Sunday 22 March 2015

China forced to rethink role in Middle East

This article originally appeared on Global Risk Insights

In recent years, China’s presence in the Middle East has taken on greater significance through deepening economic ties. China is now the second largest trading partner with Arab nations, jumping to US $238.9 billion in 2013 from $25.5 billion a decade prior. A strategy of remaining agnostic to political ideology has helped China foster relations in the Middle East, but signs of growing instability in the region could force Beijing to rethink its approach.

Aside from its ability to use cash from $4 trillion of foreign currency reserves, China has been granted access to energy by a variety of Middle Eastern nations due to its perceived neutrality. A negligible military presence in the region, an absence of recent colonial history, and seemingly high regard for state sovereignty have all contributed to China’s burgeoning presence. Such factors have been particularly important in developing links to states that are ideologically opposed to each other, like Saudi Arabia and Iran.

Middle Eastern countries have appeared to welcome China as a diversifier to US influence. China’s willingness to do arm sales and bilateral trade with countries hostile to the US acts as a balance to US hegemony. Of course, access to energy is China’s primary goal. Roughly 60% of China’s oil imports, 2.9 million barrels per day, came from the Middle East in 2013 and the nation has increased its ties to the region via tools such as energy-backed loans and joint ventures involving investment in refineries, exploration and pipelines.

China’s rise in the Middle East is coinciding with a declining US presence. While that may not seem like a major issue to the US given the domestic oil boom, it must be remembered that net imports still account for about 30% of the petroleum consumed in the US, with 30% of those net imports coming from the Persian Gulf. Moreover, estimates generally see US energy independence as several decades away.

However, China still has the ability to expand influence in the Middle East and maintain relations with Washington. Its capacity to import oil from multiple ideologically diverse sources in the region means that Beijing can afford to suspend trade with a nation that falls severely afoul of the US, if it so chooses.

Despite a lack of clear policy, China seems to have an optimal setup in the Middle East – but there are signs that this could change. The fragile nature of some regimes could bring headaches to Beijing. An unwillingness to intervene in the region’s political matters does not suggest that China can escape criticism. After Gaddafi’s removal from Libya, the new leadership said that it would have difficulty dealing with China, given that Beijing did not support NATO involvement in 2011. And China’s veto on UN resolutions censuring Assad’s regime in Syria resulted in reports of Chinese flag burning in several Middle Eastern cities.

Moreover, China may have to react to the expansion of Islamic militancy. The nation already faces threats from radical Islam in its Xinjiang province, and would not welcome the spread of ISIS influence towards its borders. Western relations with the Middle East have centered on a challenging balancing act between political ideals and the realism of energy requirements. China has to-date focused on the latter, and it has paid off. But changes in the tumultuous region may force Beijing into making difficult decisions that risk upsetting its image as the antithesis to a meddling United States.

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