China Trends #16 - China’s Diplomatic Coup in the Middle East: the Facts behind the Hype

Introduction - François Godement
Much more than Oil: the Developing China-Middle East Energy Partnership - Joseph Dellatte and Pierre Pinhas
China and the Middle East: a New Economic Equation ? - Michal Meidan
Interpreting China’s Changing Approach to Security Issues in the Middle East - Andrea Ghiselli

About

China Trends seeks understanding of China from Chinese language sources. In an era where the international news cycle is often about China, having a reality check on Chinese expressions often provides for more in-depth analysis of the logic at work in policies, and needed information about policy debates where they exist. China Trends is a quarterly publication by Institut Montaigne’s Asia program, with each issue focusing on a single theme.

François Godement, Special Advisor and Resident Senior Fellow - Asia and America

Sometimes symbols speak louder than facts when they shouldn’t. The public diplomacy focused on "development" that followed China’s so-called mediation between Saudi Arabia and Iran, involved a dizzying series of visits and initiatives labeled in the usual propaganda style. They were loosely connected to China’s various grand schemes for the planet – up to and including what the official Global Times now calls "Xivilisation". This is aggrandized by all the talk about a vacuum in the Middle East, due to an American lack of strategic interest and Europe’s limited influence.

Chinese experts have moved away from what was a position of noninvolvement in the region’s many conflicts.

To jump from this deployment of visits and rhetoric to the idea that China is becoming the great power of reference throughout the Middle East is tempting. It is particularly striking that Chinese experts have moved away from what was a position of non-involvement in the region’s many conflicts, contenting itself with outreach to all parties, to the advocacy of a larger role in the region’s geopolitics, and not only geoeconomics.

Through years of track 1.5 exchanges before 2019 with the China Institutes of Contemporary International Relations (CICIR), China’s leading geopolitical think tank under the Ministry of State Security, one could hear soundbites such as "whoever takes the road to Damascus, we will deal with them" about Syria’s civil war, or messages to the West that could be summed up as "you broke it, you fix it".

Yemen was seen through the lens of a chaotic society with one of the largest ratios of firearms to the population in the world – China has one of the lowest. Israel, with which China was acquiring a trade relationship all the more impressive as it did not rest on energy but on tech, was dealt with through a silent partnership. When immigrant Chinese workers were hit in the fields by rockets fired from Gaza, China, so prompt to emphasize the security of its citizens abroad, stayed mum. Even recently, China’s numerous energy and transport infrastructure deals with a country such as Iraq were conducted on a strictly commercial basis, with Chinese companies pulling off as soon as the work was completed. Yet one of the same voices from CICIR, namely Niu Xinchun, now claim “common values and common interests” with the Arab world and the arrival of a "never-seen-before new era".

There were two major exceptions to this hands-off attitude: China’s support for national liberation movements – starting with Algeria’s GPRA (Provisional Government of the Algerian Republic) from 1955, and continuing to this day with Palestine’s Fatah (recognized in 1988) and PLO (Palestine Liberation Organization), throughout the history of the Afro-Asian conference and non-aligned movement. The other exception, more importantly, was China’s arms sales. These were indiscriminate: they include intermediate-range ballistic missiles to Saudi Arabia in the early 1980s, large weapon sales to Iran from the era of the Iran-Iraq war, including Silkworm anti-ship missiles, an Iranian copy of which struck an Israeli frigate in 2006. Yet China learned to observe red lines – not transferring ballistic missiles to Syria, for example, capping its sales to Iran including for drones. With more predictable partners, such as Saudi Arabia, China goes further – setting up drone production facilities and transferring missile technology.

Two elements have remained from this era. One is the blame game: the United States and the wider West, usually left undefined, are responsible for everything that goes awry in the Middle East. The other is China’s claim to be a neutral and therefore a fair partner. Today, this is the basis from which propositions are made by China to solve crises through remarkably vague peace plans, and above all by the mantra of future development riding on "a wave of reconciliation" (和解潮).

China’s actual peace brokering record is much more modest, and its proposals are not always exempt from bias. Consider the Iran-Saudi Arabia "mediation" (调解). Talks between the two countries had long been going on in Baghdad, interrupted by a change of government in Iraq. Beijing was a likely substitute for largely negative reasons: Iran could never accept the good offices of the American Great Satan or its weaker auxiliary, Europe. Saudi Arabia’s crown prince has distanced himself from America on human rights issues since the Khashoggi assassination. It had long engineered a rapprochement with Russia, a patron of Iran, based on common interest in the price of oil: that agreement is now falling through, while China is the first taker of Russian oil. On the heels of the successful hosting of these talks, China’s special envoy for the Middle East – a position that exists since 2002 and has never created results – was sent with much fanfare and a peace plan to the Palestinian territory and to Israel. This current proposal merely echoes others made in the past by China – with the claim of helping to promote "intra-Palestinian reconciliation", which means Hamas and Fatah. Meanwhile, China happily collects support from the Palestinian National Authority and from the Arab League on all of its core issues – including Xinjiang. Thus, China’s peace plan for Palestine closely resembles its 12-point proposal to solve the "Ukrainian crisis" : as biased in content as it is neutral in form.

China’s real strength lies elsewhere: in its vastly increased commercial and tech attractiveness on all parties, and in the resulting impossibility to ignore China as an unavoidable partner with the capacity to reward or to punish. It is telling that Israel’s Netanyahu is reportedly about to embark on a trip to Beijing, the country having to perpetually balance its security interests with America and China’s trade relationship and increasing nuisance potential.

China’s real strength lies elsewhere: in its vastly increased commercial and tech attractiveness on all parties.

China’s public focus on development as the key to crisis solving is not followed by substantive aid – even on Palestine, U.S. aid is 500 times larger. Instead, China has successfully parlayed its dependence on Middle East oil and trade deficit into an export drive that is now going upstream with investments financed by the region itself. This is not the BRI model used in the recent past with Iraq, in which Chinese loans finance local Chinese projects. At the height of China’s FDI drive into Europe, Chinese firms used the euro market and its low interest rates. Today, China, itself the world’s largest holder of foreign currency reserves, is leveraging its huge energy purchases from Saudi Arabia for a host of mega projects, from infrastructure to digital, weapon, alternative energy and industries that will tie the Kingdom to China in the post-oil age. This is already starting to balance the books in the economic relationship between the two countries. Similar deals are underway with Gulf States. China’s economic magazine of reference, Caixin, notes that Middle East investors are teaming up with Chinese firms for local projects as much as for the China market.

In geopolitical developments related to this economic pull, the region’s states, including NATO member Turkey, flock to the Shanghai Cooperation Organization (SCO). In a hardly credible development, the United Arab Emirates withdrew in May 2023 from the US-led Middle East Maritime Security Alliance. This followed closely a claim by Iran to be forming a "naval alliance" with Gulf Cooperation Council (GCC) states. In June, Iran’s navy commander said that the trilateral naval coalition of Iran, Russia and China, which holds annual exercises, is developing. Iran’s claims are likely excessive – the region could not possibly trust Iran for security in the Gulf. But the lack of denials is a sign that the Gulf region is mixing continuing real dependence on U.S. forces with diplomatic moves designed to lower their risks.

In this context, China has considerable leverage. In a new development, it is vastly increasing its oil and LNG purchases from Russia at lower prices, thanks to the Western sanctions on Russian energy. Russia became China’s first oil supplier in early 2023. Thus, at the same time that it gains considerable influence over the Middle East, it could mitigate its own energy supply risks with Russia’s resources. Even if it is not in the U.S. situation of energy self-sufficiency, it has more options than Europe or Japan, for example.

The writing is on the wall. While we would do well to discard Beijing’s proliferating rhetoric – what it calls "language power" – regarding the Middle East, we should heed the warning that its practical influence is delivering through these public diplomacy coups.

Much more than Oil: the Developing China-Middle East Energy Partnership

Exports of Chinese renewable technology to the Middle East, and Chinese imports of renewable energy made in the Middle East – how much is this going to be the new pattern of China-Middle East energy cooperation ? Joseph Dellatte and Pierre Pinhas, respectively Resident Fellow and Project Officer within Institut Montaigne’s Asia Program, explore how this critical energy partnership expands beyond oil and towards renewables. Without ignoring the particularities of each side's energy transitions, Chinese experts insist on the complementarities of Chinese and Middle Eastern energy strategies.

China and the Middle East: a New Economic Equation ?

The diminishing US presence in the Middle East is creating opportunities for a deeper and more diversified Chinese economic footprint in the region. Michal Meidan, Head of China Energy Research at the Oxford Institute for Energy Studies, explains how Beijing's initial focus was to even out the trade balance but that economic exchanges progressively expanded with the BRI. Chinese writings confirm this interest for new market opportunities, notably digital sectors and new infrastructures. Chinese focus on economic diplomacy could open the door to mediation opportunities, but questions regarding the stability of supply chains invite China to maintain a degree of caution in its approach.

Interpreting China’s Changing Approach to Security Issues in the Middle East

The establishment of diplomatic ties by Iran and Saudi Arabia in Beijing was a major image coup for China’s foreign policy. Traditionally reluctant to get involved in Middle East security, has Chinese foreign policy radically changed overnight? Andrea Ghiselli, Assistant Professor at the School of International Relations and Public Affairs of Fudan University, considers China’s involvement as indeed having entered a new stage, yet not having transformed into a mediation force. Even though Chinese analysts enthusiastically portray mediation as a booster to their country’s international standing and a means to match its actual power, doubts remain as they are strikingly aware of the limits and costs of this proactiveness in the Middle East.

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China Trends #16
China’s Diplomatic Coup in the Middle East: the Facts behind the Hype

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China Trends #16 China’s Diplomatic Coup in the Middle East: the Facts behind the Hype

About

China Trends #16
China’s Diplomatic Coup in the Middle East: the Facts behind the Hype