China in the Middle East: Foreign Direct Investment, Economic Transformation, and Regional, Development

Abstract

This paper unpacks the complicated manners in which Chinese investment has taken shape in the Middle East, especially the member states of the Gulf Cooperation Council (GCC). Rather than focusing on highly emotive (but often poorly substantiated) themes such as debt trap diplomacy and authoritarianism propagation, this paper employs a long-term perspective on Chinese investment into the region over the last two decades, right at the start of China's Going Out strategy. Using data from various international organizations and commercial providers as well as official statistics, the paper compares and contrasts the volume, country destination, and sectorial distribution of capital inflows from China vis--vis the region's traditional investors (i.e. US and EU). It also investigates the motivations and market-entry strategies of Chinese investors, their engagement with local business communities, and the opportunities and challenges they face in different Middle Eastern contexts. The overarching argument is that the Middle East's large, young population and rich natural resources complement the investment strategies of Chinese firms eager to explore market opportunities outside their home economies. Relatedly, the vast size of the Middle Eastern economy implies that there is ample room for Chinese, US, and EU investors to not only co-exist, but also establish mutually beneficial cooperation between themselves and with the relevant host economies. Adding depth to the understudied topic of China-Middle East relations, the paper contributes to detailing the prominent features of Chinese investment in the region. It also contributes to the wider intellectual community by providing some policy advice.