The diplomatic and economic relations of Gulf governments have undergone a serious shift in the 21st century as the Gulf’s largest source of trade and biggest oil export destination has flipped from the US to the People’s Republic of China (PRC). The growing PRC economy and the PRC’s massive population have driven sky-high energy consumption rates, which have led to similarly drastic increases in oil imports from Gulf states. At the same time, this economic marriage of convenience has grown into a more substantial connection as the PRC government tries to economically offset oil imports with investment exports. Gulf leaders welcome the PRC’s construction expertise and agnostic opinions on their domestic affairs, while PRC officials welcome the Gulf’s politically stable investment environment.
The PRC’s state-run economy has invested heavily in infrastructure projects in the Gulf through its Belt and Road Initiative (BRI). The BRI’s Silk Road Economic Belt runs through Iran and the Maritime Silk Road Initiative runs through Gulf ports. Specifically, PRC companies have invested billions of dollars in Duqm Port in Oman, Khalifa Port in Abu Dhabi, and Hamad Port in Qatar, among others. With long-term concession agreements have also come overt and covert increases in PRC military activity, which the Department of Defense watches with a close eye. The PRC government established comprehensive strategic partnerships (CSPs) with Saudi Arabia, the United Arab Emirates (UAE), and Iran in the late 2010s, which come with increased bilateral investment and exchanges. The US is careful to publicly state that it will not force countries to choose between the US and the PRC as the two states enter an era of great power competition, but external governments must assess their own domestic risks that are associated with a sinking US-PRC relationship.
Gulf leaders should encourage US-PRC competition on economic engagements, such as space cooperation, free trade agreements, and advanced technology. The US should provide technologically and cost-effective alternatives to PRC-supported critical infrastructure if it is going to ask Gulf governments to limit their cooperation with PRC companies, such as Huawei and ZTE. The US and the PRC are two global leaders in the development of renewable energy and Gulf leaders should promote competitive bidding processes between companies from the two countries, among others, to support the Gulf’s transition away from hydrocarbon energy. The US and the PRC can also cooperate on diplomatic initiatives in the region through multilateral groupings and build on the agreement between Iran and Saudi Arabia that the PRC brokered to increase the US’s engagement with Iran and address the Iranian nuclear question.