hui) or ‘hide and bide’ dictum called for Beijing to “keep a low profile” as a means of easing other countries’ concerns of a rising China. During a 2013 meeting on China’s diplomacy with countries on its periphery Xi introduced the phrase 奮發有為 (fen fa you wei), or “be proactive in seeking achievements”, as an updated foreign policy mantra. This was quickly recognized as a shorthand for a more assertive Chinese foreign policy[5], and became evident with the 2013 introduction of the BRI as the organizing principle of China’s approach to developing relations with countries across Eurasia and the Indian Ocean region. The geography of the BRI gave an increased strategic importance to the Gulf region and the Arabian Peninsula, and relations have grown significantly as a result. The 2016 Arab Policy Paper articulated a Chinese approach to the Middle East for the first time, using the 1+2+3 Cooperation Pattern as a means of building a sustainable long-term presence. [6] Under this framework, 1 represents energy, 2 is infrastructure construction and trade and investment, and 3 is renewable energy, digital economy, and nuclear energy. As Chinese state-owned enterprises (SOEs) and multinational companies won contracts across MENA, this framework has proven to be an important indicator of China’s growing interests and influence. Another framework for cooperation was announced in 2018 during a CASCF Ministers’ Meeting. The “Industrial Park – Port Interconnection, Two-Wheel and Two-Wing Approach” links Chinese investment in industrial parks and ports in the UAE, Oman, Saudi Arabia, as well as Djibouti and Egypt. [7] This establishes a physical presence for Chinese companies in strategically important locations along the Arabian Peninsula’s coastline, linking business clusters and supply chains from the Gulf to the Arabian, Red and Mediterranean Seas.

As a result, the trajectory of China-GCC relations thus far appears impressive. This corresponds with the ambitions both sides have for future collaboration. Despite often grandiose expressions of future cooperation, Chinese and Gulf leaders remain rather pragmatic in developing ties; nobody projects China as a replacement for American power in the Gulf. Instead, it is seen as an important complement to the Gulf monarchies’ increasingly diverse group of extra-regional power relationships, albeit one with substantial economic and political power. At the same time both Gulf and Chinese leaders are aware of the very real challenges to the continued growth in their relations – primarily the response of the U.S, which has explicitly called for less cooperation with China from its MENA allies and partners.

1. Visions

To understand the trajectory of China’s relations with the Gulf monarchies in the coming decade, it is important to understand how each side perceives the other. This section begins with an analysis of how China is perceived by Gulf actors, and then discusses how the Gulf monarchies are perceived in China. When Gulf leaders consider China, they see an important extra-regional power with long-term interests in the region, a major global economic power, and a source of support in their efforts to diversify their economies. When China considers the Gulf monarchies it sees a major source of energy, an important geo-strategic hub for the BRI, an important influence in global Islam, and a source of contracts for its SOEs and MNCs.

The Gulf Monarchies Look at China

Partnerships with extra-regional powers has long been an important feature of the Gulf monarchies’ security and foreign policies. With Iran and Iraq in their immediate region, the monarchies face larger and conventionally stronger states with competing regime types. To cope they adopted a two-pronged approach: cooperation through the GCC (prior to 2017) and dependence on external security relationships. While the UAE and Saudi Arabia have pursued uncharacteristically independent and assertive regional foreign policies since the Arab uprisings, partnerships with the U.S. have been the central pillar of each monarchy’s defense policy since the end of the Cold War. In the wake of the Iraqi invasion of Kuwait, the U.S. signed defense cooperation agreements with Kuwait, Bahrain, Qatar and the UAE, and it has had a facilities access agreement with Oman since 1980. These agreements have facilitated the construction of a GCC-centered Gulf status quo, with U.S. troops and bases providing a deterrent against Iraqi or Iranian aggression. The asymmetrical nature of these relationships has contributed to a fear of abandonment among the Gulf monarchies, whose leaders have to take seriously the threat of a diminished U.S. commitment. While troop numbers have remained consistent and the U.S. continues to make robust arms sales to the monarchies, regional leaders have been hearing the same message from presidential administrations and congressional leaders from both parties: the U.S. is over-committed. As a result, the monarchies have steadily been diversifying their extra-regional relationships. [8] The UAE, for example, has signed strategic partnership agreements with China, India, Japan, South Korea, Singapore, Russia, Germany, and Greece in recent years. While none of the GCC countries believe that any combination of states will provide the same type of security that the U.S. does, this diversification provides a small level of security and substantial diplomatic support. Among these extra-regional partnerships, China provides perhaps the greatest potential as a long-term hedge against U.S. reduction; the fact that Washington perceives Beijing as its greatest competitor and has increasingly uses Cold War rhetoric to describe their relationships means that a Gulf feint towards China will likely spur the U.S. to action in support of the monarchies, if for no other reason than to limit possible Chinese gains. Beyond the U.S. element, the fact that China has established partnership agreements with every Gulf state except Bahrain and is the largest regional economic partner also makes it a major extra-regional power. Its BRI and Arab Policy Paper articulate clear policy goals for regional actors, contributing to a perception that China will continue to be an important long-term actor. And of course, the steady growth of its political, economic, and military power has allowed it to transition from a regional power with global interests into a global power. As such, it appears to offer a wider range of benefits than any other extra-regional power other than the U.S.

Another important consideration is how China can support domestic agendas of the Gulf monarchies. Each of them is intensely aware of the vulnerability of their rentier model; other than the UAE none of the GCC states has made a significant move towards a post-energy economy. With a reliance upon a single resource that is perceived to be in sharp decline, the political stability of the monarchies depends on managing the transition to a post-oil economy. All have embarked upon ‘Vision’ development programs with the goal of building sustainable economies: Saudi Vision 2030, Abu Dhabi Vision 2030, Qatar National Vision 2030, New Kuwait 2035, Bahrain’s Economic Vision 2030, and Oman Vision 2040. A common feature in each program is using foreign direct investment and contracting to support the development of indigenous industries. These programs dovetail with the five BRI cooperation priorities of policy coordination, facilities connectivity, unimpeded trade, financial integration, and people-to-people bonds. [9] In each of the Gulf monarchies leaders have emphasized the complementary nature of their ‘Vision’ programs and the BRI. Saudi Arabia’s Crown Prince Mohammed bin Salman, for example, described the BRI as “one of the main pillars of the Saudi Vision 2030 which would seek to make China among the Kingdom’s biggest economic partners.”[10] During the 2019 Belt and Road Forum in Beijing the UAE sent a delegation led by Prime Minister and ruler of Dubai Sheikh Mohamed bin Rashid al Maktoum, who signed deals worth $3.4 billion with Chinese firms investing in Dubai.[11] In short, leaders in the Gulf monarchies see the BRI as a means of pursuing their own domestic economic agendas.[12]

Finally, another important consideration for leaders in the Gulf is the perception of China’s rise as a global normative power. The fact that China claims the principle of non-interference in the domestic affairs of other countries as one of its five principles of peaceful coexistence provides an important ideological juxtaposition against U.S. democracy promotion. This is all the more powerful given the perceived crisis of democracy as many Western democratic countries have faced significant domestic political problems while China’s authoritarian government seems to be deftly navigating development and economic challenges. This is attractive in authoritarian Gulf monarchies. That China is seen as a rising power that will not impose political conditions on its partners is an important consideration in understanding the expansion of Chinese influence.

The U.S. and China’s contrasting approaches to COVID-19, the greatest political and economic crisis of our time, reinforces this last point. While the coronavirus broke out in China, the government was able to adopt harsh measures to contain its spread throughout much of China (although clearly not outside of China), and within a few short months was well on its way to economic recovery. The U.S. on the other hand has politicized its response to the virus, further polarizing an already divided country, and has been unable to manage the crisis. By the summer of 2020 China was offering material and experiential support to the Gulf monarchies, building field hospitals in Kuwait and Dubai and cooperating with Saudi Arabia and the UAE in their testing and tracing efforts. China’s Sinopharm has been working with the UAE and Bahrain in its efforts to develop a vaccine, and CanSino Biologics has been trialing a vaccine in Saudi Arabia. In short, the China model is seen as more capable in dealing with COVID-19, further increasing its importance among the Gulf monarchies.

China looks at the Gulf monarchies

China also sees a wide range of interests met through engagement with the Gulf monarchies. The most obvious is a source of oil and liquified natural gas (LNG), both of which China imports in great quantities. China became a net importer of oil in 1993 and since then the Gulf has come to play an important role in its energy security. Despite China’s success in diversifying its oil suppliers, Gulf exporters typically account for 40 – 50 percent of China’s oil imports, making the region an especially important component of its energy security.[13] In 2018 the Gulf monarchies collectively sold nearly $68 billion worth of oil to China.[14] This has increased in the wake of U.S. sanctions against Iran, which resulted in Beijing needing to find a replacement for seven percent of its oil imports and Saudi Arabia picking up the slack.[15] Qatar’s role as a global LNG power also features in China’s energy calculus. Between 2017 and 2023 Chinese LNG demand is projected to increase by 60 percent as it tries to move towards cleaner energy. Qatar is expected to be China’s largest supplier by then, accounting for a projected 28 percent of its LNG imports.[16] In 2018 Chinese LNG imports from Qatar were valued at $6.9 billion and were 14 percent of its total.[17] Taken together, this makes Gulf energy a significant economic interest for China.

Geography is another consideration when Chinese leaders look to the Gulf monarchies. As discussed above, the BRI must pass through the Middle East, and the monarchies represent the only grouping of relatively stable states in the region. The BRI’s overland route, the Silk Road Economic Belt, connects to Iran and Turkey, both Gulf rivals, but importantly neither country enjoys especially strong relations with many of its MENA neighbors. Since the BRI is fundamentally a series of projects designed to capitalize on regional and inter-regional connectivity, the relative isolation of Iran and Turkey make them less useful BRI partners for the time being. The Maritime Silk Road Initiative component of the BRI, on the other hand, is at a more developed stage, with the above-mentioned “Industrial Park – Port Interconnectivity” project linking Arabian Peninsula port cities with the PLAN Support Base in Djibouti and Egyptian ports connecting the Red Sea to the Mediterranean via the Suez Canal. The Gulf monarchies therefore offer substantially more to China in the way of regional and inter-regional connectivity, making them important BRI partners.

Islam is another important consideration for China in its relations with the Gulf monarchies, for both domestic and international reasons. Domestically, China faces significant pressures from its Muslim minorities, especially the Uighurs in Xinjiang, where an estimated 1,000,000 Uighurs have been detained in what the PRC describes as re-education camps and others describe as internment camps. Facing strong international condemnation for its approach to political Islam, China has found unlikely allies in the Gulf, where governments also see religious ideology as challenges to their governments. When Saudi Crown Prince Mohammed bin Salman visited China in early 2019 and was asked about Xinjiang, he reportedly stated that Saudi Arabia respects “China’s rights to take counterterrorism and de-extremism measures to safeguard national security.”[18] Shortly afterwards 36 Muslim-majority countries, including all of the Gulf monarchies, signed a letter of support for China’s Xinjiang policy. Beyond China’s domestic pressures associated with Islam, cooperation with the Gulf states is also useful in developing the BRI. Passing across several Muslim-majority countries, the BRI will be easier to implement if it is perceived to be working with Islamic traditions. Islamic finance could therefore be an interesting mechanism for increasing cooperation, and in this the UAE is especially useful. Dubai is home to the world’s largest Islamic Sukuk hub with an infrastructure supported by Nasdaq Dubai. Dubai has already cooperated with China on Islamic banking and finance, with an annual China-UAE conference held at Hamdan Bin Mohammed Smart University.[19]

Related to the Gulf ‘Vision’ development programs, China also sees the Gulf monarchies as a major source of international contracting for its SOEs and MNCs. Data from the American Enterprise Institute’s China Global Investment Tracker shows $68.12 billion worth of investment and contracting for Chinese firms operating in GCC countries between 2013 and 2019.[20] Much of this has been infrastructure construction as the monarchies continue their transition from sparsely populated, largely rural countries to modern urbanized ones. Another factor is the rise in contracting as they implement digital technologies, such as artificial intelligence, fintech, 5G networks, smart cities, and digital commerce, all of which China has a competitive advantage. While infrastructure construction may slow due to the COVID-19 adjustment, the continued march towards a digital economy will continue and Chinese firms can expect to continue tendering lucrative contracts throughout the Gulf monarchies.

2. Challenges

This does not mean to imply that China-Gulf relations do not face challenges. The most significant is and will remain the U.S. As the most important partner for each of the monarchies, the U.S. is an important consideration as they develop stronger ties with China. The deterioration of U.S. – China relations appears to be a structural feature of international politics; the significant gap between their preferences for international political order and norms presents a major hurdle in maintaining a cooperative relationship. Under the Trump administration the BRI has been countered with a more muscular approach to the Indo-Pacific, with security cooperation between the Quad of Australia, India, Japan and the U.S. in the early stages of balancing China in the Indian Ocean region.[21] The 2017 U.S. National Security Strategy framed competition with China in binary terms, stating, “A geopolitical competition between free and repressive visions of world order is taking place in the Indo-Pacific region.”[22] With this Cold War redux narrative, states with close ties to both the U.S. and China will have to strike a delicate balance. For the Gulf monarchies, as with many other countries across Eurasia and the Indian Ocean, there is little interest in becoming a theatre of great power competition, and the approach thus far has been to diplomatically wait to see if a Biden administration adopts a different approach to a China policy that is unlikely to fundamentally change.

Beyond U.S.-China competition, regional tensions in the Gulf region also pose a challenge. This also can partly be attributed to a changing U.S. Gulf policy, as regional leaders respond to American behavior. The ‘maximum pressure’ campaign against Iran has resulted in aggression from Tehran, which threatens to destabilize an already shaky status quo. At the same time, it has resulted in some Gulf monarchies actively reaching out to the Iranians in an attempt to lessen tensions. The Trump administration’s response to the GCC crisis in 2017 has also contributed to a less stable region. While the GCC has always been a less unitary organization than it appeared, U.S. leadership supported an order that allowed them to work together. President Trump’s support for the isolation of Qatar was contradicted by the Department of Defense and State Department, and within months the president changed course as well. However, the lack of leadership and brief support for the conflict resulted in a GCC split that more than three years later shows no sign of being resolved. A weakened GCC combined with an even more isolated and aggressive Iran contribute to a Gulf regional order that faces real potential for greater instability, which in turn could affect China’s substantial regional interests and lead to a recalibration of its approach to the Gulf.

Another challenge is China’s difficult relationship with Islam. As described above, the Gulf monarchies have thus far not condemned China’s actions in Xinjiang or publicly expressed concern. However, it is seen as a potential wedge issue to affect China – MENA relations, and as China’s relations with Western liberal democracies continues to deteriorate, it is likely that Xinjiang will feature more significantly in their discussions about China with MENA interlocutors. It likely will not strain Gulf relations with China, but it is an issue that is hard to avoid.

3. Conclusion

Taking stock of the visions and challenges in China-Gulf relations, the trajectory for the coming decade appears to indicate a continuing expansion of Chinese interests and influences on the Arabian Peninsula. There remain significant challenges and the potential for U.S.-China competition to play out in the Gulf should not be minimized. However, the Gulf monarchies are skilled at navigating competition between extra-regional powers and they will likely find several opportunities to advance their own interests as Washington and Beijing struggle for influence. The most significant challenge for the Gulf monarchies will be to maintain this balance in such a way that does not result in the Gulf becoming a theatre of great power competition.

*The research was supported by Center for Global Partnership (CGP), The Japan Foundation.