Not just the economy: China's growing cyberspace influence in the Middle East

The relationship between China and the Middle East, particularly Saudi Arabia and the United Arab Emirates (UAE), has been evolving rapidly in recent years. Following President Xi Jinping's December 2022 visit to the Kingdom of Saudi Arabia, it has become clear that energy remains at the forefront of the relationship between China and the Gulf.

In fact, China imports about 20% of its crude oil from Saudi Arabia and almost 40% from the Gulf Cooperation Council (GCC) nations. Since as early as 2019, during Crown Prince Mohammed bin Salman (MBS)'s visit to China, there has been an uptick in cooperation with the Saudi oil giant Aramco. Nevertheless, there is more to the relationship than meets the eye than energy security.

As we move into 2023, it is expected that there will be an increase in regional balancing, as nations in the Middle East look to diversify their foreign relationships in a multipolar world. Overall, the deepening of ties between China and the Middle East, specifically Saudi Arabia and the UAE, is a multifaceted issue in continuous flux. China, however, is not seeking nor is it capable of replacing the US as a regional security guarantor.

In the coming months, Beijing is set to increase its military technology transfers to Saudi Arabia. According to the Chinese media, the recent agreement signed during the November 2022 Zhuhai Air show, and the Saudi promise to acquire US$4 billion in military hardware is a case in point. Military technology transfers from China to Saudi Arabia are not a new development. China has supported the Kingdom since the 1980s by providing ballistic missiles and, more recently, advanced combat UAV (unmanned aerial vehicle) technology.

China and Saudi Arabia have engaged in various training and exchange programmes between their militaries. This has included joint military exercises, training Saudi military personnel in China, and exchanges of military delegations.

It is important to note that while China's involvement in weapon transfers in the region may not significantly alter the balance, it may be perceived as a bargaining chip, allowing nations such as Saudi Arabia and the UAE to pressure the US to provide more advanced weapons, particularly drones, which the Biden administration has been hesitant to do. At the same time, the US is using the transfer of advanced military materiel as a carrot in exchange for the Gulf's unconditional "rip and replace" of Chinese ICT technologies in the region.

From Riyadh to Dubai, Beijing's one-stop-shop for high-tech solutions is perceived as essential to transitioning the region to a post-oil economy. Comparing the Saudi state reception offered to Biden and Xi offers signs of who is going to blink first. The lukewarm welcome for US President Joe Biden when he made a trip to the Kingdom in July 2022 was probably a result of lingering unhappiness over Biden's earlier threat to make Saudi Arabia a pariah state over the killing of journalist Jamal Khashoggi. Realpolitik, however, forced the US president to backtrack and seek the Saudis' help in keeping oil prices from spiralling.

The lavish reception provided by King Salman bin Abdulaziz Al Saud and MBS during President Xi's visit was a contrast to the cold shoulder Biden received during his earlier hat-in-hand visit to Saudi Arabia, and presents noteworthy indications on the path the Gulf will follow in 2023.

As the Gulf economies look to diversify beyond oil, China's role in technology transfer becomes increasingly essential, opening up new trade and investment opportunities. China has not been sitting idly while Biden, during the first year of his presidency, was adamant in avoiding any contact with MBS. Also, Beijing had been increasing its geoeconomic penetration in the region well before the US began resizing its military footprint there.

In this respect, the 35 inked deals during Xi's state visit to Saudi Arabia, worth roughly US$30 billion ranging from information technology to genetics, mining, and hydrogen energy, are significant, but it remains to be seen which of the agreements will be fully realised.

Nevertheless, the adoption of Huawei-cloud computing-smart city and Saudi Arabia having China's backing of the US$500 billion NEOM "cognitive city" project will have a long-term impact on the two countries' comprehensive strategic partnership and China's ambition to set the digital standard in the region.

Moreover, Beijing's Digital Silk Road's growing footprint in the Gulf means that China is promoting its own vision of cyber sovereignty instead of a Western open-internet model. China's high-tech offers, including advanced population monitoring and AI predictive analytics, are well-received by the Gulf's monarchies, especially when the governance systems involved see eye to eye on how to handle big data and smart city security.

In addition, Beijing's comprehensive offerings to become the preeminent regional leader in developing blockchain technology and central bank digital currencies in the Middle East and North Africa (MENA) region are well received in Riyadh and Dubai. In both instances, technology transfer via China's Digital Silk Road initiative is a fundamental aspect of Beijing's efforts to internationalise its values in cyberspace: a state-centric approach to digital governance.

Nevertheless, the impact of the zero-Covid policy and the sudden U-turn on border opening regulations are casting doubts that China's economy will run out of steam and have to scale back the Belt and Road Initiative and Digital Silk Road's ambitious commitments.

In this respect, China's trade and investment expansion in the Gulf is still proceeding as the cost is not a hindrance to implementing Chinese information and communications technology in the region. At the same time, China's decades-old policy of non-interference still allows the country to maintain good relationships with various Middle Eastern nations, from Iran to Saudi Arabia to Israel and Syria, without jeopardising the expansion of President Xi's flagship foreign policy initiative, the Belt and Road.

However, Beijing's communication supports the growing perceptions in the Gulf that the US has lost interest in the region and that it is following a path of inexorable decline. But this narrative could backfire if a sudden crisis requires Beijing's intervention. The January 2023 crisis in Kazakhstan, China's near abroad, witnessed the intervention of the Collective Security Treaty Organization (CSTO) Moscow-led security organisation with 3,000 soldiers to stabilise the situation. This is one case in point.

Given the above, in 2023, the shift towards China in the Middle East is important, but it is not a game changer. The Saudi movement to the East witnessed a balancing act toward an emerging multipolar world where the US is fundamental but not mutually exclusive. At the same time, China is an essential economic actor and a leading technology provider. However, while the Gulf is pivoting to the East for trade and investment, it is still looking West for its security needs.

Related: Xi's Saudi visit: Middle powers uniting in a hierarchical world | US allies want good relations with China too | Will China become an 'empire by invitation' in the Middle East? | Chinese academic: Beijing does not want China to replace the US in the Middle East