China’s impossible balance in the Middle East
This article was written by Lucas Blascos Argullós, Policy Fellow 2023-2024, and originally appeared in Modern Diplomacy. The views in this article are the authors own.
In March 2023, many in the West looked with surprise and unease as China brokered an agreement to resume diplomatic relations between Iran and Saudi Arabia. Whilst China’s role was mostly ceremonial, it indicated that Beijing was vying to fill in the vacuum of power and influence that the US left after its withdrawal from Afghanistan. This prospect should worry us in the West.
The Middle East’s importance in China’s grand strategy has been significant since it signed comprehensive strategic partnership agreements with both Saudi Arabia and Iran. Although China would very much like to increase its influence in the region, it will never be able to do so without picking sides, which would simultaneously threaten its robust relations with both countries. If the US is serious about stopping China’s influence in the region, it must be ready to reassure regional allies, including Saudi Arabia, that it can provide the security guarantees that China will never be in a position to supply. Whether we like it or not, oil still powers the world. Until we decarbonise our economies, the West simply cannot afford to lose sway over oil-producing countries, especially when our systemic rivals relish every and any opportunity to expand their spheres of influence.
However, the cooling of relations between Riyad and Washington in the past years, together with the increasing export market that Beijing offers, has made China an attractive partner in the eyes of Saudi Arabia. Throughout the past decades, China has tailored its Middle Eastern foreign policy to improve its access to energy reserves and has made oil the single most important issue in its Gulf strategy. But energy has not been the only pillar of Sino-Gulf relations: the comprehensive strategic cooperation agreements also outlined infrastructure, investment, and trade as other major areas of cooperation in China’s upgraded ties with Saudi Arabia and Iran.
China is the largest client for Gulf oil and represents a quarter of the region’s total hydrocarbon exports, and has surpassed the trading volume of Saudi Arabia with both the USA and the European Union combined. Crude petroleum imports now amount to 82% of total Chinese imports from the Kingdom. Simultaneously, this has been accompanied by a steady decrease in US energy demand from the Gulf, which plummeted between 2003, when the US imported 2.5 million barrels a day from the Persian Gulf to less than a million by 2022. With the US decoupling from the GCC in the energy sector, Gulf countries are inevitably seeking to prioritise their relations with quickly developing countries such as India and China.
This may well be a cause for concern in Washington. Nevertheless, the deepening of Sino-Saudi relations faces one major hurdle: China’s unwavering support of the Iranian regime. Beijing has sought to project itself as a neutral superpower by equally and simultaneously expanding its cooperation with both Saudi Arabia and Iran. Improved relations with Saudi Arabia have not stopped Beijing from being the main financial supporter of the Iranian regime through its oil imports from Teheran. As with other GCC countries, China’s main interest in Iran lies in having long-term energy access, and despite Western sanctions, it has been able to access Iranian oil by bypassing Western banks and shipping services: Iran ships oil to China with dark fleet ships without responders and receives payments in RMB through small Chinese banks. Through this system, China purchases around 90% of Iran’s oil production. Thus, China acts as a lifeline for the Iranian regime, similar to the way China financially supports Russia’s imperialist aspirations in Ukraine by importing its oil and gas exports after Western sanctions and moratoriums.
China’s support of the Iranian regime gives the US and indeed the West an opportunity to drive a wedge between Saudi Arabia and China. Neither the US nor European countries will be able to come close to matching China’s demand for Saudi energy exports, nor does it seem likely that they will invest as much as China is investing in Saudi infrastructure. However, there is one thing that the West can provide Saudi Arabia that China cannot: security. Above all, Saudi Arabia’s main concern is its struggle for leadership in the Gulf and the Arab world against Iran. Whilst the symbolism of China’s mediation in restoring diplomatic relations between both rivals is significant, Saudi Arabia knows it will never be able to rely on China for its security if Beijing seeks to maintain a balanced strategy in its relations with both Riyad and Teheran.
If Western countries are determined to alienate Iran and prevent a further expansion of China’s influence in the Gulf, it may be time for European and North American governments to understand that we have the necessary means to avoid it. This does not mean giving the Saudi government a blank check. In fact, I say this as someone who believes that any form of authoritarianism is deplorable and who acknowledges the deep flaws that Saudi Arabia and other Gulf countries have. However, the single best way to keep these countries out of China’s growing sphere of influence will probably not come from confrontation but rather from providing them security guarantees that China cannot and will not be in a position to produce any time soon. Moreover, if we do commit to Saudi Arabia’s security, Western countries will be able to use this as leverage in an attempt to socialise regional countries towards the liberal democratic principles that we champion. Saudi Arabia will seek security guarantees for as long as Iran maintains its expansionary and assertive agenda in the Middle East. With China seemingly willing to financially support Iran in doing so, it is up to the West to decide if we allow Beijing’s influence to deepen, or if we are prepared to use our assets to prevent it.
