China views the Middle East as an ally rather than just a gas station

For many years, the Western economy has viewed the Middle East as a small part of its overall economy.

Many in U.S. and European governments, as well as investors in their countries, see the Middle East mainly in two ways: as an oil and natural gas supplier and as a market for investment and the purchase of goods, such as luxury items.

This view is now outdated. There is a new vision being developed in China regarding the Middle East, positioning it as a strategic partner and a key component in a changing world.

Despite tensions in the Middle East due to ongoing wars, including those involving Iran, Chinese businesses continue to make long-term investments in the Region. The business community in China believes that the Middle East will no longer be seen as a volatile region but rather as essential to the global economy.

This vision reflects the fundamental shift in China's global strategy.

Since 2013, when the Belt & Road Initiative was launched, China has been investing heavily in infrastructure, energy, logistics, and technology projects to connect Asia, the Middle East, and Europe, thereby supporting future business and economic activity worldwide. The amount of investment and construction under the Belt and Road Initiative has reached nearly $1.4 trillion globally, making it one of the largest international investment efforts ever undertaken.

The Middle East is a central part of the Belt & Road Initiative, and China wants their relationship with the Middle East to be much more than just out about the total amount of oil and natural gas coming to Asia from the Middle East, rather, they want the relationship between China and the Middle East as being a structural pillar for the future of the world.

The region received about $39 billion in Belt and Road investment deals (roughly) in 2024 alone, meaning more than double the previous year's amount. In terms of energy projects, countries like Saudi Arabia, the UAE, and Iraq have become significant partners of China (in addition to expanding their involvement in areas such as digital infrastructure, advanced manufacturing, and renewable energy).

The growth of trade (between China and Arab nations) has followed a similar trend. Total trade amounted to about $400 billion (roughly) between China and the Arab economies, with substantial growth in the depth of economic ties between China and the Arab countries (the former being the largest manufacturer in the world and the latter being one of the most strategically important regions for energy and logistics).

The significance of this relationship, however, goes beyond the sheer volume of trade.

With respect to Beijing, the Middle East is much more than just a source of oil/gas. It has important geographic attributes: it serves as the hinge point between Asia, Africa, and Europe; it is a key location for international shipping lanes; and it represents a region whose sovereign wealth funds increasingly influence international capital flows.

In short, the Middle East is a strategic partner in building a multipolar economic system.

In response, Chinese companies are acting. Throughout the entire region, they are investing in telecommunication networks, renewable energy projects, EV supply chains, and logistics infrastructure. 

These investments coincide with the economic diversification initiatives undertaken by the Gulf Arab states, particularly programs such as Saudi Arabia's Vision 2030 and the UAE's industrial and technology initiatives.

Moreover, a new paradigm of what the Middle East looks like will not be created in Washington or Brussels; it will be realized in Beijing.

There are many tensions between nations surrounding Iran; however, Chinese business leaders have publicly declared their intention to continue expanding their businesses in the Middle East, on the grounds that short-term political instability should not affect long-term business plans and strategies.

An example of a Chinese entrepreneurial leader who is part of this movement to invest in the Middle East is Li Dongsheng. Li Dongsheng is the founder and chief executive officer of TCL Technology, a leading global manufacturer of electronics and displays, and one of the largest consumer electronics producers on the planet.

As a global industrial manufacturer specializing in television sets, semiconductor displays, and consumer electronics, TCL operates multiple manufacturing facilities and markets its products in Asia, North America, and Europe.

For over 30 years, Li has led TCL’s transformation into a globally recognized technology company. As part of the initial wave of Chinese industrial globalization, he worked with other Chinese manufacturing companies to help develop China’s industrial base. Additionally, he is the primary founder and/or operator of this new Middle Eastern business model in China in the year 2000, in Sudan.

In a recent interview about business opportunities in the Middle East, Li said that a company could not "throw the baby out with the bathwater" because of temporary political changes; a global business organization cannot afford to lose any significant market.

Another example of a Chinese leader in the Middle East investment discussion is He Xiaopeng, founder and chief executive officer of XPeng Motors, a leader in developing electric vehicle technology in China.

As a technology-driven manufacturing company that designs and manufactures intelligent EVs (electric vehicles), XPeng uses artificial intelligence, driver-assistance software, and advanced battery technology to develop its vehicles. In 2024, XPeng expects to sell approximately 190,000 vehicles and generate approximately ¥40.9 billion of revenues (approximately $5.7 billion), making the company one of China’s largest all-EV manufacturers of new-energy vehicles.

He Xiaopeng, the CEO of XPeng, has also focused XPeng as a technology-oriented, forward-thinking mobility company through investment strategies involving smart electric vehicles (EV), robotics, artificial intelligence chips, and emissions-free vertical take-off and landing (VTOL) aircraft through XPeng AeroHT (the VTOL subsidiary of XPeng).

Li Dongsheng and He Xiaopeng are purposely included in discussions about investment in the Middle East. Each of the companies founded by these two entrepreneurs represents one of the dominant types of industrial strategy from the Chinese perspective: advanced manufacturing and next-generation mobility.

There is a significant difference between how the West's financial institutions and companies expand into the Gulf's financial centers and how they do so in the Gulf's industrial sector. Many Western (e.g., US and European) financial institutions are expanding their presence in the Gulf through wealth management (e.g., asset allocation for sovereign wealth funds), providing banking services, and allocating investments for private individuals. 

On the other hand, many Chinese companies that engage with the Gulf do so by creating long-term operational partnerships to develop the region's industrial capabilities.

This difference, although subtle, is already manifesting itself in profound ways.

On the one hand, Western financial institutions have a primary interest in the Gulf rather than in building long-term business relationships. On the other hand, many Chinese companies are developing relationships with the region as long-term partners in the region's economic development.

Additionally, this difference is indicative of broader structural changes in the global economy, as the dynamics of supply chain reconfiguration and the intensification of technological competition are reshaping the geography of economic power worldwide. The strategic location of the Middle East, along with newly developing Eurasian trade corridors, will give it a disproportionately large role in the global economy.

It seems that China, in its efforts to secure a long-term energy supply, is recognizing this structural shift much sooner than Western governments and investors.

From a Chinese perspective, securing a long-term energy supply remains very important, as China remains the world's largest importer of crude oil from the region, and Gulf producers supply a large share of its crude oil. In contrast, energy is only one aspect of a much larger, comprehensive economic relationship that China is developing with the Gulf region.

China's expansion into new markets in the Gulf region reflects a growing trend in Chinese industrial development (e.g., telecommunications equipment, smart infrastructure, renewable energy generation, and electric mobility).

Considerable effort and time are being devoted by many Western companies to developing industrial partnerships across various areas of the Gulf region.

Energy security, supply chain resilience, and infrastructure development are again reshaping geopolitical alliances. Countries that combine resources, capital, and strategic geography will play a role in the new order of the global economy.

The Middle East is perfectly positioned at the intersection of those three critical components.

Thus, for Western policymakers and investors, the real question is not whether the region matters, as that debate has already been concluded. The real question is whether they will continue to see the Middle East through the narrow lens of hydrocarbons and financial flows, or recognize what China appears to recognize: the region's growing role as a key hub in the new global economy.

Historically, those who recognize the structure of change early have generally benefited from it.

It appears China has already placed that bet.