High-tech hot wires China’s Gulf strategy

As American pressure on China grows in Asia, Beijing is likely to increase its relevance in the Middle East

A ‘flying car’ built by Chinese company Xpen Aeroht made its first public flight in the United Arab Emirates in October. A few months earlier, China’s NWTN announced that it would build an electric vehicle facility in Abu Dhabi.

These technological deals show that the United States’ efforts to convince Gulf allies to restrict Beijing’s influence in the region have been unsuccessful.

Across the UAE’s border, Huawei and the Saudi Digital Academy have agreed to advance local technological talent and realize the digital transformation envisioned in Riyadh’s blueprint for economic diversification, known as Saudi Vision 2030.

The agenda included artificial intelligence, cloud computing, cybersecurity, and 5G.

Despite US President Joe Biden arguing in July that improving US-Saudi relations is essential to “outcompete China,” it will be an uphill task with the intensification of Sino-Gulf synergy.

Developing from a focus on energy over the last two decades, tech collaboration has now become a powerful catalyst in furthering China’s engagement with the six Gulf Cooperation Council, or GCC, countries.

Foreign trade

The trade bill has catapulted from about US$1.5 billion in 1990 to $180 billion in 2019, which is 11% of the bloc’s foreign trade. That makes China the GCC’s leading trading partner.

By pursuing an economic diversification strategy, Gulf countries could add a further $255 billion to their GDP and generate 600,000 tech jobs by 2030. Among other Asian countries, China is the principal partner to tap into technology as AI and data are the “new oil.”

The region’s young workers also offer great potential for promoting tech-oriented businesses. Driven by the Covid-19 pandemic, the space for a digital economy will expand exponentially and bring fintech opportunities into play.

China is involved in six GCC nations. Photo: File

Other factors including the great-power rivalry, Iran and the Abraham Accords, have also enhanced Sino-Gulf collaboration. China’s strategy to provide both infrastructure and technology fits well with the region’s vision.

The Digital Silk Road, introduced in 2015 as part of the Belt and Road Initiative, is a potent conduit for realizing this.

Since 2019, most GCC telecom firms have signed 5G contracts with Huawei. With the UAE’s G42 launching a $10 billion fund to invest in late-stage tech companies this year, its engagement with China will accelerate.

In the defense arena, the UAE purchased Chinese Wing Loong I drones in 2016 and Wing Loong II two years later. The decision was made after the US refused to sell its latest weaponized models, citing the impact of the war in Yemen.

In 2017, Beijing and Riyadh struck a deal to manufacture CH-4 drones in Saudi Arabia.

Tech role

Harvard University’s Belfer Center for Science and International Affairs stressed that China has “displaced the US as the world’s top high-tech manufacturer.”

In terms of “artificial intelligence, 5G, quantum information science, semiconductors, biotechnology, and green energy … it has already become number one. In others, on current trajectories, it will overtake the US within the next decade,” it said.

China’s tech role has become a source of geopolitical tension between the Gulf governments and Washington. In 2020, the US flagged Huawei’s role in the UAE’s 5G projects and the value attached to their partnership.

Still, GCC administrations have exercised strategic autonomy and refused to allow politics to interfere in their tech-driven economic progress.

The UAE suspended F-35 talks with the US. Photo: File

This was evident in the UAE suspending talks on a F-35 fighter jet deal with the US in 2021, citing “sovereign operational restrictions” – implying the ongoing Huawei-5G issue.

A few months later, the UAE announced plans to purchase Chinese L-15 advanced trainer and light combat jets. American intelligence reports have also indicated that Riyadh is developing ballistic missiles with China’s help and manufacturing them domestically.

Amid Washington-Riyadh tension over the OPEC+ decision to cut oil production, the Saudi energy minister held a virtual meeting with his Chinese counterpart to discuss cooperation on nuclear energy.

This again undermines the US push for cooperation with Saudi Arabia on nuclear energy to prevent Saudi-Chinese cooperation on the issue.

Strategic relationship

As American pressure on China grows in Asia, Beijing is likely to increase its relevance in the Middle East. From the GCC perspective, the relationship with China is more strategic than opportunistic, particularly for their future economic visions.

It comes at a time when the US is struggling to preserve its role as the world leader while Washington’s major allies in Europe remain preoccupied with the Russia-Ukraine war and other domestic challenges.

In this climate, China will expand its sphere of influence in countries that have previously been longstanding US partners. A potential China-GCC free trade agreement would confirm its growing clout in the region.

N Janardhan is a Senior Research Fellow at the Anwar Gargash Diplomatic Academy in Abu Dhabi and a non-resident fellow at the Arab Gulf States Institute in Washington. Gedaliah Afterman is the head of the Asia Policy Program at the Abba Eban Institute for Diplomacy and Foreign Affairs at Reichman University (IDC Herzliya) in Israel.

This article is republished from East Asia Forum under a Creative Commons license. Read the original article here.

The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy of China Factor.

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