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Technology propels China’s Gulf strategy forward

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Guests and reporters check out the XPeng eVTOL flying car X2 in Dubai, United Arab Emirates, 10 October 2022 (Photo: Reuters/Amr Alfiky).

In Brief

A ‘flying car’ built by Chinese company Xpen Aeroht made its first public flight in the United Arab Emirates (UAE) in October 2022. A few months earlier, China’s NWTN — a passenger transport company — announced that it would build an electric vehicle facility in Abu Dhabi. These technological headways show that US efforts to convince Gulf allies to restrict China’s influence have been unsuccessful.


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Across the UAE’s borders, Huawei and the Saudi Digital Academy agreed in 2022 to advance local technological talent and realise the digital transformation — the use of artificial intelligence, cloud computing, cybersecurity and 5G — envisioned in Saudi Vision 2030, Riyadh’s blueprint for economic diversification. Despite US President Joe Biden explicitly arguing in July 2022 that improving US–Saudi relations is essential to ‘outcompete China’, it will be an uphill task with the intensification of the Gulf–China synergy.

Developing from a focus on energy over the last two decades, tech collaboration has now become a powerful catalyst in furthering China’s engagement with the six Gulf Cooperation Council (GCC) countries. The trade bill has catapulted from about US$1.5 billion in 1990 to US$180 billion in 2019 — 11 per cent of the bloc’s foreign trade — making China the GCC’s foremost trading partner.

The GCC countries are pursuing an economic diversification strategy that could add a further US$255 billion to their GDP and generate 600,000 technology jobs by 2030. Among other Asian countries, China is the principal partner to tap into technology, AI and data as the ‘new oil’.

The region’s youth bulge offers great potential for promoting technology-oriented businesses to ensure workforce rationalisation. Driven by the pandemic, the space for a digital economy will expand exponentially and bring fintech opportunities into play.

Other factors including the great-power rivalry, Iran and the Abraham Accords — bringing Israel into the region’s mainstream and development agenda — have also enhanced Gulf–China collaboration. China’s strategy to provide both infrastructure and technology fits well with the region’s leaders’ vision. The Digital Silk Road, introduced in 2015 as part of the Belt and Road Initiative, is a potent conduit for realising this regional vision.

Since 2019, most GCC telecom firms have signed 5G contracts with Huawei. With the UAE’s G42 launching a US$10 billion fund to invest in late-stage technology companies in 2022, its engagement with China will accelerate.

In the defence arena, the UAE has purchased Chinese Wing Loong I drones in 2016 and Wing Loong II in 2018 after the United States refused to sell its latest weaponised drones, citing the impact of the war in Yemen. In 2017, Beijing and Riyadh struck a deal to manufacture CH-4 drones in Saudi Arabia.

Harvard University’s Belfer Center for Science and International Affairs stressed that China has ‘displaced the US as the world’s top high-tech manufacturer’. In terms of ‘artificial intelligence, 5G, quantum information science, semiconductors, biotechnology, and green energy … it has already become number one. In others, on current trajectories, it will overtake the US within the next decade’.

China’s tech role has become a source of geopolitical tension between the Gulf and US governments. In 2020, Washington flagged Huawei’s role in the UAE’s 5G projects and the value attached to their US partnership.

Still, the GCC governments exercised strategic autonomy and refused to allow politics to interfere in their tech-driven economic progress. This is evident in the UAE suspending talks on its F-35 fighter jet deal with the United States in 2021, citing ‘sovereign operational restrictions’ — implying the ongoing Huawei–5G issue. A few months later, the UAE announced plans to purchase Chinese L-15 advanced trainer and light combat jets. US intelligence reports have also indicated that Riyadh is developing ballistic missiles with China’s help and manufacturing them domestically.

Amid Saudi–US tension over OPEC+ decision to cut oil production, the Saudi energy minister held a virtual meeting with his Chinese counterpart to discuss cooperation on nuclear energy. This again undermines the US push for cooperation with Saudi Arabia on nuclear energy to prevent Saudi–Chinese cooperation on the issue.

As US pressure on China grows in Asia, Beijing is likely to increase its relevance in the Middle East. From the GCC perspective, the relationship with China is more strategic than opportunistic, particularly for their innovative future economic visions.

As the United States struggles to preserve its role as the world leader and Europe remains preoccupied with the Russia–Ukraine war and other domestic challenges, China will expand its sphere of influence in countries that have previously been longstanding US allies. A potential China–GCC free trade agreement would confirm its growing clout in the region.

N Janardhan is a Senior Research Fellow at the Anwar Gargash Diplomatic Academy, Abu Dhabi and non-resident fellow at the Arab Gulf States Institute in Washington.

Gedaliah Afterman is the head of the Asia Policy Program at the Abba Eban Institute for Diplomacy and Foreign Affairs at Reichman University (IDC Herzliya), Israel.

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