The EU has begun a probe into Chinese wind turbine companies. Then-Commission Executive Vice-President for Competition Margarethe Vestager warned that a wave of subsidised Chinese wind turbine exports: “is not only dangerous for our competitiveness. It also jeopardises our economic security.” The EU remains scarred by its loss of a trade war to China over the bloc’s solar power industry a decade earlier. Western governments and activists have also expressed concerns that China’s green sector is tied to human rights abuses like forced labour in Xinjiang.

In the Middle East, however, many governments remain open to Chinese green sector exports and have struck commercial agreements to gain investment from its major firms. In July, Saudi Arabia’s Public Investment Fund struck joint investment deals with Chinese solar power companies Jinko Solar and TCL Zhonghuan. Meanwhile, Saudi investment business ALGIHAZ signed a contract to build an energy storage facility with Chinese company Sungrow. The Australian Griffith Asia Institute calculated that altogether Chinese firms worked on green energy projects across the Middle East worth about $9.5 billion over 2018-2023.

Middle Eastern States Piggyback Off China

China’s government and Chinese state-owned or state-linked companies have been able to offer commercial and political advantages to Middle Eastern governments seeking to decarbonize their economies. Western engineering and manufacturing firms’ projects are regulated by numerous rules intended to prevent corruption, environmental harm and other negative development outcomes. Chinese companies under the direction of the ruling Chinese Communist Party (CCP) face no such restraints, though the quality of the infrastructure they have produced under China’s signature Belt & Road Project (BRI) initiative has varied. For autocratic Middle Eastern governments like the Gulf monarchies, however, Chinese companies have the ability to build high-technology critical infrastructure without the need to appease external stakeholders like the human rights groups or independent media outlets found in Western countries.

“Xi of Arabia,”

Chinese companies are also generally happy to operate in a Middle Eastern business environment that still often relies on patronage to get deals done. The CCP has cultivated particularly close ties with Saudi Arabia, the UAE, Iran, Egypt, and Algeria, with whose governments Beijing has signed comprehensive strategic partnerships (the most elevated type of bilateral agreement with China). These relationships have borne increasing fruit as the BRI has matured and new technology has widened the appeal of clean energy and other green industries. Petrostates like Saudi Arabia have belatedly woken up to the threat of climate change and their own potential ability to take advantage of clean energy like solar power.

Doing Deals to Decarbonize

Chinese President Xi Jinping met with UAE President Sheikh Mohamed bin Zayed Al Nahyan in Beijing in June. Xi promised his government would cooperate more closely with the Arab country on a range of industries including “information technology, artificial intelligence, the digital economy, and new energy.” China was already the UAE’s biggest trading partner in 2022 while the Arab state was Beijing’s biggest Arab trading partner, the UAE’s economy ministry said in 2023. While renewable energy development is only one aspect of the burgeoning diplomatic and trading relationship between the two sides, it is an important consideration for the UAE and its Net Zero 2050 strategy to decarbonize the country’s economy. Given China’s private sector is subordinate to the political aims of the ruling CCP, further Chinese green investment is likely to flow to the UAE in 2025. The UAE is also investing in renewables in East Asia, with its green energy firm Masdar aiming to install 2 gigawatts of renewable power in ASEAN countries by 2025. The firm was invited by the Philippines government to invest in Manila’s green sector too.

In May, the UAE’s Minister of State for Foreign Trade Thani bin Ahmed Al Zeyoudi, said “new energy” and “critical minerals” were among the areas the country was interested in engaging with Beijing. Chinese CEOs held meetings with UAE officials in July following the UAE president’s state visit to discuss bilateral cooperation in various areas, including solar power and renewable energy. The UAE’s example is being replicated by other Middle Eastern governments with whom China has cultivated close relations. At the Forum on China-Africa Cooperation in September, Egypt signed agreements worth more than $1.1 billion with Chinese companies, which included the country’s first green chemical plant. China’s Befar Group will build a $500 million facility powered energy sources including natural gas, wind and solar energy. A second deal involves the creation of a $100 million solar panel factory. Chinese companies are building solar power plants in Algeria and becoming investors and co-investors in Saudi and UAE solar and wind projects as these two countries decarbonise their power grids.

China Seeks to Refute Dumping Narratives

Meanwhile, Middle Eastern demand for Chinese clean energy infrastructure and products allows Beijing to claim it is not engaged in overproduction in sectors like EV manufacturing or renewable energy products and dumping the resulting excess on foreign markets. Much criticism of Chinese trade practices in the country’s green industries has come from the US and other Western governments. Treasury Secretary Janet Yellen said in April that excess Chinese manufacturing capacity in sectors like EVs and solar panels was intensifying. Chinese state media and CEOs like the head of vehicle manufacturer Great Wall Motor International have denied this, although non-Western countries like Turkey have also imposed tariffs on Chinese exports like EVs. China has taken Turkey to the World Trade Organization in response.

Trade tensions between China and governments under pressure to restrict Chinese green technology exports are likely to endure in many parts of the world. In the Middle East, however, Beijing and local regimes continue to discover synergies between their development needs. China’s sluggish economy and growing trade tensions with the Global North have left it in need of new markets for its goods. Meanwhile, Middle Eastern governments need the country’s know-how and deep pockets if they are to overhaul their own 20^th-century fossil fuel infrastructure and create new jobs in the emerging green economies of the 21^st century. 

China’s top diplomat and current foreign minister Wang Yi arranged an unexpected Saudi-Iran peace agreement in March this year between Riyadh’s mercurial Crown Prince Mohammed bin Salman Al Saud and Iran’s aging Supreme Leader Ali Khamenei. Meanwhile Egypt, Iran, Saudi Arabia and the UAE were all invited (and agreed) to join the emerging markets BRICS grouping of non-Western countries, with their membership to come into effect on January 1, 2024. China is overhauling President Xi’s ambitious Belt & Road Initiative (BRI) global infrastructure development programme and Beijing is seeking project funding from rich Muslim countries. Beijing therefore pushed the Iran-Saudi peace deal and supported Saudi Arabia’s application to join the BRICS to help it gain access to Saudi backing for the BRI. Another reason for growing Gulf-China ties is Beijing’s intensifying technological competition with Washington.

Growing US-China technology competition

The US is stepping up its efforts to contain China’s geopolitical and technological development in East Asia and outside it. In October 2022, Washington launched controls intended to prevent China from acquiring certain categories of semiconductor chips made with US equipment anywhere in the world, partially to prevent Beijing from using them to develop advanced new artificial intelligence systems. The US has since escalated these export restrictions on semiconductor chips to unspecified Middle Eastern countries, according to US multinational technology firm Nvidia late last month.

Meanwhile, a source at Nvidia’s commercial rival Advanced Micro Devices  told media it had also received an official letter from the US government containing similar restrictions. The chips concerned were high-powered models used to improve machine-learning tasks for artificial intelligence programmes like ChatGPT.  Gulf Arab states have been increasingly seeking to import advanced versions of these to create their own artificial intelligence models, but their growing technoscientific ties to China are a source of rising US unease.

China-US tensions were recently raised further following US Secretary of Commerce Gina Raimondo’s recent combative trip to China, during which the Commerce Secretary explicitly said the US would remain hardline in its approach to limiting Chinese access to advanced technologies. Beijing didn’t pull any punches either, with US-blacklisted telecommunications company Huawei releasing its new Mate 60 Pro smartphone during Raimondo’s visit. Huawei’s smartphone business was crushed by US technology export restrictions in 2019 and the new handset showcases the firm’s partial evasion of these as well as its intension to reestablish itself in the sector.

 On China’s tightly controlled internet Chinese citizens posted memes turning Raimondo into a brand ambassador for Huawei; a play on her department’s role in enforcing technology restrictions on Chinese firms like Huawei or Semiconductor Manufacturing International Corporation (SMIC), the partially state-owned Chinese company which allegedly built the semiconductor chip powering Huawei’s homemade phone. In response, US lawmakers have called for investigations to see whether SMIC broke US sanctions and supplied components to Huawei, while South Korean firm SK Hynix started a probe after discovering parts it manufactured were present inside Huawei’s new handsets.

US Fears About China-Middle Eastern Technological Cooperation

President Biden has made containing China’s technological rise — and any subsequent global spread of Chinese technologies, standards and norms about cyberspace — a central part of his administration’s foreign policy. At the same time Saudi Arabia and the UAE have emerged as some of the biggest customers of US chip firms like Intel and Nvidia, the latter of whose high-powered products are much sought-after for their use in artificial intelligence research. The UAE has bought thousands of US semiconductor chips for a homegrown Arabic artificial intelligence model called Falcon, made by Abu Dhabi’s Technological Innovation Institute.

Meanwhile Saudi Arabia is spending $120 million to buy these to build its own ChatGPT-style large language model at the King Abdullah University of Science and Technology, despite using Chinese researchers. Gulf state leaders want to own and control artificial intelligence developments within their own countries, while using Chinese and US know-how to create their own local systems. There is also an element of Arab countries’ balancing the two sides to avoid dependency upon either one of them; Riyadh has allowed Huawei’s cloud arm to create a data centre in Saudi Arabia to support government services and artificial intelligence language models in Arabic despite using US-made chips to train them.

Gulf governments’ laxer approach to China likely lies behind August’s US imposition of restrictions on top artificial intelligence chips being exported unnamed Middle Eastern countries; such deliveries are unlikely to be going to already-hostile states like Iran. Crown Prince Mohammed bin Salman Al Saud’s decision to rely on Chinese researchers to help Riyadh build its artificial intelligence models is especially likely to have angered President Biden, who personally dislikes the de facto Saudi leader, a sentiment the volatile crown prince reportedly returns.

Beijing will be intensely interested in the chance to send researchers to Saudi Arabia study US chip technologies so it can parallel engineer its own devices when they return home. Saudi Arabia and potentially other Gulf states therefore represent a weak spot in the global technological blockade President Biden is attempting to erect around China’s semiconductor and artificial intelligence sectors. Despite their diplomatic importance to the US, the Gulf states could therefore find their early enthusiasm for artificial intelligence hitting similar curbs to China’s if they continue to weaken US efforts to contain China’s technological rise.

Russia’s disastrous military performance so far in the war in Ukraine has weakened its military reputation in the eyes of Beijing, but also sharpened China’s desire not to see Moscow humiliated or Russian leader Vladimir Putin driven from power; Beijing fears regime change in Russia would leave it isolated and potentially faced with a pro-Western regime along its northern border.

China’s attendance boosted the profile of the summit,  something which pleased the US, and in may help smooth still-strained personal ties between Crown Prince Mohammed bin Salman Al Saud (MBS) and US President Joe Biden. The US, India, Brazil, the EU also attended the talks, as well as a number of Global South states like Zambia, Indonesia and Egypt. Moscow was excluded however.

Is China breaking with Russia on this issue? 

On the surface China’s change of direction by attending the summit would appear to move it away from Russia, whose invasion it has so far refused to condemn. However, while China has close economic ties with Ukraine which it wishes to preserve, its position on the conflict still mirrors the ambivalent attitude of many Global South states like South Africa, who have chosen to take a neutral stance or even tilted towards Russia somewhat. Li Hui, the Chinese special representative who attended the event, previously served as China’s ambassador to Russia for a decade, for example. Many Chinese see the Russia-Ukraine conflict as a proxy war between Washington and its ally Moscow, one which the US is also using to encircle China, for example by strengthening NATO countries’ ties to American allies in Asia like South Korea and Japan.

China’s attendance at the Saudi summit served several strategic purposes from Beijing’s point of view. It allowed Beijing to join Riyadh in burnishing its credentials with Global South countries as a peacemaker and to leverage improved relations into stronger economic ties down the line which provide it with an alternative to reliance on trade with an increasingly anti-China US-led global bloc. It was a concession to Ukraine to attend but at an event which would produce no final outcome that would put pressure on Russia.

Attendance further allowed China to support a Saudi initiative at no diplomatic cost to itself, building on the momentum it gained from its sponsorship of the Saudi-Iran peace deal earlier this year. Wang Yi, China’s top diplomat and returning foreign minister, helped broker that agreement. China’s relationship with Saudi Arabia remains a shallow and transactional one,  but, given each regime has its problems with the current US-led global order, this is often sufficient motivation for the two sides to cooperate for now.

Saudi Diplomacy-washing

The Saudi-led conference was billed as an event for Ukraine to reach out to countries outside the Western zone of influence, given Riyadh’s neutrality (it maintains ties with Beijing, Kiev and Moscow). More quietly it was also intended to help re-invent MBS as a responsible global statesman, part of a concerted effort to turn a page on his past history of erratic and dangerous decision making. Past highlights have included allegedly kidnapping Lebanese Prime Minister Saad al-Hariri, invading neighboring Yemen and his probable involvement in the murder of Washington Post journalist Jamal Khashoggi.

For its part, Russia has also annoyed Riyadh by failing to implement OPEC+ production cuts in recent months, and MBS may not have been averse to causing Moscow symbolic discomfort on the global stage by publicly hosting a large international forum to which Russia was not invited.

Is China using Riyadh as a back channel to Washington? 

China and the US are slowly rebuilding bilateral meetings between senior officials this year after Beijing suspended or cut off multiple official contacts in protest last August at then-House Speaker Nancy Pelosi’s trip to Taiwan. Relations between the two countries remain poor but at present both sides are attempting to put a floor under their relationship, in China’s case motivated by the need to support its flagging economic recovery from the COVID-19 pandemic.

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BEIJING, CHINA – AUGUST 31: Saudi Arabia Deputy Crown Prince Mohammed bin Salman (L) and Chinese President Xi Jinping (R) shake hands during a meeting at the Diaoyutai State guest house on August 31, 2016 in Beijing, China. The deputy prince is meeting Chinese officials during his visit to boost bilateral ties between the two nations. (Photo by Rolex – Pool/Getty Images). FILE.

Given this situation, Beijing does not need to use Riyadh as a back channel to Washington; however Saudi Arabia is likely leveraging its burgeoning relationship with China — of which the Ukraine summit is the latest instance — in its bilateral relations with the US and Beijing will not object to Saudi Arabia’s attempts to balance itself between the two superpowers. China may one day wish to supplant the US as Saudis’ main political and security partner in the Middle Eastern region, but at present it is not unhappy for the US to continue to act as the leading power there, given that this ties down American military assets and political capital which might otherwise be used against China in East Asia.

Oil and Wheat

Commodities form another factor in Chinese and Saudi diplomatic calculations. Despite tensions over Saudi oil production levels, Saudi Arabia is no longer as important to the US as an energy supplier as it was in the 1990s. Meanwhile, the Chinese economy is also currently faltering, which is likely to reduce Chinese demand for Saudi energy supplies this year (though it is still a major oil customer).

Ideally, Saudi Arabia would like to keep relations with both superpowers stable enough that it can sell to them (given softer demand from both for its main export at present) while preserving its freedom of manoeuvre when it comes to oil production levels. Moreover, given its recent raft of diplomatic activity with China, Saudi Arabia will probably be happy to balance this with renewing ties to Washington. The two sides have tried to mend fences since the fallout from the murder of Jamal Khashoggi strained ties with the Biden White House several years ago.

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Saudi Crown Prince Mohammed bin Salman (4th R) attends a meeting with Chinese President Xi Jinping (3rd L) at the Great Hall of the People in Beijing on February 22, 2019. (Photo by HOW HWEE YOUNG / POOL / AFP) (Photo credit should read HOW HWEE YOUNG/AFP via Getty Images). FILE.

While working with China allows Riyadh to show Washington it can find alternative partners if pushed too hard on issues like human rights, Saudi Arabia still wants US help on many issues which matter too it. Washington in turn is now seeking assurances Riyadh will not get too close to China, despite the fact it was happy to see Beijing attend the latest round of Ukraine-related peace talks in Jeddah.

For its part, China will be keen that the Saudi talks create a constructive atmosphere that helps it achieve its goal of resurrecting the collapsed Russia-Ukraine Black Sea grain deal. China was the top purchaser of Ukrainan agricultural goods through the initiative before Russia withdrew from it in July. China places a high political priority on food security but is reliant on imports due to a lack of food self-sufficiency. \

Large parts of the country’s farmland was flooded this summer in the aftermath of Typhoon Doksuri, damaging crop production and causing officials to warn of further risks to agricultural output from pests and disease once the flood waters recided. Its public support for a third round of talks after Jeddah may in part be calculated to help its relationship with Ukraine, to help win it over at a later date should Beijing be able to persuade Russia to allow grain shipments to resume in the Black Sea.

In many regions, this has eroded several decades of unquestioned US pre-eminence following the fall of the Berlin Wall, including the Middle East, whose abundance of fossil fuels made it a particular focus of American foreign policy concern for many decades. In the 21st century, as the world shifts away from hydrocarbons and towards renewable energy generation and clean mass transportation,China’s deepening domestic commitment to electric vehicles and the infrastructure needed to power them (like charging stations) is adding to its attraction as an economic and political alternative, even to Arab governments traditionally aligned with America.

Enter the EV Dragon?

With strong government backing since 2015, China’s electric car industry has emerged in recent years as a serious competitor to pioneers of the sector like US firm Tesla, with plug-in cars’ share of the Chinese car market estimated to hit 40% by end-2024. Chinese auto manufacturers have a commercial incentive to expand into the Middle East even without official encouragement from the CCP. The domestic Chinese market for electric vehicles (EVs) is extremely competitive, with Chinese EV manufacturers looking to expand overseas in a bid to increase their profitability as a consequence.

Chinese EV exports to the European Union and the US are increasing, albeit from a low base; but the growing trade and technology war between Washington and Beijing which began under former President Donald Trump in 2018 continues under President Joe Biden, who has chosen to maintain Trump-era tariffs on China for example. Growing Western unease about China means Chinese EV manufacturers worry about measures to limit their exports in both markets, incentivising them to look to regions like the Middle East, where there is less political resistance to Chinese commercial expansion.

Like the rest of the world, the Middle East is suffering from the impact of manmade climate change and seeking to move away from fossil fuels for power and transport. Arab autocracies like the Gulf Cooperation Council (GCC) bloc are attracted to Beijing’s  reputation as a modernising non-democracy which is able to complete large-scale infrastructure projects, shown by years of global infrastructure development under its strategy known as the Belt and Road Initiative.

China also offers Middle Eastern countries a state-led model to emulate should they consider partnering with Chinese firms in their own nascent future EV industries, especially among early prioritizers of green transport like the United Arab Emirates and Saudi Arabia. Government-to-government connections between Middle Eastern regimes and China’s CCP are also increasing, helped by the need of many GCC countries to diversify their economies beyond hydrocarbon exports. Moreover, unlike with the US, Arab governments face little domestic backlash for deepening their ties with China, which is popular in the region, especially among Arab youth, 80% of whom consider Beijing to be an ally of their country according to a regional survey held earlier this year.

Early Indicators

This diplomatic popularity suggests that Chinese products will benefit from a kind of soft power which will boost Chinese EV firms’ confidence that they will be able to enter the region with little political or commercial controversy. Some practical obstacles still remain. For example, the Gulf Cooperation Council (GCC) bloc of Arab countries requires vehicles to pass a tough certification process to ensure they can operate in GCC countries’ harsh desert climates, and concerns have been raised about untested Chinese EV imports which are not covered by warranties there.

The quickest Chinese EV brand to establish a commercial footprint in the GCC is BYD, run by Wang Chuanfu, which hopes to begin selling both EVs and plug-in hybrid cars in the UAE by the end of 2023. Despite recent cutbacks, the company remains backed by Warren Buffet, and is experiencing solid sales of its diverse portfolio.

In the UAE, BYD appears focused on launching the ATTO 3 (the first EV model BYD developed for the international market and which it claims has passed GCC climate stress tests) first, followed by the Han EV sedan in October this year. BYD and other Chinese brands may soon face competition in the GCC car market from indigenous GCC brands like Saudi Arabia’s Ceer, but will have the advantage of their previous experience developing the market in China. 

Outside the GCC, China’s backing for renewable energy projects which boost Middle Eastern countries’ energy independence — such as Beijing’s longstanding state-backed investments in solar and wind power in resource-poor Jordan — could help Chinese power and construction companies future work electrifying non-Gulf Middle Eastern countries’ roads and public transport systems too, as the shift to EVs takes off there. For example, work on renewable energy projects in Jordan in earlier years may have helped Chinese officials and executives establish the relationships that have already enabled early sales of EVs to begin there. BYD has received approval to launch four models there; in addition to the ATTO 3 and the Han sedan, these include the Dolphin compact car and the Tang sport-utility vehicle. An incentive to quickly approve more EV models, more quickly for Jordan, is that it is dependent on petrol-imports, meaning a shift to a renewable energy grid which fuels an electrified public transport system and road network would be an immense advantage to a relatively poor country.

Chinese efforts to offer green economic development to Middle Eastern states have seen them make diplomatic in-roads into the region without the deployment of widespread military power, or the entanglement of Chinese actors in the region’s many quarrels. Whether this will continue as the country’s diplomatic and commercial footprint expands in the Middle East is open to question. However, China’s efforts to take a global lead in the areas of renewable energy and electric vehicles in the previous decade appear to be advancing its bilateral relations in the Middle East in the 2020s. It has not yet displaced the US as the dominant global power in the region, but Washington would be wise to take note of how Beijing’s investments in these areas have paid off in terms of soft power there.

Russia’s occasional partner-in-crime China has also mooted sending troops to fight in Idlib, concerned at the presence of Uighur jihadists among the international terrorist organisations present there. But unlike Russia, which has used overseas military interventions in unstable places like Syria and Ukraine to reassert its geopolitical significance, Beijing still follows a decades-old policy of avoiding involvement in overseas adventures. Its interest in Syria is primarily focused on extending its new One Belt, One Road strategy westward, and thus expanding its economic and political influence into the Mediterranean region.

Along with Russia and Iran, Beijing could end up being among the big winners of the Syrian civil war, having backed the victorious side (albeit distantly and at arm’s length). Indeed, without the rebels and their Western backers to united them, the three powers could easily end up quarreling as they compete for influence in post-war Syria among themselves; the Assad regime remains a pariah for Western countries and the international institutions they still influence, meaning the aid needed to rebuild Syria following the end of the war will be unlikely to come from these quarters without terms attached which are unacceptable to the victors in Damascus.

However neither Iran nor Russia are likely to be able to afford to give the amount of aid that China can, meaning Beijing will have a significant advantage over its competitors. Estimates over how much it will cost to return Syria to its pre-2011 level of development vary; the government of President Bashar al-Assad says it will need $195 billion to rebuild, whilst the UN estimates it will cost at least $250 billion. So far China has only promised a fraction of this sum, but with the United States and European nations seeing the cost of rebuilding as leverage to be used to force Damascus into making political concessions to the opposition, Beijing does have an opening it could take to integrate Syria into One Belt, One Road, if it so chooses.

Syria is certainly courting China for more cash, with the Assad regime’s ambassador to Beijing, Imad Mustafa, announcing late last year that it would give top priority to Chinese companies in investment and reconstruction opportunities at a special gathering of 1,000 representatives of Chinese firms, who might be interested in the opportunities of working there. At the same event, Qin Yong, the vice-president of the China-Arab Exchange Association, claimed that plans for $2 billion had been made for Chinese investments in Syrian industrial parks. How much of this money will actually materialise is debatable, but Qin made four trips to Syria in 2017, highlighting the growing interest Chinese businessmen are showing at the prospect of rebuilding Syria’s shattered infrastructure in areas like roads, hospitals and even the Arab state’s electricity grid.

Such big infrastructure projects are a hallmark of Chinese development at home and projection of influence abroad. Indeed, Beijing has long been accused of using such schemes to run up unpayable debts with poor countries elsewhere in Asia, and of using this ‘debt-trap’ to extort political concessions from the unfortunate debtors. Beijing may be pursuing the same strategy in Syria at the expense of Iran, Russia, and ultimately President Assad himself.

However, given the methods that the Assad clan have used to retain their power in Syria, the Syrian ruling elite may have little choice in the matter, having nowhere else to turn for the money. Meanwhile, though China may generally prefer safer places to invest the bulk of its cash in the Middle East (such as Qatar), it also has a history of propping up despotic regimes in the region where it suits Chinese geopolitical interests. For example, Beijing has worked for years with the Sudanese regime of President Omar al-Bashir who, like President Assad, is accused of committing serious crimes against his own people, including genocide, and has been indicted by the International Criminal Court (ICC).

Neither China nor Sudan is a signatory to the ICC, whose operations are regarded as an infringer of national sovereignty by both authoritarian governments. But China today controls as much as 75 percent of Sudanese oil production, having thrived there by undercutting the competition and accepting higher risks than companies based elsewhere in the world would. Syria has much less to offer Beijing in terms of natural resources than Sudan, but its pariah reputation and geographic location at the crossroads of Europe and the Middle East (troubled EU member Cyprus lies just off the coast) may combine to make it an attractive prospective outpost of Chinese power. Therefore, expect more headlines about Chinese interest in Syria’s reconstruction if the rebellion in Idlib is decisively crushed later this year.

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Bonus video added by Informed Comment:

TeleSur from last Winter: “China ready to participate in reconstruction of Syria

The outbreak of tit-for-tat tariffs means the US-Sino confrontation now embraces both the military sphere (in the South China Sea and over Taiwan, which Trump has occasionally threatened to use as a bargaining chip) and the economic one. It is difficult at present to see how either side could back down in the short term, and things are probably going to get worse before they get better.

AFP/File / – Beijing has warned that new US tariffs on its products ‘threaten China’s economic interests and security’.

Many third party countries risk getting roped into the escalating US-Sino trade dispute; in particular this includes Pakistan. With decades-long security alliances with both powers dating back to the Cold War era, it was always in for a stormy ride during a time when both Beijing and Washington are led by prickly nationalists. The influential Pakistani military is heavily dependent on the US for its equipment and arms, while Pakistan’s wobbly economy may soon need a loan from the US-led International Monetary Fund (IMF).

However Pakistan also owes China a lot of money, and in truth America and it have been drifting apart at least since the Obama administration. Therefore the growing quarrel between its two patrons puts Islamabad in a tricky geopolitical position. For all the advantages of being able to play each off against the other in the short term, Islamabad will be hoping it can avoid having to choose between them.

AFP/File / Brendan Smialowski. China has targeted soybeans, which are grown in states that supported Donald Trump in the 2016 US presidential election.

Things have become more tense between the US and Pakistan under the Trump administration, whose erratic approach towards Islamabad has rattled some observers. The US president caught many off guard when his very first tweet of 2018 accused Pakistan of cheating America, by accepting billions of dollars in US aid but giving Washington little back except “lies and deceit”. A few days later President Trump suspended $2 billion in military aid to Pakistan. Caught between Islamist militant groups and its angry ally, some analysts say Islamabad has been put in an impossible position.

On the other hand at least some parts of the Pakistani security establishment are known to have kept up ‘secret’ ties to the Afghan Taliban and other insurgents fighting the US and NATO in Afghanistan. America still needs Pakistan to help deliver an end to the Afghan civil war which has been raging since 2001, and under Trump it seems intent on twisting arms until it gets a firm commitment from Pakistan, to either deliver the groups it is backing to the peace table or to cut all ties with them. How realistic a policy goal this is remains to be seen, but the ultimate outcome probably depends upon the health of the Pakistani economy.

However economically (even before Trump arrived in the White House) Pakistan has increasingly been turning towards China, another country with a frequently fraught relationship with the United States. Of course, the two Asian states have been close military allies for decades, bound together by mutual territorial disputes with neighbouring India. But Beijing has become increasingly economically influential in Pakistan as well, and has recently promised Islamabad “$57 billion in economic investment through China’s [Belt and Road Initiative]” to quote a report from the National Interest.

Of particular concern to the US and India has been deep Chinese involvement in the development of the strategic port of Gwadar (located near Iran and the Persian Gulf), all as part of Beijing’s ambitious China Pakistan Economic Corridor (CPEC) project. The benefits of CPEC are disputed, but the Pakistani security establishment has certainly found the Pakistani component of China’s Belt and Road Initiative a lucrative opportunity; CEPEC’s budget is equivalent to roughly 20 percent of Pakistan’s entire GDP, according to the Financial Times newspaper.

How tactfully China will act in geopolitical terrain as sensitive as Pakistan, with which it shares a short border, still remains to be seen. One thing for certain is that, at the time of writing, in the battle for influence there it is China, not America, which has the bigger economic stick. However, should there be a sudden economic or social crisis in the volatile South Asian country, which is beset by multiple insurgencies beyond the Pakistani Taliban’s, it is not clear how Beijing would react.

Islamabad Skyline by Kamranmangrio via WikiMedia Commons

China has a terrible relationship with its minority Muslim populations, particularly the Uighur community living in its vast western province of Xinjiang. China’s treatment of this community has brought it the unwanted attention of international Islamist extremist movements in the South and Central Asian regions, and caused it tensions with Pakistan and other Muslim allies, who are embarrassed at their partner’s domestic behaviour towards their co-religionists.

Of course, this hasn’t stopped countries which pride themselves on their strong Muslim identity seeking closer relations with Beijing. For example, last October the Austin World Affairs Council reported that the “…Chinese and Saudi militaries are currently holding joint counter-terrorism exercises in western China”. China is simply too economically important now to be ignored; meanwhile its authoritarian system of rule at home is far more palatable to the autocratic rulers of many Arab and Muslim states than the American system, whose periodic public lectures on human rights annoy its Middle Eastern allies and make them fear its reliability in a crisis (though China’s has also to be tested).

But, whatever authoritarian regimes in the Arab and Islamic parts of the world may decree officially, globally-speaking China’s popular reputation is on thinner ice than it used to be in the Muslim community. In the somewhat unlikely event of a sudden Islamist takeover of Pakistan for example, the relationship between the two states would almost certainly cool dramatically.

All these factors leave the relationships between Pakistan, China and America in a tangled mess, particularly if it is the brewing US-China trade war which finally torpedoes Pakistani efforts to manage the country’s outstanding debts. At present Islamabad has a cool relationship with Washington at best, and a fairly warm one with Beijing. Any economic crisis would bring Pakistan cap in hand to the IMF, and could spark a diplomatic crisis if Washington uses this as leverage to force concessions from Islamabad.

Pakistani PM Shahid Khaqan Abbasi, 2017, by Drazen Jorgic via WikiMedia Commons.

Alternatively, a failure to repay Beijing could bring about a chance for a US-Pakistani reconciliation, particularly if China acts as clumsily as it has in its foreign relationships in the past. But a hostile Trump administration and a global economic crisis brought on by Washington’s attempt to wrest concessions from international rivals and allies alike could also see the break between the two countries become permanent. Pakistan would then move firmly into China’s camp in the growing economic and military competition between the US and China during Trump’s current term.

This makes the escalating multi-front trade war the Trump administration has begun (with friend and foe alike) take on a particular strategic significance in the South Asian context. There is growing speculation that Pakistan will shortly need to seek a loan from the US-dominated IMF, for the second time in five years. Even worse, Pakistan’s public debt stands at 70 percent of its GDP and there are fears that the country cannot pay back a series of Chinese loans it has taken out.

This isn’t totally certain in the case of Pakistan, whose economy is still on course to grow by 5.6 percent in real terms for the fiscal year of 2017-18 according to IMF estimates. Inflation has also remained relatively low at 5.4 percent, and strong consumption growth, agricultural recovery, better power supplies, and investments from parts of the CPEC programme have all helped keep GDP rising. Unfortunately these positive trends look set to run out of steam somewhat in 2019, with the fund predicting a slump in growth according to Pakistan’s Dawn newspaper, down from the current 5.6 percent to 4.7 percent.

A downturn would leave Pakistan needing help from either Washington or Beijing; and while America has been accused of using its financial system and economic muscle to bully foreign countries, so has China. In particular, Beijing has been accused in the past of using its loans as a way of extorting further political and financial concessions from those dangerously economically weak countries participating in its Belt and Road Initiative. Many writers sympathetic to India have already accused China of using sharp financial tactics to turn Pakistan’s fellow South Asian nation Sri Lanka into a “semi-colony”.

The same columnists are now predicting that Pakistan will soon be forced permanently away from America and into a form of debt-induced dependency on China. In truth, the situation is so fluid and multi-faceted that it is difficult to predict what will happen next. Only two things are certain; firstly that at present the US has less influence in Pakistan than Trump thinks it does, and secondly that Pakistan is increasingly treading a wavering tightrope in its relations between Washington and Beijing. The geopolitical picture of the South Asian region could look very different in a few years time if Pakistan’s wavering economy cannot hold up in the face of the squabbling economic giants to either side of it.

Featured Photo: Gwadar Port via WikiMedia Commons.

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Video added by Informed Comment:

New China TV: “CPEC lays solid infrastructure foundation for Pakistan’s economy”

Among America’s allies who stand to lose out unless the Trump administration decides to exempt them, France looks to be particularly hard hit by the end of the JCPOA. Paris has tripled its trade surplus with Tehran in just two years according to its Economy Minister Bruno Le Maire, and now its firms will have just six months to wind up their business operations there or face crippling penalties from Washington. Major French companies involved in Iran include some of the country’s most well known names, including Renault, Total, Peugeot and Sanofi. Le Maire was widely reported for remarks he made to French radio listeners in which he said it was “not acceptable” for the US to be the “economic policeman of the planet”. Europeans generally have been angered by what are seen as high handed US government actions over Iran, such as the newly appointed US ambassador to Germany’s clumsy Twitter instruction to German businesses that they should “wind down their Iranian operations immediately”.

But beyond annoying its European allies, the Trump administration’s threats are unlikely to move US rivals Russia and China, which both have extensive business ties with Iran that are likely to survive the fall of the JCPOA. In particular China is likely to see the withdrawal of America from the nuclear deal as a chance to improve its political relations with Tehran, which will not be in a position to be choosy about whom it does business with once US secondary sanctions snap back into place. But economically speaking the reality of Chinese influence in Iran is more complex than the American attempt to push Beijing and other foreign countries into re-isolating Tehran admits. In the short term many Chinese firms who do business in Iran may take a big hit; in one example, for breaching US sanctions Chinese telecom equipment maker ZTE Corp received a seven year ban on US companies selling it components and software in April that could shut it down for good.

But this ignores several critical factors featuring in Chinese thinking over Iran and the US. The first is that China is in Iran for the long haul, with the Islamic Republic now physically linking itself to China via a new “Silk Railway”. Intended to carry goods and passengers between the two countries under China’s frequently renamed “One Belt, One Road” initiative, the 10,399 km long railroad linking the capital Iranian capital to Yiwu in China’s eastern Zhejiang province was built as Chinese-Iranian cooperation deepened during the sanctions period. Bilateral trade between the pair grew from $4 billion in 2003 to $53 billion in 2013 for example, as Chinese firms displaced European ones in the Obama era. Geography makes Iran a Eurasian trade hub and China sees it as both a vital link in its projected Asia-Europe trading route and as a component in Beijing’s plans for regional integration with Central Asia.

Secondly with a potential trade war brewing between America and China, Beijing is unlikely to be in a very helpful mood regarding American problems with the Islamic Republic. It’s position is closer to that of the Europeans and many Americans themselves, which is that since the JCPOA was an international deal brokered under the authority of the United Nations, Washington’s withdrawal is unfortunate, but not an end to the matter. US demands on Iran will be added to the list of others Beijing has no intention of doing anything about, and punishing Chinese companies like ZTE Corp who operate there further would be swiftly interpreted as one more American move to prevent China from achieving its ‘rightful place’ in the region, as elsewhere.

This matters because in spite of everything China’s major interest in Iran remains the same as every other power since the beginning of the twentieth century, namely privileged access to Iran’s oil and gas supplies. According to energy research firm Greenscape, almost one third of Iranian oil exports have flowed to China this year, making Beijing the Islamic Republic’s best customer. China’s economy is still a massive energy consumer in spite of efforts by the ruling Chinese Communist Party to diversify the country away from fossil fuel use; and while Iran is more dependent on oil and gas sales to raise money than ever since the American withdrawal from the JCPOA, the price of oil is also surging thanks to Trump’s actions.

Just as an agreement between OPEC countries and Russia has tightened up global supplies to economies like China’s, so Washington’s actions now threaten to remove the Iranian supply as well. Iran’s crude oil exports surged by 1 million barrels per day when sanctions were last removed in 2016, so this backward step now is likely to incline both Beijing and Tehran to explore a bilateral energy deal that deepens Iran’s dependency upon China in the longer run. Pushing Iran into China’s waiting arms was unlikely to have been a major US policy goal in the Middle East, but that is what seems likely to happen now that America has started trying to unravel the JCPOA agreement that was keeping a lid on tensions in the region. Trump’s withdrawal from his predecessor’s greatest foreign policy achievement may end up being an even bigger mistake than the one the diplomats and analysts are already calling it.

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Bonus video added by Informed Comment:

CGTN: “China pledges to safeguard, implement Iran nuclear deal”

North Korea has surprised the international community by announcing it is suspending its testing of nuclear weapons and intercontinental ballistic missiles ahead of talks between US President Donald Trump and the North Korean leader Kim Jong-un. The isolated communist regime said that the moratorium on testing would go into immediate effect according to state run media, and also comes less than a week before Kim is due to meet South Korean President Moon Jae-in at a summit in the Korean peninsula’s demilitarised zone. The good will gesture might be intended to signal the North Korean regime is negotiating in good faith as it goes some way to meeting US demands for a denuclearisation of the Korean peninsula.

North Korea last tested a nuclear weapon in September 2017, in an explosion experts claimed as highlighting the most powerful device it had yet revealed. But the North Korean regime is also under heavy US sanctions which have put significant economic pressure on the country’s fragile economy. Critics of the negotiations have argued that the regime will attempt to string the prospect of verifiable dismantlement for years past Trump’s presidency, confident that the technical sophistication of its nuclear and missile programmes is now advanced enough that it can afford a decent period of talks aimed at economic and sanctions relief.

Given the furious war of public insults that have been exchanged between President Trump and North Korean dictator Kim Jong-un, many observers had believed that the talks would never take place between the two thin-skinned leaders. Moreover the recent appointment of arch-hawk and neoconservative stalwart John Bolton as the new National Security Advisor of the United States by President Trump had seemed to signal the administration was taking a more hardline turn in its foreign policies.

A former Bush-era administration veteran, Bolton has openly called for preemptive strikes on both North Korea and Iran in the recent past and defends the Bush administration’s decision to attack Iraq in 2003 to this day. His rise to prominence within the Trump administration almost certainly means that the US will exit its nuclear deal with Iran in May for example, when the president has said he will refuse to extend critical US sanctions relief that is part of the US bargain with the Iranian regime unless he is satisfied by amendments he has demanded allies like Britain make to the agreement. Surprisingly however, Pyongyang does not seem to have been put off from talks with the Trump administration after watching it demolish another painstakingly crafted nuclear agreement with a longstanding US rival; a meeting between Trump and Kim is still scheduled to go ahead at some point this summer, although an exact date has not yet been set.

The North’s commitment to peaceful talks and its surprise decision to suspend its provocative programme of nuclear and missile tests could be a ruse ahead of scheduled talks between North and South Korea’s leaders of course. Or it could be an attempt to buy some breathing space while the communist leadership assesses US intentions; according to the South Korean leadership, Pyongyang has suddenly expressed a desire for the “complete denuclearisation” of the Korean peninsula, surprisingly without any preconditions such as demanding the withdrawal of US troops, something which has long blocked serious attempts at negotiations under previous American administrations.

While it is hardly likely that the regime in Pyongyang is truly serious about giving up its nuclear programme at such an advanced stage, after decades of stalemate it could be that a window to achieve some form of verifiable containment of the North Korean nuclear weapons arsenal has briefly opened. China, North Korea’s only major friend and ally, would certainly be in favour of diffusing the issue as long as the current regime was allowed to stay in power (especially if it eventually meant negotiating an official end to the Korean war and the subsequent departure of US troops from South Korea).

If so it is ironic that nuclear talks would be progressing over North Korea’s far more advanced arsenal around the same summer as America’s permanent crisis with a non-nuclear Iran, whose agreement with world powers President Trump has called the “worst deal ever”, is heating back up again. Some 70 percent of Iranians back their country acquiring nuclear weapons and the missiles to deliver them, according to a recent poll.

A smaller majority of Iranians still back Iran’s deal with America even though they say that it hasn’t delivered the promised economic benefits (largely because so many foreign businesses remain wary of entering the Iranian market whilst President Trump remains in the White House). Sticking the agreement with Tehran seems unacceptable to the war hawks currently in the ascendency within the Trump administration however; unlike isolated North Korea, whose nuclear programme is the only major security issue America has with it, the list of American grudges against Iran is considerably longer. Among others they include Iranian sponsored killings of US servicemen during the wars in Iraq and Afghanistan, Tehran’s support for terrorist groups and its threats to Israel, and Iran’s support for Syria’s bloodsoaked dictatorship.

A look at the contrasting approaches the Trump administration has taken to the two countries is instructive; put simply North Korea is more of a threat but less of a problem than Iran right now. While its communist regime has no wish to commit suicide by attacking America first, it can probably hit multiple US cities, overseas possessions or military bases with its present intercontinental ballistic missile technology and might already have the ability to fit a nuclear warhead to some of those missiles.

Meanwhile any conventional fighting that would take place in a theoretical second Korean war would be devastating to South Korea’s capital Seoul, and the Pentagon estimates that casualties during any conflict would run into the millions; put simply, it isn’t worth the risk to America if a solution short of war can be negotiated, and the president who succeeded in doing would be lauded—a not insignificant attraction to a man of President Trump’s character.

Non-nuclear Iran meanwhile is much less of a military threat to America, particularly since the US is no longer so dependent upon Middle Eastern oil from countries whose infrastructure and transport systems could be vulnerable to Iranian retaliation in any conflict, and much more of an irritant. Washington also now has more room to maneuver against Iran. Although it still has small numbers of troops present in both states, the US is no longer tied down as it was ten years ago in the joint occupations of Iraq and Afghanistan.

With the talks with North Korea to point to if anyone complains about its belligerence abroad, figures in the Trump administration might consider now the time to launch the air war on Iran that has long been discussed on the US Right and among partisans of Israel’s Likud party. How a US strike against Iran following the dissolution of the nuclear agreement between the pair would go down in Pyongyang is unknowable. Unlike Tehran North Korea knows it can count on China’s fear of American influence reaching its borders to cushion it against any blowback if it ever does decide to relinquish its arms. But sabre-rattling towards Tehran by Washington now will certainly not inspire much trust in future American intentions among North Korea’s paranoid and secretive elites.

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Bonus video added by Informed Comment:

?? North Korea suspends nuclear and missile tests | Al Jazeera English

As the Syrian civil war begins to wind down after six and a half years of bitter fighting, a new phase is emerging in the battered country’s political life — plans for country’s postwar reconstruction are already being laid even as the fighting between Islamist rebels and the Syrian regime reaches a final climax in the country’s northwest. More violence is threatening to break out between US backed Kurdish rebels and Turkey, which strongly objected to American plans to create a border force out of the Kurdish dominated Syrian Democratic Forces, with which to remain engaged in Syrian politics.

But though there are still tensions which could explode between the numerous factions present on Syrian soil, in the major population centres away from the fighting the thoughts of Syria’s leaders and their allies are now turning towards rebuilding the country’s shattered cities and putting Syria’s war-damaged economy back on its feet. Russia’s President Vladimir Putin has declared victory (again) in his country’s two year war in Syria, and is now appealing to the international community for funds to help restart Syria, warning that otherwise the country will remain an impoverished wreck that will act as a breeding ground for extremist groups. Meanwhile the United Nations estimates that the cost of rebuilding Syria will be at least $250bn.

Rising superpower China has already stepped forwards and said that it will help Syria’s Bashar al-Assad to rebuild. Beijing has also announced that it would be sending Chinese special forces to Syria to help the regime there fight against rebel remnants. Driving by its fears over the fact that up to 5,000 ethnic Uighurs from its violence-prone far western region of Xinjiang are fighting in rebel ranks, and by its desire to include Syria in its One Belt, One Road programme, Beijing has made clear its support for the Assad regime in Damascus. Last year China even joined with Russia in vetoing UN sanctions on Damascus for using chemical weapons on its own people.

Meanwhile the China-Arab Exchange Association has said that its members have been on multiple trips to Syria to discuss future cooperation between Beijing and Damascus. China has also officially announced that it intends to cooperate with the Assad regime on funding Syria’s reconstruction efforts.

Indeed, Syria is looking primarily to Iran, Russia and China for help with its reconstruction efforts, with businesses from these three allies expected to be among the biggest beneficiaries of the winding down of Syria’s civil war in most parts of the country. Assad’s forces now control all the major cities in the country, leaving the Baathist regime looking militarily unassailable. The reconstruction efforts will be a further opportunity to enable it to portray itself as the responsible, reasonable party in the recent conflict, and the participation of so many outside backers in rebuilding Syria will lend Damascus some much needed legitimacy.

Reconstruction in Syria will undoubtedly be used as an opportunity by the Assad regime to punish those it deems opponents, and reward those whom it perceives as useful loyalists. Indeed its inner circle will probably profit personally from the programme, given how immense corruption was in pre-war Syria and how it continued during the war.

But unlike the pre-war days, when the Assad family and an inner circle of favoured loyalists could carve up the ossified Syrian state just between themselves, this time around the proceeds will have to be shared with the countries whose military support and political cover helped the clan win the war against US and Gulf backed rebel groups like the Free Syrian Army umbrella organisation. This time the webs of corrupt patronage being spun across Syria will stretch to Beijing, Moscow and Tehran as well. The US and its European and Gulf Arab allies, most of whom backed the Syrian rebels, will continue to withhold money for reconstruction however. As the losers of the civil war, this is one of the few cards that they will have to play in the upcoming peace talks.

If their diplomats stick to their guns, then this is not an empty threat however. Unlike petro-states such as Iraq, Syria itself has little ability to generate cash internally to pay for its own rebuilding; the economy is in ruins and the country’s 6.1 million internally displaced people (IDPs), many of whom escaped other formerly opposition-held areas after they were overrun by government forces, will be reluctant to go home and see what kind of future they have under President Assad. That goes double for the Syrian refugees who have made it into Europe or simply to other, more stable, countries like Turkey or Lebanon (stability being a relative term here).

The EU, US and the Gulf states have put aside US$9.7bn for humanitarian aid, but have so far refused to support the reconstruction efforts without a political transition away from Assad. Meanwhile Assad has insisted that nations like Turkey and Saudi Arabia, who are angling for business despite having supported the opposition, will not be included in it anyway.

Reconstruction efforts will also be hindered economically by US and EU sanctions aimed banning settlements in Syria in dollars and euros, a legacy of efforts to cut the Assad regime off from the world economy. Russia says that it has been promised contracts worth at least 850 million euros to rebuild infrastructure such as Syria’s energy facilities. Iran has been given contracts worth several hundred million euros to repair power grids, with the China-Arab Exchange Association estimating that there was about US$2bn of investment promised for Syria’s international supporters as of late last year.

Nevertheless, this is only a tiny fraction of the sums that will need to be spent before the damage caused to Syria by the war is repaired. Syria will remain in ruins for years to come, as the wartime political stalemate, between Assad’s backers in China, Russia and Iran and his enemies in the US and EU, endures into the peace after it. Lacking alternatives, Chinese money and reconstruction aid will slowly come to play an increasingly important part in Syria’s internal politics, a significant change from before the war.

By working through what is still the internationally recognised government of Syria, Beijing will be able to claim that it has avoided taking sides in a civil war (now nearly over) but is now engaging with a sovereign state (unlike America, which has done as much as it can from the sidelines to undermine the Assad regime). While relying on Middle Eastern oil supplies, China has traditionally avoided diplomatic entanglements there, so this support for Assad marks a shift in regional diplomacy that Chinese diplomats will undoubtedly try to conceal behind the language of non-intervention.

Neil Thompson is a freelance writer who has lived and traveled extensively through East Asia and the Middle East. He holds an MA in the International Relations of East Asia from Durham University, and is now based in London.

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Related video added by Informed Comment:

Press TV from last month: “Syria, China en route to boost economic cooperation”