China’s growing interest in the Persian Gulf – together with all the talking of U.S. retrenchment from the very same region – gives rise to a question: will China’s increasing economic interest in the Persian Gulf lead to a more activist security policy there? And, to put it bluntly, will China and the U.S. switch roles in the long term? To answer these questions, we need to consider a few aspects. First, what is the strategic relevance of the Gulf to China? Second, how do U.S. and Chinese interests in the region overlap, and how do they separate? Is China politically willing (or ready) to be a major security actor?
Most of China’s interest for the Persian Gulf region stems from the key role the Gulf plays in global energy markets. China is the second-largest consumer of oil (14% of the world total), with oil constituting nearly 70% of its overall energy consumption. China also is the largest importer of oil and natural gas in the world. The import dependency on oil rose to 72% in 2018, the highest rate in the past half century. In 2018, 43% of Chinese oil imports came from the Gulf region, with Saudi Arabia in the lead, followed by Iraq and Oman. Iran too, before the snapback of U.S. sanctions in 2018, was crucial to Chinese energy needs. According to TankerTrackers.com, which tracks oil tankers and shipments based on satellite imagery and automatic identification systems, Saudi Arabia exported a whopping 1,802,788 barrels per day (bpd) to China last July, compared to 921,811 bpd in August in 2018. By contrast, exports to the U.S. in July were 262,053 bpd, nearly 62% down from 687,946 bpd in August of last year. U.S. sanctions on Iranian oil have helped the shift. Major Asian energy importers like China were forced to shift business away from the Islamic Republic — the third-largest producer among the members of the “Organization of the Petroleum Exporting Countries” (OPEC) — and start buying more Saudi barrels to make up for the shortfall.
Trade, too, plays a key role in Chinese determinations towards the MENA region, and the Gulf in particular. China is now the top economic partner of the Gulf Cooperation Council (GCC) and the largest trading partner for Kuwait, Oman, Saudi Arabia, and the United Arab Emirates (UAE). For Iran, too, Beijing is a major trade partner, even though the disparity in the relationship (especially considering the extent of current sanctions) is glaring. Indeed, Iran needs China more than China needs Iran, and relations are critically unbalanced.
The U.S., in contrast, have been reducing their energy dependence from the Gulf: in 2009, China already surpassed the U.S. as the biggest oil importer from Saudi Arabia and, since then, American producers have contributed to making the country no longer reliant on Gulf oil. Nevertheless, Washington still maintains an interest in the stability of global energy markets, as the global oil price strongly affects its own domestic market. Thus, access to energy resources for global markets and freedom of navigation remain the key priorities of the U.S. in the Gulf region. These strongly overlap with China’s priorities, and the country has until now benefited from the U.S. regional security architecture. However, while both the U.S. and China share an interest in regional stability, the two potentially collide in how to ensure stability. If Washington aims at implementing an offshore balancing strategy against Iran by relying on its Gulf allies (with Saudi Arabia playing a major role) and Israel, China is more prone to an inclusive definition of “security architecture”, taking a leaf from Russia’s book, which aims to make both Iran and the Arab Gulf countries key pillars for regional stability.
In this context, what can we expect for the future of the region?
Perceptions of an American withdrawal from the Middle East led observers to wonder whether rising powers such as Russia and China were going to step in. However, despite the narrative of the current U.S. administration, the actual prospects of the U.S. pulling out of the region seem scarce. This is particularly true for the Arabian Peninsula and the Persian Gulf region, where the U.S. presence grew steadily in the last decade, and where Washington still maintains strong interests in ensuring freedom of navigation and safeguard global oil supplies.
Even if the U.S. would eventually withdraw from the region, China would have to expand its power projection capabilities if it aims to replace the U.S. as a military and security force. For the time being, Beijing seems to lack both military capability – especially air cover that would require regional military bases – and political will. Yet, growing projects under the banner of the Belt and Road Initiative (BRI) as well as regional volatility may change these calculations in the long term. However, pragmatism is more likely to continue to guide China’s actions, leading Beijing to strengthen its already flourishing economic relations with Gulf countries as well as its diplomatic stature. Regional countries, too, are likely to continue to “use” the Chinese card to hedge their bets vis-à-vis a perceived diminishing U.S. commitment.