Expert Speak Raisina Debates
Published on Jun 10, 2024

China’s primary chase in West Asia remains economic and it will continue to push for economic integration despite the region’s challenges.

Arab states and China tighten partnership at a time of turmoil

The tenth ministerial conference of the China-Arab States Cooperation Forum held in Beijing recently saw China aligning its agenda more closely with that of its Arab partners. Importantly, the conclave comes close on the heels of the Israel-Hamas conflict in the region, and Chinese President Xi Jinping’s move to spread influence in in a geography traditionally dominated by the US.

China’s move to build its own capacities in West Asia, particularly in the Arab states, has already seen a variety of successes, at times, more out of chance than strategy. The mediation and delivery of Saudi Arabia–Iran normalisation in 2023 and its steadfast and vocal support towards the Palestinian cause have given it favourable traction even if the cost has been a significant loss in its bilateral with Israel. 

China’s move to build its own capacities in West Asia, particularly in the Arab states, has already seen a variety of successes, at times, more out of chance than strategy.

“War should not continue indefinitely; justice should not be absent forever. Commitment to the two-state solution should not be wavered at will,” Xi said during his speech at the forum inaugural. Since October 2023, when the war began on the back of Hamas’s terror attack against Israel and abduction of Israeli citizens, China has not condemned Hamas by name. In fact, Beijing has played host to talks between Hamas and Fatah, both Palestinian factions, both having starkly different approaches to the issue. Scholar Yun Sun, recently explained that China is increasingly seeing Hamas as a legitimate political force in a future Palestinian statehood. This is, of course, contrarian to Israeli military aims of the war in Gaza, where it has repeatedly said that it would only accept the complete destruction of Hamas. 

Beyond the geopolitics of it all, China’s primary chase remains economic, and so was the undercurrent of the Summit. Both Arab states and China want to expand trade and investment, as both see each other as critical to future-proof their ambitions, with the likes of Saudi and United Arab Emirates (UAE) being big oil exporters, and China, being a massive importer. Even the dynamic of oil, is on shaky ground, more so for the Arab producers as oil production by non-OPEC states overtakes those by the members. 

‘It’s the economy, stupid!’ 

Overall, there are winds of change blowing through West Asia too. For instance, the Kingdom’s Vision 2030 puts emphasis on reducing dependence on oil, diversifying income sources, improving human capital and boosting manufacturing. This is where China seeks greater cooperation. During the Summit, Xi proposed the ‘five important cooperation frameworks’. China, along with Arab nations, plan to build joint facilities to pursue research on Artificial Intelligence (AI), green transition, agriculture, and information technology. Space is also the new frontier for nations in West Asia like Saudi Arabia. Here buoyed from its recent landing on the far side of the moon, China seeks to cooperate in manned space missions, build joint facilities to monitor space debris, and for the BeiDou satellite navigation system, which China has positioned as an alternative to the American Global Positioning System (GPS). 

Another key area of cooperation is finance and investment, with China pledging special loans to support industrialisation. In turn, China wants closer cooperation between financial institutions on both sides, inviting banks to sign up for the Cross-border Interbank Payment System (CIPS), which was launched to promote international use of China’s Renminbi in trade settlements. China has positioned CIPS as an alternative to the Western financial architecture. Following the Russia-Ukraine conflict, Western powers have cut off Moscow’s banks from the Swift financial messaging system. 

Another key area of cooperation is finance and investment, with China pledging special loans to support industrialisation.

China is also keen to improve cooperation on the digital currency developed by the People's Bank of China. On the energy and trade fronts, China has mooted pitching in with research and development in renewable technologies with Chinese energy companies and financial institutions participating in renewable energy ventures in Arab nations. Plans are afoot to expedite the negotiations on bilateral and regional free trade agreements and advance the dialogue mechanism for e-commerce cooperation. In March 2023, China introduced the Global Civilisation Initiative (GCI) as a counter to the US credo on human rights and democracy. China has proposed to build the China-Arab Center of Global Civilisation Initiative that will see greater synergy between political elites between West Asian nations and China. 

Li Chengwen, a former ambassador for China-Arab States Cooperation Forum Affairs, assess that in the two decades since the establishment of the forum, trade between West Asian nations and China rose to US$400 billion in 2023 from US$30 billion in 2004. On the back of commercial ties, Li notes that China has established a ‘comprehensive strategic partnership’ or ‘strategic partnership’ with Arab countries and the Arab League. 

Economy versus security

A significant aspect missing from Arab–China deliberations has been that of security. While Xi rightly says it is a turbulent world today, Beijing seems keen on defence cooperation from a business sense with Arab partners, but less so on a strategic framework beyond a point. 

While Saudi Arabia today enjoys out deep economic engagements with China, it still chases a comprehensive security and defense deal with the US, a potential normalisation with Israel (however, this now seems unlikely in the near future at least), and a civil nuclear component as well. A successful execution of such an arrangement would potentially bring Saudi under a similar security guarantee umbrella currently enjoyed by US allies like Japan and South Korea. 

For the US, it is also an opportunity to push back against Chinese ingressions. If such a deal was to go through, Washington D.C. expects to have some leverage in pushing Riyadh to keep China out of certain critical sectors, such as defence, semiconductors, at least a sub-sect of high-end technologies. This is, of course, easier said than done, as the raging debate over calls to ban social media platform TikTok continue. 

For the US, it is also an opportunity to push back against Chinese ingressions. If such a deal was to go through, Washington D.C. expects to have some leverage in pushing Riyadh to keep China out of certain critical sectors, such as defence, semiconductors, at least a sub-sect of high-end technologies.

The interesting part is that China may have never been inclined to be any kind of security guarantor in the region. Even during the recent Red Sea crisis, China used its diplomatic access to create some sort of security guarantee against its ships, possibly through Iran. But it did not deploy any significant naval power, unlike others from the West, or even India. Other than dangling the cheque book, China, perceivably, remains risk averse

Finally, China has used the current opportunity to get closer to the Arab viewpoint by taking a clear stand on Gaza. This would also get it some public mileage in what is called the ‘Arab street’. But there is also a gap between public opinion and top-heavy decision-making of the region’s monarchies and governments. For long, Beijing’s policy in the region has been that of ‘follow the Arab position’. China intends to continue the same and push for further economic integration despite the region’s challenges. 


Kabir Taneja is a Fellow with the Strategic Studies Programme at the Observer Research Foundation.

Kalpit Mankikar is a Fellow with the Strategic Studies Programme at the Observer Research Foundation.

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Authors

Kabir Taneja

Kabir Taneja

Kabir Taneja is a Fellow with Strategic Studies programme. His research focuses on Indias relations with West Asia specifically looking at the domestic political dynamics ...

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Kalpit A Mankikar

Kalpit A Mankikar

Kalpit A Mankikar is a Fellow with Strategic Studies programme and is based out of ORFs Delhi centre. His research focusses on China specifically looking ...

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