China and the US in the Middle East: Iran and the Arab Gulf

China’s interest in the Middle East has primarily been economic but is growing more strategic. With the launch of China’s “Belt and Road Initiative” (BRI) and its growing demand for imported oil, the Gulf has assumed greater significance to it.

While China’s influence is growing, it remains far less substantial as a security partner for the Gulf states than the US. China’s attempts to balance its relations with Israel, the Arab Gulf States and Iran also creates its own challenges—these states often being in tension with each other.

This briefing sets out China’s regional priorities. It then provides a snapshot of Chinese trade and security engagement with the Arab Gulf powers, analysis of a China-Iran-Russia axis, and the significance of this for US-led interests.

China’s Belt and Road Initiative

In 2013, China launched the Belt and Road Initiative (BRI). This infrastructure project stretches from East Asia to Europe and takes the form of China making investments overseas in trade and communication networks, as well as enhancing cooperation through trade and other agreements.

Stated aims are to strengthen China’s trade, support development, and to boost China’s economy. The Middle East is central to several of the BRI’s economic corridors, including one through Iran, to link China to Europe.

China is an important trading partner

China has agreed high-level partnerships with Iran and all Gulf Cooperation Council (GCC) states (Saudi Arabia, UAE, Bahrain, Kuwait, Qatar, and Oman) other than Bahrain. In 2022, it has pledged to renew free trade talks.

In 2021, the value of China’s bilateral trade with GCC states and Iran was US$248 billion. This was four times greater than their trade with the US.

In 2021, Saudi Arabia was also China’s largest single source of oil worldwide. However, since Russia’s invasion of Ukraine in February 2022 China is importing more Russian oil as US allies seek to diversify away from Russian imports. This may reduce the Gulf’s importance to China.

China: Military and technology in the Gulf

The militarisation of China-Gulf relationships is relatively undeveloped compared to Russia and the US. From 2010 to 2020, China provided less than 2% of GCC arms imports. Most arms sales have been drones, and Saudi Arabia and the UAE have been the primary purchasers.

China conducted military exercises with Saudi Arabia in 2019, and pledges greater cooperation with GCC states. However, these have been balanced with military exercises with Iran. Reports in 2021 of a Chinese military base in the UAE, suggesting a strategic shift, have been denied by China and the UAE.

Current US concern is focused on the use of Huawei technologies in the region. Huawei is a Chinese telecoms provider, which successive US Administrations have judged to be a security risk. The Biden Administration has reportedly asked the UAE to remove Huawei from its networks by 2025, saying its use will limit America’s ability to share information and technology.

Is there an Iran-Russia-China axis?

All three countries share a hostility to US-led influence and have often taken similar positions internationally. For example, all have backed the Assad regime in Syria, either diplomatically (China) or militarily (Iran, Russia). Iran has also blamed NATO for the war in Ukraine. Both Russia and China support a nuclear deal with Iran, but have called for some sanctions to be lessened.

Analysts see their relationship as an ad-hoc one, rather than a systematic alliance. Russia and Iran, for example, are now in competition as suppliers of sanctioned oil. The region is also a secondary theatre to both Russia and China, who have substantive relations with Gulf states to balance with Iran.

What does this mean for US influence?

Successive US Administrations have sought to “pivot” to the Asia-Pacific to compete with China. This has created concern amongst US Gulf allies that US interest is less certain and guaranteed. President Biden also initially sought to distance the US from Saudi Arabia and the UAE. However, in July 2022 Biden met the Saudi Crown Prince, suggesting a re-setting of relations.

While China is the region’s biggest single economic partner, the US, and allies such as France, the UK and South Korea, remain dominant sources of arms (PDF). China’s trade and regional stability also remains heavily reliant on the US security presence. Both the US and UK have substantial military forces deployed in the Gulf region for maritime security and counter terrorism purposes, including combatting Islamic State/Daesh.