Since the Arab Spring, China has been quietly asserting its influence and fortifying its foothold in the Middle East, while the United States pivots to the Asia Pacific after a decade of war. It is aligning with states that have problematic relations with the West and are also geo-strategically placed on the littoral of the “Four Seas”–the Caspian Sea, Black Sea, Mediterranean Sea, and Arabian Sea/Persian Gulf. Paradoxically, the U.S. eastward pivot is matched by the resurgent Middle Kingdom’s westward pivot across its new Silk Road, and threatens to outflank the citadel of American geo-strategies in the region.
INTRODUCTION: CHINA’S STRATEGIC INTERESTS IN THE MIDDLE EAST
China’s interest in the Middle East is first and foremost energy-driven. In 1993, when it became a net oil importer for the first time, Beijing embarked on a “go out” (zhouchuqu) policy to procure energy assets abroad to feed its growing economy. The legitimacy of the Chinese Communist Party (CCP) rests on continued economic growth and delivering a rising standard of living for the Chinese population. As a corollary, China is also concerned about security of energy supply lines and Sea Lines of Communication (SLOCS). Because the United States is considered its main opponent in the international system, China is wary of U.S. naval dominance and the risk of choking China’s energy supply through the Malacca Straits should hostilities break out over Taiwan. This is referred to as the “Malacca Dilemma,” where 80 percent of China’s oil imports traverse this chokepoint that is vulnerable to piracy and U.S. blockade. Indeed, given increasing tension in the three flash points of the South China Sea, the Korean Peninsula and the Taiwan Straits, this concern is even more pressing for the Chinese leadership.
The Middle East is also a strategic logistics and trade hub for China’s exports and market access in Europe and Africa. China understands the importance of having strong economic foundations for military power and sees that continued market access for their exports to fuel China’s economy would build up their war chest to further underwrite military modernization. The EU is currently China’s largest trading partner ahead of the United States. Moreover, China also has vast interests on the African continent–both via infrastructure projects and long-term energy supply contracts. More than 1 million Chinese are in Africa (up from about 100,000 in the early 2000s), with trade at $120 billion in 2011. In 2009, China overtook the United States to become Africa’s number one trading partner. As such, the Middle East is a strategic region that connects Europe, Africa, and Asia markets.
Thus, given the Middle East’s location as a trade hub linking the three continents, a vital region for market access, and site of vast energy reserves to fuel China’s continued economic growth, the CCP deems the Middle East as a high priority on its foreign policy agenda. As the United States “pivots” towards Asia, China will naturally seek strategic depth in areas that were once dominated by the United States and its Western allies. This is even more so in the aftermath of the Arab Spring.
Strategic Foothold Post Arab Spring
The Arab Spring caught China by surprise, and Beijing has not fared well in its aftermath. Director General of Chinese Foreign Ministry’s African Affairs Department Lu Shaye expressed China’s fear that Western military intervention in crucial energy markets could eventually restrict Beijing’s access to oil and gas. In a 2011 interview regarding Libya, he expressed concerns that European-led [NATO] intervention in Libya was a thinly veiled gambit to restore waning western influence in Africa. China had to evacuate over 36,000 Chinese nationals from Libya and lost over $20 billion in investments when the Qadhafi regime was ousted.
As such, there is an uptick of writing in the Chinese press arguing for change in the traditional non-interference stance in China’s foreign policy. China is now more proactive in its Middle East diplomacy and wants to ensure its previous contracts are protected in the post-Arab Spring regimes as well as obtain a foothold for Chinese firms while Western firms evacuate from these regions or are reticent to invest due to uncertainty. China, with its state-owned companies backed by its $3.3 trillion war chest, is adept at filling in the vacuum in these “minefields” in order to sustain economic growth, since Western businesses have virtually monopolized relatively “safe” regions elsewhere.
CHINA’S NEW SILK ROAD STRATEGY
In order to procure energy assets and ensure security of energy supply, China has adopted a two-pronged strategy. First, it has embarked on a “New Silk Road” of infrastructure projects. China is turning historical trading routes of the ancient Silk Roads into a modern grid of overland pipelines, roads, and railways for its energy supplies–called the New Silk Road. This is to circumvent naval chokepoints and hedge against risks of naval blockades or embargoes.
Second, it has increased military power projection to protect overseas interests. China has also embarked on military (especially naval) modernization to protect overseas interests and adjusted its strategy from “coastal defense” to “far seas defense” for the PLA Navy (PLAN). China uses a combination of economic, political, and military tools to further this two-pronged strategy.
China is building various infrastructure projects in the Middle East and Africa. These are usually bilateral agreements with the government to bypass market forces of tender and competition. One such example is the 2012 Sino-Israeli agreement for Chinese companies to build a cargo rail line linking the Mediterranean port of Ashdod with Eilat in the Red Sea, dubbed the “Med-Red rail,” and the “steel canal” to bypass an increasingly unstable Suez Canal under the Muslim Brotherhood’s control. The bilateral government agreement enables Israel to bypass its Tender Law in awarding the franchise and allow it to contract with Chinese companies to help finance the project. Likewise in Egypt, China recently penned bilateral government agreements with President Muhammad Mursi to build railways, telecommunications, and other infrastructure projects backed by Chinese concessional loans, providing funding with advantageous conditions that few other countries are willing to provide.
In addition to bilateral agreements, China also provides competitive package deals that may include military aid in addition to concessional loans, as well as loans for oil, loans for strategic minerals, and/or loans for infrastructure projects. Western companies cannot compete, because Chinese state-owned companies are backed by China’s $3.3 trillion war chest. For example, in Afghanistan in 2007, China’s Metallurgical Group (M.C.C.) outbid the second runner up by 70 percent, offering $3.5 billion for the Aynak cooper mine estimated to go for $2 billion. M.C.C. offered $1 billion more than any of its competitors from Canada, Europe, Russia, the United States, and Kazakhstan. The entire package included a one-stop shop to build railways, a 400-megawatt generating plant to power the copper mine and Kabul, coal mines to feed the plant’s generators, as well as schools, roads, and even mosques for the Afghans.
As such, the Chinese have raised the bar and taken the bid beyond the scope of just an extractive operation. Even if the projects take five or ten years due to ongoing instability, at least they have a beachhead and sustaining influence. These types of development aid packages underscore how Chinese leaders–flush with cash and in control of both the government and major industries–meld strategy, business, and statecraft into a seamless whole.