BROOKINGS Commentary Forecasting China’s strategy in the Middle East over the next four years Yun Sun December 19, 2024

 BROOKINGS 

Commentary

Forecasting China’s strategy in the Middle East over the next four years

Yun Sun

December 19, 2024

Saudi Crown Prince Mohammed bin Salman receives China's premier, Li Qiang, in Riyadh, Saudi Arabia, September 11, 2024. (Saudi Press Agency/Handout via REUTERS)

17 min read

Middle East & North Africa

Program

Foreign Policy Global Economy and Development

Center

John L. Thornton China Center

Editor's note: This piece is part of a series titled “The future of U.S.-China policy: Recommendations for the incoming administration” from Brookings’s John L. Thornton China Center.

In the past two decades, China has rapidly emerged as an increasingly consequential economic, political, and security actor in the Middle East. China is the largest consumer of Middle Eastern oil, Chinese trade with the region has more than tripled over the past 20 years, and China is playing an expanding role in regional peace, security, and diplomacy. Beijing’s strategy in the Middle East has emphasized a comprehensive plan to expand its influence in almost all key domains. The next four years will be essential to China’s acceleration of its political, economic, and diplomatic engagement in the Middle East, with a strong focus on diversifying economic ties, involvement in peace and mediation, and managing a regional power equilibrium that has shifted as the result of the war in Gaza.

Continued dependence on Middle Eastern oil

When China assesses the Middle East in its global strategy, its foremost national interest always lies in energy security. As China is heavily dependent on energy imports, the Middle East is an inevitable and indispensable partner for China. In 2022, about 53% of China’s crude oil imports came from the Middle East. According to the U.S. Energy Information Administration, China’s crude oil imports hit a record high of 11.3 million barrels per day in 2023, growing by 10% compared to the previous year. Middle Eastern countries, including Saudi Arabia, Iraq, the United Arab Emirates, Oman, Kuwait, Qatar, and Iran (through Malaysia), occupy top positions in China’s energy import portfolio.

To ensure its energy security, China has worked carefully to avoid overdependence on a single country. According to conversations I had with Chinese experts in October 2024, the Chinese foreign policy community’s conventional wisdom is that China should not import more than 20% of its crude oil from any single country, regardless of whether it is Russia or Saudi Arabia. However, the deliberate avoidance of dependence on a single country does not remove China’s dependence on the Middle East as a region.

Despite China’s commitment to carbon neutrality and a green transition, the diversification of China’s energy portfolio is unlikely to affect China’s dependence on Middle Eastern oil for the next four years. China intends to peak carbon emissions by 2030, which means that it will still be expanding its carbon emissions in 2029. As China prioritizes reducing coal in its overall energy consumption, oil and gas are seen as “cleaner” alternatives. In other words, even if China intends to reduce carbon emissions, coal, rather than oil and gas, is the priority for reductions. This is why the percentage of coal in China’s overall energy consumption decreased from 68.5% to 55.3% from 2012 to 2021, while the percentage of oil increased from 17% to 18%.

China’s dependence on Middle Eastern hydrocarbons has two immediate implications: first, China has to protect stable energy production in the region, and second, China has to protect the safe transportation of energy from the region to China. These two priorities ensure that any conflict that affects or disrupts the production or transportation of China’s oil shipments will not be in China’s national interest. China’s strategy in the Middle East during the incoming Trump administration will be heavily vested in the maintenance of oil production and shipment.

Diversifying economic engagement

The final impact of the war in Gaza on the region’s future is unknown, but several trajectories of China’s strategy in the Middle East will accelerate regardless. First, China’s expansion and diversification of economic ties in the region will deepen in non-energy sectors. Contrary to the conventional wisdom that China’s economic relations with the Middle East completely hinge upon the energy trade, China’s exports to the region reached nearly $229 billion in 2022, while imports exceeded $278 billion. The top commodity China exports to the region is machinery and parts, while its imports primarily consist of natural resources. This signifies that the Middle East has become an important market for China, and that China will look to have the region absorb Chinese overcapacity by increasing its exports.

In addition, China is diving into the development of infrastructure, new and clean energy, the digital economy, and artificial intelligence (AI) in the Middle East while aligning China’s own strategies such as the Belt and Road Initiative with local Middle Eastern blueprints like Saudi Arabia’s Vision 2030. In the next four years, China will further saturate the Middle East with its economic presence, including not only trade in goods but also in services. In recent years, Chinese AI companies have been actively building partnerships to expand their market access in the Middle East. Digital technology cooperation between China and regional countries is likely to be the most impactful.

Trajectory of relations with key countries

The Gaza crisis has put China’s traditional balancing diplomacy in the region to a serious stress test. Until 2023, China had been able to maintain relationships with all parties in the region, between Saudi Arabia and Iran, and between the Arab world and Israel relatively well. This strategic flexibility was made possible by China’s relatively detached position and lack of entanglement with regional powers. However, the Gaza crisis has demonstrated the limitation of China’s balancing diplomacy. With the shifts and uncertainty associated with the regional power equilibrium, China’s balancing diplomacy will have to adapt.

First, many in China see the Gaza crisis as a temporary setback for the reconciliation process between Israel and the Arab countries, and that eventually, normalization of relations between Israel and Saudi Arabia will occur. China does not necessarily see itself as a benefactor of such normalization because a security pact between the United States and Saudi Arabia, a precondition for Israel-Saudi normalization, will undermine China’s efforts to shape a new regional security architecture with less U.S. involvement and influence. China does not yet have critical influence over Saudi Arabia’s strategic alignment choice. Nevertheless, China is likely to use its energy, economic, and political engagement to neutralize the impact of the Saudi-U.S. defense agreement, particularly if such a pact includes clauses that hinder security and technological cooperation between China and Saudi Arabia. It means China will prioritize building leverage and enhancing ties with Saudi Arabia (as well as other key Arab states) to balance their deepened security ties with the United States. China has been pushing against a U.S.-led regional security organization or mechanism—what the Chinese have termed a “Middle Eastern NATO.” Although China’s nascent and superficial security involvement in the region means that this process is occurring largely independently from China, it does not stop China from working to influence it.

Similarly, it will be important for China to support Iran’s efforts to regain its strength and prestige after the latter has taken a heavy toll from Israel’s attacks on its regional proxies, including Hamas and Hezbollah. China would like to see a regional security architecture anchored on a balance of power, with Iran as a strong pillar and as China’s partner in countering U.S. dominance in the region’s security affairs. Thus, Iran’s weakening is not conducive to this approach. China signed a 25-year blueprint on economic engagement with Iran in 2021, but the progress in investment and economic cooperation has been lacking.

Moving forward, China may prioritize rebuilding Tehran’s strength to preserve the region’s balance of power. That could entail more imports of Iranian crude oil, more investment in Iran’s infrastructure, and support for Iran’s regional approach. China remains concerned about the threat of U.S. sanctions, but such support from Beijing could transpire in a relatively less political manner such as through illicit trade, development aid, and diplomatic support. Beijing denies the existence of an “axis of evil” with Russia, North Korea, and Iran, but privately, Chinese officials recognize that these countries share more convictions and interests in international politics with China than China does with the United States. This sentiment could potentially heighten if U.S.-China relations enter another “freefall” under the second Trump administration. In all, China will not let Tehran fail, particularly because Beijing’s relationship with Tehran would presumably help balance Saudi Arabia’s pursuit of relationships with the United States and Israel.

Navigating a difficult relationship with Israel

China’s relationship with Israel suffered the most from the war in Gaza. China has refused to define Hamas as a terrorist organization and has been almost unequivocally critical of Israel and the “humanitarian disaster” it created in Gaza since the beginning of the crisis. The key caveat is not that China adopted a pro-Palestine position, but rather that China adopted an anti-U.S. position in the Gaza crisis. Because Beijing sees Israel as America’s closest ally in the region, China’s default position is to counter the positions of the United States and its allies. Had Israel’s alliance with the United States not been a factor, China’s position toward the Gaza crisis would likely have followed Beijing’s traditional balancing act. In the Chinese policy community, it is widely acknowledged that Israel is the “victim” of U.S.-China great power competition coming to China’s policy toward the war in Gaza.

The challenge is how Beijing will manage its relationship with Israel beyond the Gaza crisis. Some in Beijing are seriously concerned about some Israeli voices who call for Israel to develop relations with Taiwan as retaliation against China’s pro-Palestine position. An Israeli parliamentary delegation visited Taiwan in April 2024, and Taiwan’s possible role in Israel’s pager attacks against Hezbollah has brought keen attention to the previously quiet military relations between Israel and Taiwan. Few in China actually believe that Israel will pursue diplomatic relations with Taiwan, but the evolving relationship evidently has ramifications for China and its top priority of the “One China” principle.

The trajectory of the China-Israel relationship in the next four years will be a key question for China’s Middle East strategy. China does not have a fundamental conflict of national interests with Israel, and their deteriorating relations today are a consequence of the Israel-Palestine conflict rather than a direct clash between China and Israel. Therefore, given China’s tradition of balancing diplomacy in the Middle East, China will foreseeably want to repair damaged ties with Israel through a diverse range of engagements. This will be particularly true and occur expediently if the Gaza crisis ends and if some level of reconciliation is achieved between Israel and Saudi Arabia.

But there are also counterfactors. The Gaza war has disillusioned Israelis who previously romanticized their country’s relationship with China, as Israel had hoped for China to adopt a more sympathetic and supportive attitude toward Israel’s position. A sense of betrayal, a resentment of China’s position, and emotional reactions to China’s repeated criticisms will make it exceedingly difficult to convince the Israeli people that China is neutral and trustworthy again. Pragmatism might prevail in the end, but it could take more than four years for things to renormalize.

Growing involvement in regional peace and conflict mediation

President Xi Jinping first proposed the concept of a new “common, comprehensive, cooperative and sustainable security” architecture in the Middle East in 2018 during the 8th China-Arab States Cooperation Forum. In 2022, Chinese Foreign Minister Wang Yi built upon Xi’s proposal further by calling for a “new security architecture in the Middle East.” In addition to tendering positions based on principles such as adherence to political and diplomatic dialogues, the centrality of regional countries, and the sacredness of the U.N. Charter, Wang offered two specific overtures on regional peace dialogues: first, an international peace conference on the settlement of Palestine based on a two-state solution; and second, a Gulf security dialogue platform to address the tension between Iran and Arab countries. Based on these visions, China’s goal is not to replace the United States as the security guarantor in the region. Instead, China is trying to displace the United States’ regional dominance by facilitating the creation of a new security structure in the Middle East; a structure in which China could play a more significant role given its growing economic weight and political ties with various powers in the region.

China has had two successes on Middle East peace and conflict issues since its new vision was introduced. In March 2023, Saudi Arabia and Iran reached a peace deal in Beijing that was nominally “brokered” by China. The exact role China played in the deal is a subject of heavy debate, focusing on whether China only facilitated the dialogue or indeed substantively mediated. Still, it was China’s first major success in mediating an international conflict. China’s second success came in July 2024, when 14 different Palestinian factions signed the Beijing Declaration on Ending Division and Strengthening Palestinian National Unity in Beijing. Doubts are rampant over the deal’s practicality and implementation, but the fact that China chaired the process at the minimum demonstrates its growing influence on the issue.

With its newly minted stature as the regional peacemaker, China will undoubtedly enhance its involvement in Middle East peace affairs over the next four years. Chinese diplomats and Middle East scholars appear ready, having been mobilized to contribute ideas and plans toward this end. Beijing foreseeably will be using its diplomatic influence and many channels of communication to assert its role and involvement.

However, it will not be easy for China to mediate on the Israeli-Palestinian issue. Beijing’s striking inability to make any difference in the Gaza war signifies China’s weakness as a peace broker. In fact, the moment that China picked a side by refusing to denounce Hamas’ Oct 7 attack, it lost its impartiality and credibility as a mediator. This dictates that China must increase its relationship-building and influence over the Palestinian movement’s internal dynamics to build up the movement’s strength and enhance Beijing’s ability to mediate the conflict. The post-conflict reconstruction in Gaza, Lebanon, and other conflict-torn areas will offer China a good opportunity to attain such influence, as China specializes in infrastructure construction and has financial resources to support it.

China may also increase its efforts to mediate between Iran and other Gulf countries in the Middle East. Iran’s leadership in the region’s “axis of resistance” has been In the Chinese assessment, Iran’s response through mid-October 2024 has been largely moderate and tailored, which could suggest that Tehran has a bigger appetite for more conciliatory moves vis-à-vis Saudi Arabia, among others. China’s relationship with Iran will foreseeably gain more momentum, as China will want to see the restoration of some type of regional power equilibrium. Enhanced ties with both Iran and the Arab states will offer China an avenue for more influence in political dialogues.

China’s military presence in the Middle East?

The long-standing suspicion that China will sooner or later seek a military presence in the Middle East to protect its energy interests is unlikely to be resolved by 2029. China’s prioritized theater continues to be the Western Pacific and will remain so as long as the Taiwan issue is not resolved. This means that China will have to live with the insecurity of its energy dependence on the Middle East in the meantime. Chinese oil executives have made a distinction between susceptibility and vulnerability, arguing that China’s oil dependence on the Middle East is susceptible but not vulnerable to the volatile regional security situation. The confidence comes from a judgment that no one, the United States and oil-producing countries included, will want to see a major disruption in the global market.

The argument made by Chinese oil executives consciously does not consider extreme situations such as a U.S.-China military conflict and a naval blockade of China’s oil shipments from the Middle East. Beijing does not seem to see a practical solution to that vulnerability. Furthermore, building up China’s regional military presence from scratch is unlikely to protect China’s oil interests for a very long time to come given the U.S. military’s mature and significant presence in the region.

However, this does not mean that China will be absent from developing closer security ties with countries in the region to enhance its influence even short of a direct military presence and deployment. China currently has a number of security cooperation arrangements in the region, including joint exercises and drone production cooperation with Iran, joint training and arms sales to the United Arab Emirates, as well as potentially dual-use port facilities. In this sense, it is unlikely that China will establish a direct military presence in the Middle East in the next four years, even though Beijing’s regional security cooperation and influence will expand through bilateral cooperation, arms sales, and dual-use facilities.

Conclusion

The challenge from China’s strategy and presence in the Middle East will only continue to grow during the Trump administration. By 2029, the region will remain a cornerstone of China’s energy security, which makes it imperative for Beijing to increase its role, presence, and influence in the region to protect its critical national interest. China will continue diversifying its economic ties with the region, going beyond the traditional field of energy by venturing into the energy transition and the digital economy and looking for buyers of advanced technology exports.

As a result of the war in Gaza, China’s relations with key countries in the region will foreseeably go through a period of adjustment. This is particularly true of Israel, as the China-Israel relationship has suffered the most damage due to the Gaza crisis. Following its mantra of having balanced diplomacy, China will be keen to build deeper relationships with both Iran and Saudi Arabia and could contribute toward building up Iran’s capability and restoring Tehran’s tarnished image in the region. China sees itself as a new type of regional peacemaker and likely intends to play a bigger role in the mediation among different Palestinian factions and Gaza’s reconstruction. The “new security architecture in the Middle East” proposal will be a more prominent feature in China’s policy toward the region between 2025 and 2029.

All these have significant implications for the incoming Trump administration. As President-elect Donald Trump is expected to support Israel’s security, push for Saudi-Israel normalization, and pressure Iran with more sanctions, China will be actively working to exploit U.S. policy and advance Chinese interests and influence in the region. The Gaza crisis has been a strong example of how China has leveraged Washington’s position to undermine U.S. regional leadership and credibility. Washington can rest assured that China stands ready to continue to do so for the next four years. This means the Trump administration’s Middle East policy will have to include an answer, or even just propose a future direction, for the inevitable question of Palestine’s status and the issue of the two-state solution. The absence of it will only strengthen China’s ability to act as a supporter and advocate for the Palestinian people, thereby reinforcing Beijing’s influence and ties with the Muslim world.

China’s growing and diversifying economic ties with the Middle East will directly challenge the United States’ traditional role and leadership. A vigorous economic engagement strategy beyond the issue of oil has always been lacking in the United States’ regional policy playbook. As the region envisions its economic future and plans for the diversification of its economic growth, the United States will miss the train and leave the field for China if it is unable to respond to the region’s demand for high-technology industries and new energy resources. China’s technological cooperation with Middle Eastern countries, especially in the fields of digital economy and infrastructure, will pose an immediate challenge to the United States’ ability to advance security and other cooperation in the region. The Trump administration could work with U.S. private sector companies to present the countries of the Middle East with alternative options to Chinese technologies and products.

Author

Yun Sun

Nonresident Fellow - Global Economy and Development, Foreign Policy, John L. Thornton China Center, Africa Growth Initiative