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Chinese President Xi Jinping attends the China-Gulf Cooperation Council Summit in Riyadh, Saudi Arabia, on December 9, 2022. (Xinhua via Getty Images)
When National Security Advisor Jake Sullivan recently discussed American leadership of the global economy, he focused on Europe and the Indo-Pacific and mentioned Africa and Latin America. He did not mention the Middle East once. Meanwhile, Beijing has made significant economic inroads in the region.
As China attempts to overcome its financial challenges and create a Beijing-led global order, read Hudson Visiting Research Fellow Yair Albeck [[link removed]]’s new policy memo [[link removed]] to learn how the Middle East fits into Xi Jinping’s strategy.
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Key Insights
1. Beijing faces a scarcity of investment capital and a potential debt crisis.
Such an onerous economic environment explains why Beijing has taken an interest in the Middle East. Affluent Gulf countries possess the necessary financial resources to support China’s ambitious goals, and Beijing sees significant strategic value in strengthening economic ties with the region. For this reason, China focused a substantial portion of its Belt and Road Initiative (BRI) activities in the Middle East in 2022. American policymakers should understand that the Middle East is a locus of increased competition against China.
2. China has run into significant challenges in capturing high-tech and high-value supply chains.
While high-tech trade with the West may be difficult, China sees the Middle East, especially Gulf countries that wish to diversify their economies, as low-hanging fruit ready for picking. Many Gulf countries, along with Turkey and Egypt, are already part of the Digital Silk Road (DSR), a tech-focused version of the BRI. The DSR aims to build the necessary infrastructure for a new digital economy centered around China, which would allow Beijing to establish new technology standards.
3. China is pursuing economic security and self-reliance.
To achieve self-sufficiency, Beijing aims to strengthen the symbiotic relationship between its domestic and international markets and make its domestic market the primary driver of its economic growth. By anchoring its economic development in its domestic market, China seeks to limit its vulnerability to international sanctions. Because the Middle East is vital for China’s energy future, China’s increased investment in the region will further solidify China’s long-term energy security and improve its self-sufficiency.
Quotes may be edited for clarity and length.
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