China’s economic and political engagement in the Middle East has surged over the past decade, particularly in the aftermath of the Arab Spring and amid growing perceptions of the United States’ withdrawal from the region.

China has traditionally tried to maintain a balancing act in the Middle East, developing relationships with all sides while steering clear of the region’s multiple conflicts. With China’s standing strengthening among developing countries, and superpower competition intensifying, it has adopted a more proactive approach to position itself as a potential alternative and a counterbalance to the United States.

China’s Belt and Road Initiative (BRI), initiated in 2013, has significantly increased China’s involvement in the region and propelled Beijing to become, since 2016, the primary foreign investor there. Initially focused on energy-sector trade and investment, Beijing has broadened the scope of its regional engagement to encompass infrastructure, technologically advanced smart-city projects, innovation hubs and 5G mobile networks.

As Beijing’s economic clout in the Middle East has grown, so has the recognition by regional powers   of China’s strategic value. Middle Eastern leaders, increasingly disillusioned with policies of the United States—including its invasion of Iraq in 2003, support for the Arab Spring in 2011, hurried exit from Afghanistan and withdrawal from nuclear negotiations with Iran—have turned towards China as a potentially more reliable partner. For Gulf Cooperation Council (GCC) countries especially, the relationship with China has become strategic rather than opportunistic. China’s ability and willingness to cooperate with regional players without imposing political or human rights ideals align with the visions of Middle Eastern leaders. This strategic approach suggests a reorientation of regional relationships and positions, in which China is gaining prominence as a key economic and developmental partner.

The Western perspective on China’s role in the Middle East has shifted over time, too. Initially seen as a non-threatening free-rider benefiting from US security infrastructure, China is now viewed as a significant challenger to US and Western interests in the region. This shift reflects Beijing’s growing economic and strategic influence, especially as the United States has reduced its energy imports from the Middle East, allowing China to fill the gap. China’s trade with the six-member GCC bloc has drastically surged, increasing from $10 billion in 2000 to more than $230 billion in 2021, further contributing to the erosion of Western influence in the region. China’s increasing interest in technology and its aspiration for technological autonomy have also significantly affected its relationship with the Middle East.

Apart from the GCC countries, in recent years, China has developed a partnership with Israel that has expanded across various domains, from infrastructure to agriculture and education. Trade between the two reached a record $21 billion in 2022, and Chinese firms have been engaged in about 500 investment deals in Israel over the past decade, predominantly in the technology sector, focusing on areas such as telecommunications, artificial intelligence and cloud computing.

As a result of Chinese investment in Israel’s high-tech industry, which peaked in 2018, and evolving US perceptions of China, Washington applied pressure on Israel to limit its interactions with Beijing. In response, Israel established a foreign investments advisory committee in 2019 and rejected several Chinese bids on security-sensitive infrastructure projects. In recent years, Washington’s influence has significantly limited the scope of Israeli-Chinese trade, especially in sensitive sectors.

Diversifying cooperation

From the perspective of the Gulf states, China’s emergence as a technological powerhouse, especially its Digital Silk Road, fits well with their aspirations to emerge as global leaders in technology and innovation. Collaboration in domains such as artificial intelligence, telecommunications and space exploration can bring about mutual long-term advantages.

More recently, another factor influencing China’s approach to the Middle East has been Russia’s invasion of Ukraine. Concerns about potential Western economic sanctions and the ambivalence of Middle East partners of the US  towards the Russia–Ukraine conflict have prompted and allowed China to expand the use of its currency in transactions with oil-rich Gulf countries. For instance, collaborations with the UAE and Saudi Arabia on digital yuan transactions and the initiation of international transaction platforms such as mBridge demonstrate China’s efforts to deepen its economic ties in the region.

Moreover, China has also been gradually making progress in the Middle Eastern market for defence equipment. With the United States refusing to sell its latest weapon-carrying drones to some countries due to such conflicts as the war in Yemen, the UAE, Saudi Arabia and others have turned to China for alternatives. Such events as the UAE’s suspension of talks with the US over an F-35 deal and subsequent orders for Chinese jet trainers emphasise China’s increasing influence on the region’s defence sector. Reports of Riyadh developing ballistic missiles with Chinese assistance further illustrate this evolving dynamic.

In the diplomatic sphere, China’s facilitation of the diplomatic breakthrough between Saudi Arabia and Iran in March 2023 exemplified its efforts to expand political engagement in the Middle East. The rapprochement not only showcased China’s growing diplomatic weight but also underscored its broader strategic interests in the Middle East, including securing energy supplies and promoting Chinese global initiatives such as the BRI, the Digital Silk Road and the Global Security Initiative.

China’s response to the Gaza war

China has become even more active in the Middle East since the Biden administration began ramping up pressure on it in the Asia-Pacific. This intensifying superpower dynamic has been on display since the outbreak of the Gaza war on 7 October 2023.

Despite China’s efforts to position itself as a regional mediator, its initial response to the Hamas attack on Israel was subdued. Beijing notably refrained from directly condemning Hamas for the atrocities committed on 7 October, avoiding any specific mention of the group by name. Disappointment and anger arose in Israel because of China’s lack of empathy, vocal one-sided criticism, and targeting of the United States as an enabler of Israeli military actions in Gaza. A significant step in Beijing’s evolving position occurred in February 2024, when China’s representation at the International Court of Justice asserted Palestinians’ right to self-determination, including the use of armed struggle, signalling more explicit support for Hamas.

China’s support for the Palestinians historically stems from its role as a champion of the developing world and its backing of the Non-Aligned Movement. Today, it is more about growing superpower competition in the Middle East.

For Beijing, the Israeli-Palestinian conflict is less about the Palestinians or the Israelis and more about its own standing in the region, its interests in relation to Arab countries and Iran and the global south, and its strategic position regarding the United States. Recently, and particularly during the Gaza war, China has been using the conflict as an instrument in its superpower competition with the United States. China has been leveraging the conflict to discredit the United States while strengthening its own position. An important goal for China has also been to secure Arab and Muslim support for its policies in Xinjiang while dismissing Western and especially US criticism of Beijing’s human rights policies as hypocritical. As such, China’s strategy throughout the Gaza war has been one of aligning with the interests of the Arab world while differentiating its stance from that of the US.

Moreover, China’s clear and calculated shift towards a more assertive and pro-Palestinian stance in the Israel–Hamas conflict also reflects its evolving priorities and strategic interests in the Middle East. This has shown that Israel does not rank highly in Beijing’s strategic calculations, and any damage to its relationship with Israel is considered manageable in the broader regional and geopolitical game.

Amid criticism of the United States’ support for Israel, China is positioning itself as an alternative, emphasising support for the Palestinian side. For Beijing, this is about narrative. This move serves as a strategic, low-cost method for China to enhance its regional influence and present itself as a counterbalance to the United States. While China has taken a passive approach to the war so far, as it clearly cannot stop it, this move enables it to present itself as a player in the post-conflict scenario.

China and the United States: competing regional strategies

With tensions between the United States and China growing, Beijing has leveraged the war in Gaza to challenge the United States in the region and the developing world more broadly.

Recent polling data suggests that China’s approach has been positively received by the Arab public amid growing criticism of the United States. Respondents in Egypt, Iraq, Tunisia and Turkey view Xi Jinping and Vladimir Putin more favourably than they see Joe Biden: the figures show 33.8 percent support for Xi Jinping and 21.7 percent for Biden.

The narrative war between China and the United States over the conflict in Gaza underscores the broader power struggle between the superpowers for global and regional influence: positions on Israel and the Gaza war serve as a strategic pawn in the larger game of influence and control.

Although China can still benefit from investments and partnerships in Israel’s advanced tech sector and critical infrastructure, Beijing understands that Israel’s alliance with the United States limits the relationship. Beijing appears to have calculated that it stands to gain more by criticising Israel and the U.S. and aligning with the Arab and developing world public opinion, even at the expense of its relationship with Israel.

As the Biden administration grapples with growing criticism of its support for Israel, China is trying to capitalise on the situation. While this seems to have worked on the public-relations level, it remains to be seen whether it will have a real impact on its regional position. Although many in the Arab world agree with China’s criticism of the United States over the war in Gaza, China’s effort to counter the US by offering support for Iran’s use of proxies and violence to stabilise the region, including for its 13 April direct attack against Israel, may be seen less favourably across the region.

Beyond narratives, regional leaders believe that only the United States can bring a solution to the Gaza war and that China is not a relevant political actor in this regard. China’s decision to facilitate discussions between competing Palestinian factions in Beijing should be understood as an effort by Beijing to carve out a relevant role for itself in the conflict, especially once the fighting subsides.

Washington’s efforts to end the fighting in Gaza and promote regional normalisation are part of a broader US strategy aimed at stabilising the Middle East and launching a US-led economic strategy for the region that could counter China’s growing influence.

Looking ahead, while China’s strategic manoeuvres in the Middle East have garnered public support and challenged the United States, their long-term impact remains uncertain. The region’s complex dynamics and the critical role of US political and military power suggest that China’s influence may face significant limitations. As the geopolitical landscape evolves, and the region becomes ever more important, the interplay between Chinese ambitions and American responses will continue to shape the future of the Middle East.

Since Washington’s February 2020 agreement with the Taliban to withdraw from Afghanistan, some commentators have suggested that China may step into the vacuum. Beijing may be watching recent events with some apprehension, but it will also see the US withdrawal as presenting opportunities.

China has significant strategic, security and economic interests in the region that give it a stake in Afghanistan’s future stability. Its direct economic interests in Afghanistan include a 30-year lease on the Mes Aynak copper mine, which it has held since 2007 but hasn’t been able to exploit due to the  volatile security situation. Beijing also likely has an eye on Afghanistan’s vast mineral resources, which are estimated to be worth more than US$1 trillion and include significant quantities of rare-earth elements.

Over the past 20 years, China has benefited from American and NATO involvement in the region, which provided the security environment that enabled Beijing to pursue its Belt and Road Initiative across Pakistan and Central Asia. China has invested particularly heavily in both Pakistan and Tajikistan, which represent important elements of two key BRI corridors. But they also share long and porous borders and ethnic and tribal links with Afghanistan and are acutely vulnerable to instability in Afghanistan.

China also sees Afghanistan as important to the security of its Xinjiang region because Afghanistan has long been used as a refuge by Uyghurs fleeing persecution in China, and also reportedly as a base by Uyghur militants.

While the form and substance of Beijing’s Afghanistan strategy are still taking shape, it will likely focus on drawing whoever is in power in Kabul into its orbit through targeted financial support and investment. Beijing may want to avoid undertaking any heavy lifting on Afghan security, but it will probably act to limit any instability or threats arising from the US departure that would impinge upon Chinese security interests or regional BRI investments.

Some commentators have argued that China will pursue its agenda in Afghanistan via a cooperative framework involving Pakistan, Russia and Iran and will stop short of committing ‘boots on the ground’ in Afghanistan. Others have suggested that Afghanistan is so central to China’s ‘march west’ that it’s inevitable that China will play a more direct and influential role in Afghanistan’s future security.

Beijing has long demonstrated a willingness to play both sides of the Afghan divide. In 2018, it emerged that a Chinese delegation to Kabul had gained agreement from the government of President Ashraf Ghani to construct a Chinese military base in north Afghanistan. In 2020, it was reported that Beijing had entered into negotiations with the Taliban, promising ‘sizable investments in energy and infrastructure projects’—including motorways linking Afghanistan’s main cities and projects involving electricity generation and oil and gas transportation—in return for ‘peace’. And in late 2020, Beijing’s relationship with Kabul was rocked by revelations of a Chinese intelligence operation working with the terrorist Haqqani network—a close Taliban ally that maintains links with both al-Qaeda and Islamic State—to hunt down Uyghurs in Afghanistan.

China’s interaction with the Taliban and the Haqqani network also suggests that Beijing has long understood what Washington has refused to admit: that the US’s rapid drawdown will inevitably lead to a Taliban ascendency in Afghanistan. This has been reinforced by the Taliban’s gains in the past two months. Between 1 May and 13 June 2021, the group increased its share of territory under its control from 73 districts to 223. The number of government-controlled districts has correspondingly declined from 115 to 73, and the Taliban are currently contesting control of a further 111 districts.

Beijing has also offered to facilitate a new peace process involving the Afghan government and the Taliban, and has lobbied for a new UN assistance mandate for Afghanistan to succeed the mandate that expires in September 2021. As Brahma Chellaney noted in a recent piece, however, Beijing may favour the Taliban and use the lure of international recognition and economic aid to cement its relationship with a future Taliban government.

Beijing appears confident that it has the skills to navigate the volatile political and security situation in Afghanistan. An opinion piece in the Global Times—the mouthpiece of the Chinese Communist Party—said that China can’t ‘sit idle and keep itself out of Afghan affairs’, arguing that ‘compared to other powers, China has the ability to get involved in Afghan affairs without becoming entangled in it’. If this comment reflects the thinking of the Chinese leadership, it demonstrates a wicked combination of hubris and naivety that may lead to miscalculation.

Events in Afghanistan already appear to be escalating faster than anticipated and may defy Beijing’s ability to step into the role of peacemaker. The conflict is also threatening to draw in Afghanistan’s neighbours. Tajikistan is already dealing with an influx of Afghan refugees, including Afghan National Security Forces, and has effectively lost control of its border with Afghanistan. It has mobilised 20,000 troops on its border and called for support from Collective Security Treaty Organization members, which include Russia. These events clearly cut across Beijing’s interest given that Tajikistan is of great strategic importance to it. China already maintains a military base on Tajik soil and the rapidly deteriorating situation in Afghanistan may force Beijing to commit to a more direct role in the region, including through the deployment of peacekeepers in Afghanistan.

While the Taliban currently appear amenable to Beijing’s overtures, there’s no guarantee that they’ll continue to be once the US is fully out of the picture, even if Beijing delivers on its investment promises. Over time, China will likely come to be viewed as yet another meddling imperialist power exploiting Afghanistan’s suffering for its own benefit. And while the Taliban have turned a blind eye to China’s persecution of its Turkic Muslim minorities, it’s plausible that grassroots resentment over this issue may become more prominent over time. In addition, the Taliban aren’t the only militant Islamist group active in the region. Groups such as Tehrik-e-Taliban Pakistan and Islamic State have already indicated their intent, in actions and in words, to attack Chinese interests in the region.

The deteriorating security situation in Afghanistan has significant ramifications for China’s regional interests. Despite Beijing’s belief that it can engage with Afghanistan on its terms and at arm’s length, it’s likely that China will soon find itself deeply entangled in post-US Afghan affairs. As demonstrated by the experience of other ‘imperialist powers’ that dared to step into the Afghan cauldron, this rarely ends well.

The Australian government has cancelled Victoria’s Belt and Road Initiative agreement with China.

In the first decisions under the government’s new law allowing it to quash arrangements states, territories and public universities have, or propose to have, with foreign governments, Foreign Minister Marise Payne announced four Victorian agreements would end.

Two are with China and the others are with Iran and Syria.

The agreements with China are the memorandum of understanding on the Belt and Road Initiative signed in October 2018, and a subsequent more detailed framework agreement signed in October 2019.

The agreement with Iran related to student exchanges and dates from 2004. The protocol with Syria was for scientific cooperation and goes back to 1999.

Payne, who makes the determinations under the foreign arrangements scheme, said the agreements were ‘inconsistent with Australia’s foreign policy or adverse to our foreign relations’ under the scheme’s test.

The action drew another sharp response from China, which is extensively targeting Australian trade and regularly delivers rhetorical attacks.

A statement from a Chinese embassy spokesperson condemned the cancellation of the agreements as ‘provocative’ and expressed ‘strong displeasure and resolute opposition’ to Payne’s announcement.

‘The BRI is an initiative for economic cooperation, which follows the principle of extensive consultation, joint contribution and shared benefits, and upholds the spirit of openness, inclusiveness and transparency,’ the spokesperson said.

‘It has brought tangible benefits to the participating parties. The BRI cooperation between China and the Victoria state is conducive to deepening economic and trade relations between the two sides and will promote economic growth and the well-being of the people of Victoria.’

The statement said this was ‘another unreasonable and provocative move taken by the Australian side against China.

‘It further shows that the Australian government has no sincerity in improving China–Australia relations. It is bound to bring further damage to bilateral relations and will only end up hurting itself.’

The Victorian buy-in to the BRI—China’s global infrastructure and development strategy—was seen as the prime target when the government first announced its plan to review the agreements with foreign governments and their entities.

Prime Minister Scott Morrison said last year about the BRI that it was a program Australia’s foreign policy did not recognise ‘because we don’t believe it is consistent with Australia’s national interest’.

The foreign arrangements scheme, operating since December, was driven substantially by concern about foreign interference in Australia, in particular from China.

It also reflects the broader principle that foreign relations are a national matter and agreements by states and territories with foreign governments should not be at odds with the federal government’s policies.

Federal sources say the Victorian agreements with China have not yielded any tangible outcomes for the state.

The agreements with Iran and Syria have been overtaken by major changes in relations with those countries.

Payne said under the audits of existing and proposed foreign arrangements required by the new law, she had been notified of more than 1,000 arrangements.

‘States and territories have now completed their initial audit of existing arrangements with foreign national governments.

‘The more than 1,000 notified so far reflect the richness and breadth of Australia’s international interests and demonstrate the important role played by Australia’s states, territories, universities and local governments in advancing Australia’s interests abroad.’

A spokesperson for the Victorian government said the law was ‘entirely a matter for the Commonwealth government’.

Payne has approved a proposed memorandum of understanding between the Western Australian and Indonesian governments.

The Victorian government’s Belt and Road Initiative program is a zombie project that has its own inertia and is proceeding despite the world changing around it. It needs to be halted and comprehensively reassessed. The federal government institutions that understand foreign policy, national security and digital technology must be involved actively and comprehensively in that reassessment.

The core rationale for a state government being a party to this initiative of Beijing’s also needs to be rethought in light of the world we are now living in.

If it’s about cheap financing, the Covid-19 environment means money is as cheap for governments to borrow as it has ever been, so that reason doesn’t make much sense.

If it’s about giving Chinese firms work, there are plenty of Australian companies that are at least as qualified and available to undertake infrastructure projects.

If it’s about using Chinese digital technology in our infrastructure, that’s probably just a bad idea.

Premier Daniel Andrews has been personally pursuing Chinese involvement in Victoria’s multibillion-dollar ‘Big Build’ since at least his May 2018 visit to China. In October of that year, he signed up to the Belt and Road Initiative in a memorandum of understanding with Beijing. He refused to make the agreement public, only doing so after intense pressure during the last Victorian election campaign.

Then in October last year, Andrews signed a ‘framework agreement’ with the People’s Republic of China on ‘Jointly Promoting the Silk Road Economic Belt and the 21st Century Maritime Silk Road’. The title is boilerplate Chinese government language for the BRI, Xi Jinping’s strategy for growing Chinese power and creating a Sino-centred world.

That document was made public, which is great, because it has some clear principles. It commits China and Victoria to adhere to ‘the concept of openness, green and clean governance’ as well as ‘highlighting the importance of procedure [which is] open, transparent and non-discriminatory’.

So, it’s surprising to find that as the Victorian government prepares to sign up Chinese entities—perhaps banks, perhaps state-owned or private construction companies, perhaps a combination of these—for actual projects in Victoria, no one can be told any of the details.

There are two bigger problems here, though. The Victorian government’s BRI activities are simply out of step with the new international and economic environment, including the now openly coercive directions that Beijing is taking with Canberra over trade and in government relations.

And the Victorian political leadership’s championing of the state’s tie-up with Beijing on infrastructure is a glaring wedge that Beijing is driving into Australia—at a time when national cohesion on dealing with the Chinese state is essential.

Almost as bad has been the language used by Victorian Treasurer Tim Pallas, who accused the federal government of ‘vilifying’ China—when what Prime Minister Scott Morrison and Foreign Minister Marise Payne had actually done and said was call for a credible, independent, international inquiry into the causes of a global pandemic. In very calm language. They have since gained the support of more than 120 nations.

Unfortunately, the treasurer’s words sounded like talking points from Beijing’s foreign ministry or an article in the Chinese Communist Party’s Global Times mouthpiece.

The result is that we appear headed for an outcome in Victoria where Chinese firms are involved in building chunks of national infrastructure, perhaps with tie-ups to Chinese state banks and other entities—who knows.

So what? Infrastructure isn’t just concrete and steel now. It’s laced with digital technology controlling its critical functions. The 2018 federal decision on 5G was all about the risks in digital technology from states like China that compel companies to cooperate for state security and intelligence purposes. Those issues are relevant here too.

What Victoria is proposing has foreign policy and national security implications that the Victorian government is simply unequipped to assess.

From the beginning, the BRI program with Victoria appears to have fallen into gaps between the federal and state governments. Right at the start, the Victorians said they had consulted at the federal level with the Department of Foreign Affairs and Trade, but Canberra seemed only partly aware of the proposal and expressed what sounded like lukewarm public support.

That was then. Who now thinks it’s the time to implement Xi’s strategic agenda and work to make Australia part of a more China-centred world? Who now thinks it’s the time to enter non-public arrangements with Chinese firms—state-owned or otherwise—to build Australian infrastructure? And who now thinks it’s the right time to show that the federal and state levels of government are on divergent paths in responding to an assertive and authoritarian Beijing?

Victoria’s tender process must not be used to hinder transparency with the proposed deal. This is not a standard arrangement between a government and the private sector. This is an Australian state dealing with an authoritarian superpower that is pursuing its key strategic agenda—and using its companies, banks and technologies to do so.

There’s more to the Victorian BRI deal than infrastructure. The agreements talk about cooperation on biotechnology and life sciences, research and high-end manufacturing—all areas that also have important national security applications and implications. Again, this must all be reassessed from a national perspective.

If the national cabinet has any purposes other than helping us all manage the Covid-19 pandemic, a fundamental one must be forging a cohesive and united national policy on China. This is needed to help us navigate the increasingly sharp strategic differences between Australia and the Chinese state, while keeping the areas in which we can continue to trade and cooperate to both our national advantages. To have any meaning, that national cohesion must extend to any deals contemplated by individual states and territories.

Unlike the excuses we heard after the disastrously managed 2015 Port of Darwin deal, which led to that piece of key infrastructure being leased to a Chinese company for 99 years, we have our eyes wide open about the issues involved this time. And we have time to stop and think. Let’s do so.