China’s Economic Engagement in the Middle East

China’s President Xi Jinping last month visited key states of the Middle East. During meeting with King Salman, President Xi agreed on closer strategic cooperation between Riyadh and Beijing. In Cairo, Xi and Egypt’s President signed document outlining bilateral cooperation for next five years. There Xi also supported the idea of fully independent Palestinian state with Jerusalem as country’s new capital. Tehran was Xi’s last stop, making him first head of state to visit Iran after the lifting of international sanctions. Xi and Rouhani oversaw signing of 17 agreements including one on the revival of the old Silk trade route. Both the states also agreed to cooperate on nuclear energy projects and on enhancement of mutual trade up to US$600 billion.
Xi’s tour to Middle East was the latest move in Beijing’s ongoing push for global economic influence. Significant initiatives include tripling Beijing development fund for Africa to US$60 billion, investment of more than US$45 billion on China-Pakistan economic corridor and investing in UK’s nuclear plants. Similar economic motives took Xi to Middle East. There the discussions focused on the revival of the old Silk Road trade route. Xi proposed 3200kmlong high speed rail link between China and Tehran through Central Asia that would further be extended to Europe in future. The idea is to ensure flow of resources into China in order to manufacture and modify them into value added goods, and then export them to other nations.
Being an international player, China wishes to grow economically in the region through commercial investments and exchange of technology. China has recently started to expand beyond borders and beyond region. For China, Middle East is main energy supplier and natural partner in terms of its strategic location. The strategic trade routes i.e., Strait of Hormuz, Suez Canal links the region to Europe and Africa. Additionally, Middle East also provides a huge market for Chinese goods, services and technology. Hence China is operating in a sustainable manner and investing lot of money in this project. But it faces certain challenges. First, the region is plagued with so many conflicts that China wants to see to be resolved for the growth of the Silk Road. Secondly, although China needs oil from Middle East to power its economy but it also wants these states to figure out ways in which trade can be increased. With current decline in the oil prices leading to budget deficits, the issue of concern for China is that it cannot sell its goods in a market where people cannot afford them. Thus China is looking forward to see these states make improvements in their economy because without improvements, all these economic developments would be rendered unsustainable.
With regards to China’s economic engagement in the Middle East, certain other factors demand assessment. These are put forth along with possible answers. Firstly, what does China’s new strategic partnership with Saudi Arabia and Iran mean? How would that be translated in a region that is wrapped with conflicts and civil wars at the moment? In this regard, China has been very cautious on not to intervene because it knows that would not serve its best interest. Secondly, China is not only growing as an economic giant but also as a security partner in the Middle East. China does not intend to replace current security guarantors i.e., US or other European powers, but to secure its routes, it might cooperate with regional states in future in their fight against extremism and ISIS.
Could China make it way in the present complex Middle Eastern political environment? Could it stay neutral for long as it already appears to be siding with the Assad regime through it vetoes in the UNSC? Incidentally, Chinese government enjoys an advantage of not interfering in the region in the past. Whereas presently, it is developing ties altogether with different regional countries thus any country does not have any problem with Chinese engagement with another state in the Middle East.
Is China in a position to mediate between Saudi Arabia and Iran as it has an interest in seeing these two partners to have normal relations? Unlike American exceptionalism that links engagement with demands of establishing democracy and open markets, China has adopted different strategy. To cooperate with China, states neither need to follow any ideology nor are they demanded to change the government. Recently China has made some significant moves that have put it off centre from its prior position of neutrality. These include calling for independent Palestinian state and supporting the existing government in Yemen. Despite that, China is unlikely to prefer mediating.
Would Gulf States rely on China knowing that it appears to be siding with Assad regime? Gulf States suspiciously view the growing openness between US and Iran specifically after US pivot towards Asia strategy and nuclear agreement with Iran. They are cautious about Iran becoming more emboldened and empowered as they already see Iran interfering in many Arab countries capitals’ and their politics. Hence they are trying to hedge their bets elsewhere by making partnerships with China, Russia, EU and other regional powers to balance any changes that may occur in relationship patterns in the Middle East.
Though China has its own policy in the region that does not necessarily fits in with the Gulf States, nevertheless two sides are trying to overcome differences. There exist no suspicions about China’s motives given the amount that it is investing not just in the Middle East but in its nearby regions. The revival of ancient Silk Road is deemed to change the landscape of Asia. But the success of Silk Road depends on peaceful coexistence strategy. Hence what should be avoided is to reach a situation similar to the past, when Christians were divided between Catholics and Protestants, and it took them thirty years of war with more than one third of the people dead before both sides finally came to a conclusion that they are exhausted and they should prefer living peacefully with one another.

Published by Pakistan Observer on March 03, 2016

Link of the Article: http://pakobserver.net/2016/03/03/chinas-economic-engagement-in-me/

Disclaimer: Views expressed are of the writer and are not necessarily reflective of IPRI policy.