Earlier this month, reports emerged that the United States was moving ahead with plans to develop an infrastructure project that some see as a direct response to Beijing’s Belt and Road Initiative. Originating in meetings of the I2U2 Forum, which includes the U.S., India, the UAE and Israel, the plan would look to link Arab countries in the Levant and the Gulf to India through a network of ports and railroads, undercutting some of the perceived benefits of the China-backed BRI. Details remain scarce at this point, but according to a former senior Israeli official who was directly involved in the early discussions, “Nobody said it out loud but it was about China from day one.”
Two’s a Crowd
Whatever the underlying objective, China clearly perceives the move as an attempt to muscle in on what it increasingly sees as its territory. Xu Liang, an associate professor at the School of International Relations, Beijing International Studies University, called it “the revival of the Cold War mentality in the Middle East. The plan is a deliberate containment of China’s Belt and Road Initiative.” Ding Long, a professor with the Middle East Studies Institute of Shanghai International Studies University, put it even more starkly and linked it to the failure of the U.S. to play to its comparative advantage in the region: “In terms of the technology and costs of building railways, no other country in the world than China has such a prominent advantage. What Middle Eastern countries want from the U.S. is not a railway but security. However, the U.S. did not and could not bring security to the region, but instead created a mess of the security situation there. This is the dilemma the U.S. is facing in the Middle East.”
What’s 150% of Almost Nothing?
Over in the Gulf, Tehran is looking to trumpet the benefits of its relationship with Beijing and emphasize improvements since China’s involvement in the Saudi-Iran normalization deal, but their efforts ring hollow. The website of the Tehran Chamber of Commerce, Industries, Mines and Agriculture (TCCIMA) reported that according to the Economic and Commercial Counsellor of the Chinese Embassy in Tehran, Xu Qisong, China’s investment in Iran increased by 150 percent in 2022. But even at a 150-percent increase, China’s investment in Iran in 2022 amounted to a paltry $185 billion USD, out of a total FDI of $5.95 billion. Considering that Iran’s exports to China have decreased, that it is importing more Chinese goods than ever before, and that it is selling oil at a massive discount to China, the balance of trade remains in China’s favor.
When All Else Fails, There’s Always Soft Power
Other attempts to engage with Iran remain focused on diplomatic engagement and cultural connections. Iran’s outgoing ambassador to China, Mohammad Keshavarzzadeh, held a meeting with Chinese Deputy Foreign Minister Deng Li, while the Chinese ambassador to Iran, Chang Hua, participated in the dedication of a “China Pavilion” (a China Studies center) at Allameh Tabataba’i University. The most significant collaboration between a Chinese and Iranian company seems to be the joint development of a blockbuster film “Chang’an, Chang’an,” directed by Chinese filmmaker Zhang Zhong and filmed in Iran. It may be an exciting summer thriller, but a major oil deal, it is not.
Meanwhile, in Arabia Deserta …
Beijing’s chronic underinvestment in Iran is even more apparent when considering the news coming out of Saudi Arabia. In addition to a similar level of diplomatic engagement—Vice Foreign Minister Deng Li met with Saudi Deputy Foreign Minister Waleed Al-Khuraiji on 23 May—there have also continued to be significant economic developments. On 24 May, Chinese renewable energy company TCL Zhonghuan announced a major partnership with Saudi conglomerate Vision Industries to build a jointly-owned photovoltaic cell factory in Saudi Arabia, with hope to develop additional projects to serve as a hub for providing renewable energy technology to the developing states in the region and along the BRI. Future investments in petrochemicals seem on the horizon, too, as Li Jiajie, chairman of the Hong Kong and China Gas Company, met with Saudi Aramco officials to discuss their joint investments in EnerVenue, a renewable energy startup. Chinese officials continue to engage at the provincial level as well, as cash-strapped local governments court wealthy Gulf sovereign development funds for financial support. Liang Yanshun, a member of the Central Committee of the Communist Party of China and secretary of the Party Committee of the Ningxia Hui Autonomous Region, led a delegation of the Communist Party of China to visit Saudi Arabia 20–23 May for this purpose.
