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Friday, January 27, 2023

China opening multi-dimensional cooperation portals in the Middle East

Washington obviously does not want to share its sphere of influence within the Middle East and Africa, but the Gulf leaders and Chinese leader Xi Jinping appear to have other ideas.

The media has also indicated that Xi Jinping’s visit, his third journey outside China since the coronavirus pandemic began, included his attendance at a “Saudi-Chinese summit,” a China-Arab and a China-Gulf Cooperation Council (GCC) summit.

Apparently China and Saudi Arabia signed a comprehensive strategic partnership agreement that included a number of deals and memoranda of understanding, including on hydrogen energy, on coordination between the kingdom’s Vision 2030 and China’s Belt and Road Initiative, and with regards to direct investment. Xi’s warm welcome stood in stark contrast to the frigid atmosphere surrounding US President Joe Biden’s visit to the kingdom earlier in the year.

Washington obviously does not want to share its sphere of influence within the Middle East and Africa, but the Gulf leaders and Chinese leader Xi Jinping appear to have other ideas.

China and Saudi Arabia expressed aligned policies on a range of areas from security to oil in a joint statement on 9 December, adding they will support each other while not interfering in each other’s internal affairs. The agreement came during Chinese President Xi Jinping’s recent visit to Saudi Arabia, amid frayed ties between the United States and both these countries over oil production, human rights abuses and other issues.

A lengthy Joint Statement was subsequently published by the official Saudi Press Agency (SPA) clarifying bilateral agreement on a range of diverse global issues, including energy, security, Iran’s nuclear program, the crisis in Yemen and Russia’s war on Ukraine. It also indicated that Riyadh and Beijing were both keen to underline “the importance of stability in the world oil markets,” noting that Saudi Arabia was a dependable exporter of crude oil to its Chinese partner. They also appear to have articulated resolve to “develop cooperation and coordination in defense fields,” as well as continuing cooperating on “combating terrorism and its financing.”

The statement also asserted that both countries will “continue to firmly support each other’s core interests, support each other in maintaining their sovereignty and territorial integrity, and exert joint efforts to defend the principle of non- interference in the internal affairs of states, rules of international law and basic principles of international relations.” This would apparently include not criticizing each other’s internal policies, presumably including on issues of human rights and domestic rule. China also confirmed its “opposition to any actions that would interfere in the internal affairs of the Kingdom of Saudi Arabia,” without going into further details.

It may be recalled that over the past three years both countries have been sometimes greatly criticized for their human rights records by the USA.

This aspect also led to the United States imposing in June, the decision to ban all commodities that are being produced in China’s Xinjiang region in the western part of that country. This apparently came about because of the US State Department estimated that since 2017, up to two million Uyghurs and members of other ethnic groups had been imprisoned in a obscure network of internment camps where they have reportedly been “subjected to torture, cruel and inhumane treatment such as physical and sexual abuse, forced labor, and death.” Chinese officials have however consistently denied all allegations of human rights abuses in Xinjiang.

Similarly, in 2021 a community report prepared by the US intelligence authorities observed that the Saudi Crown Prince Mohammed bin Salman had been directly involved in an operation that led to the murder and dismemberment of Washington Post journalist Jamal Khashoggi. This allegation was however denied by the Crown Prince.

China is Saudi Arabia’s biggest trading partner and a source of growing investment. It is also the world’s biggest buyer of oil. Saudi Arabia on the other hand is China’s largest trading partner in the Middle East and the top global supplier of crude oil. Much of the trade is focused on oil. China’s crude imports from Saudi Arabia stood at $43.9 billion in 2021, accounting for 77% of its total goods imports from the Kingdom. That amount also made up more than a quarter of Saudi Arabia’s total crude exports. Between May and July, Russia was China’s No. 1 oil supplier, until Saudi Arabia regained the top spot in August. China, the world’s second largest economy, relies heavily on foreign oil and gas. In this context 72% of its oil consumption was imported last year and 44% of natural gas demand is also met from overseas. It may be recalled that at the 20th Party Congress in October, Xi stressed that ensuring energy security was a key priority.

Professor Eswar Prasad, of Cornell University in this regard has commented that “stability of energy supplies, in terms of both prices and quantities, was as such a key priority for Xi Jinping as the Chinese economy remains heavily reliant on oil and natural gas imports.”

Analyst Shihabi has remarked that Saudi Arabia “is pursuing a multipolar strategy of strong strategic ties.” In this context he has observed that Saudi Arabia is coordinating with China, India and Russia on oil and with the United Kingdom and France as alternatives to the US on arms sales. All of this is apparently taking place against the background of their “bumpy relationship with the old friend the US.”

During the third and final day of his visit Chinese President Xi Jinping attended summits of the six-member Gulf Cooperation Council and a broader China-Arab leaders’ meeting. The discussions came one day after bilateral sit-downs with Saudi royals yielded a joint statement stressing “the importance of stability” in oil markets — a point of continuing friction with the United States. Washington, it may be recalled, has already urged the Saudis to raise production to keep prices under control due to the instability evolving from the Ukraine situation.

The Chinese President at the start of the China-GCC summit asserted that “China will continue to firmly support the GCC countries in maintaining their own security… and build a collective security framework for the Gulf. China will continue to import large quantities of crude oil from GCC countries on an ongoing basis,” and also take steps to expand other areas of energy cooperation including liquefied natural gas imports”.  Another area of focus was a China-GCC free trade agreement under discussion for nearly two decades.

It may be mentioned in this regard that Oil from Saudi Arabia alone accounted for 17 percent of China’s imports last year, and recently Qatar has also announced a 27-year natural gas deal with China. In this context, it would be interesting to note that a joint Chinese-Saudi statement has also observed that there will be “focusing on emissions rather than sources” in tackling climate change- the approach championed by the resource-rich Gulf monarchies. Subsequently, forty-six bilateral agreements and memorandums of understanding were announced on everything from housing to Chinese language teaching. Both sides appear to have been seeking economic and strategic benefits by deepening cooperation.

It was evident from these meetings that the Gulf countries, strategic partners of Washington, are trying to bolster their ties with China as part of an eastward turn that involves diversifying their fossil fuel-reliant economies. At the same time China, hit hard by its Covid lockdowns, is also trying to revive its economy and widen its sphere of influence, notably through its Belt and Road Initiative which provides funding for infrastructure projects around the world.

Robert Mogielnicki of the Arab Gulf States Institute in Washington has observed in this regard that “It’s not as simple for the GCC states, which seem to be more interested in advancing bilateral ties and are engaged in varying degrees of regional economic competition with their neighboring member states.”  A breakthrough on the trade pact could also help Saudi Arabia, the Middle East’s biggest economy; diversify its economy in line with its Vision 2030 reform agenda.

Political analyst Marwan Bishara has also significantly noted that “both Riyadh and Beijing have grown tired of Washington pressuring them to take its side against Russia in Ukraine and preaching the rights and wrongs of their ways in the Western-imposed “rules-based international system”. All of this seems to have brought them closer together”. He has also observed that “a younger generation of Gulf leaders is showing they seek greater independence from Washington to diversify their partnerships in energy, technology and security. China is a natural partner for them: it seeks reliable energy sources and markets for its goods and services, and prioritizes development and trade over democracy and human rights”.

Joe Biden, according to Bishara is undertaking “frantic – even desperate – attempt to shore up the dwindling authority of the US in one of its most important spheres of influence” and this “is driven by the fear that China is willing and capable of filling the void that America may leave behind in the region and beyond”. Ostensibly, the US appears to believe that China’s greater attention towards the Middle East because Beijing wants to secure more trade and investments than ever before.

In terms of geo-politics Bishara has also pointed out that Beijing has established a naval base in Djibouti, deployed a flotilla to the Persian Gulf, and reached strategic partnerships with Algeria, Egypt, the United Arab Emirates and Iran. It has also held massive naval drills with Russia and Iran.

Such activity on the part of China and geo-strategist leadership also denote that unlike the energy-sufficient US, China needs the Gulf region to supply it with the oil and gas resources it needs to sustain and strengthen its economic growth and military machine associated with the term-“a world power”.

From Beijing’s perspective, Saudi Arabia is an extremely important source of energy that greatly matters to the future of China’s economic growth. John Calabrese, Director of the Middle East-Asia Project at the Middle East Institute has consequently correctly observed that “Saudi Arabia is partnering with China to accelerate the Kingdom’s digitalization of the energy sector and the digital transformation of the economy more broadly. China is also an important investment destination for petroleum and natural gas company Saudi Aramco as the latter is seeking to expand its downstream activities in Asia.” 

Saudi Arabia this year has already made one of its largest investments in China with Aramco’s US Dollar 10 billion investment into a refinery and petrochemical complex in China’s northeast. Calabrese has also stated that he believes “cooperation in the development of hydrogen and in renewables is in its incipient stage but could blossom.”

Muhammad Zamir, a former Ambassador, is an analyst specialized in foreign affairs, right to information and good governance

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Muhammad Zamir, a former Ambassador, is an analyst specialized in foreign affairs, right to information and good governance.

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