Endogenous motivation

China's Middle East policy is driven by its economic interests in the region and not motivated by an intention to undermine the US' influence

In recent years, divisions among countries over major global hotspot issues have deepened. Notably, the Ukraine crisis — renewing its escalation since 2021 — and the longstanding Israel-Palestine conflict have contributed to these widening rifts. Against this backdrop, developing nations are actively seeking to position themselves in a shifting world order. The expansion of BRICS and the Shanghai Cooperation Organization mark the growing prominence of the Global South. And the Middle East has also emerged as a region of significant economic transformation and opportunity.

With President Xi Jinping's attendance at the first China-Arab States Summit and the China-Gulf Cooperation Council Summit, as well as his State visit to Saudi Arabia in December 2022, China-Arab relations have entered a new era of robust growth.

At the same time, to circumvent the unpredictable high tariffs imposed by the United States on Chinese products, Chinese photovoltaic and electric vehicle companies have turned to Arab nations to build factories and achieve localization before entering US and European markets.

More importantly, economic cooperation between China and Middle East countries has a strong endogenous driving force.

Middle East countries are pursuing re-industrialization while Chinese enterprises are exploring overseas markets outside the US and Europe. Arab countries in the Persian Gulf region have ambitious plans to transform their economies by developing their tourism, trade, industry and technology sectors, which require huge industrial capacity and infrastructure building. The Gulf nations' vision for energy transition and China's new energy prowess are a perfect match.

Gulf nations are keen to lead in new energy, with EV, energy storage, hydrogen and carbon capture their focus areas. For its part, China is expanding its investment overseas, especially in Global South countries. Although still dwarfed by developed countries, China's overseas economic presence is growing fast. According to Foreign Direct Investment Markets, a greenfield FDI tracking database, China's overseas greenfield investments reached a record $162 billion in 2023, up from only $50 billion in 2022.

It is noteworthy that most of these investments flowed to the Global South, with the Middle East the top destination, marking a strategic pivot in China's outward investment. In the past, the country's investment and financing in the Middle East was insignificant, far lower than its trade with the region. But in 2023, three of the top five destinations for China's overseas greenfield investment were in the Middle East — Saudi Arabia ($16.8 billion), Egypt ($8.3 billion) and Morocco ($9.8 billion).

Arab countries' investment in China has been surging as well. Before 2020, the Arab world's investment in China was negligible. In 2021, the investment of Arab sovereign wealth funds in China was $110 million, rising to $1.05 billion in 2022 and $2.3 billion in 2023. In the first 10 months of 2024 alone, Arab sovereign wealth funds invested $9 billion in China, accounting for 16 percent of their global total investments. It took less than three years for the share to grow from 1 percent to 16 percent. These figures underscore that economic interests are a key driving force behind China's increased engagement in the Middle East.

While some attribute China's policy in the region to strategic rivalry with the US, the economic data present a contrasting narrative. Against the backdrop of China-US competition, scholars in both countries tend to overestimate the threat posed by the other country. But a rational and objective evaluation best serves the national interests of both countries, while overestimating or underestimating the threats is detrimental.

If decision-makers fail to accurately assess the intensity of China-US competition in the Middle East, they will not grasp the true nature of China's Middle East policy, thereby missing opportunities and wasting resources.

China-US confrontation mainly unfolds in the form of China's moral criticism of the US, and the US' attempted suppression of China's military and technological development. Although it represents only a small part of the two countries' involvement in Middle East affairs, competition occupies the majority of media headlines, leading scholars, politicians and the public to believe that confrontation is the mainstay of the two countries' Middle East policies.

In fact, China-US competition is not prominent in trade and investment. The US does not seek to challenge China's leadership in trade and energy, while China does not threaten the US' dominance in security and technology. But these areas are the "silent majority" in public opinion, and do not draw enough public attention.

It can be seen that China-US competition is not the major determining factor in China's Middle East policy. Instead, it is China's political, economic and security interests in the region that form the endogenous motivation for its engagement with the Middle East.

China and Arab countries are walking toward each other. Economic ties remain the locomotive of China-Middle East relations, and China is also trying to substantially participate in the political process of the region.

In summary, the evidence points to a policy primarily propelled by endogenous economic imperatives rather than a deliberate attempt to counter US influence.

Contrary to the Western narrative that China leverages the Middle East to influence major power relations, it is major country interactions that shape China's interests in the Middle East.

Western scholars reverse the cause and effect, thinking that China's Middle East policy is not in line with US interests or is detrimental to US interests, and conclude that China's Middle East policy is intended to undermine the US' influence in the region, which is a typical US-centric worldview.

The author is executive director of the China-Arab Research Institute of Ningxia University. The author contributed this article to China Watch, a think tank powered by China Daily. The views do not necessarily reflect those of China Daily.

Contact the editor at editor@chinawatch.cn.