The history of international relations depicts that there is no permanent friend or foe; however, attaining national interests remains a persistent phenomenon in the international system. With evolving patterns of world politics, where US hegemony is under the cloud due to revanchist China, the regional actors are changing their narratives and sides to take maximum benefits from the prevailing situation in the world political and strategic theatre.
Therefore, a shift in the alliance system is evident and taking place prominently in the Indo-Pacific and Middle East regions.
The recent Arab Summit and full-hearted welcome of the Chinese president, XI Jinping, is an event of reflection for the US. Growing Chinese influence in the Gulf has unnerved the United States; Xi attended a wider summit of the Gulf Cooperation Council (GCC) with leaders of Arab League states spanning from the Gulf, Levant, and Africa.
The first such summit was held at the King Abdulaziz International Conference Center in Riyadh. Participants included: Saudi Crown Prince and Prime Minister Mohammed bin Salman Al Saud, Qatar’s Emir Sheikh Tamim bin Hamad Al Thani, Bahrain’s King Hamad bin Isa Al Khalifah, Kuwait’s Crown Prince Sheikh Meshaal Jaber Al Ahmad Al Sabah, Oman’s Deputy Prime Minister Sayyid Fahd bin Mahmoud Al Said, Ruler of UAE’s Fujairah state Sheikh Hamad bin Mohammad.
The prominent tilt of major United States allies—which were strategically dependent on US weapons—particularly Saudi Arabia, resulted due to the inappropriate pressure by the US on human rights issues and failure to protect Saudi’s strategic interests in Yemen.
Before this, Joe Biden, the US president also exerted pressure on Saudi Crown Prince, Muhammad Bin Salman, to increase oil production which was rejected and led to deteriorating relations.
However, China is an energy-hungry state, accounting for 17 percent of the Asian giant’s oil imports in 2021, and the Gulf region is full of natural resources. It, undoubtedly, leads to deepening economic ties. Xi Jinping said Beijing would continue to import large quantities of oil from Gulf Arab countries and expand imports of liquefied natural gas.
On the other hand, Crown Prince, MBS, heralded Xi’s visit as a “historic new phase of relations with China”, a sharp contrast with the awkward US-Saudi meetings five months ago when President Biden attended a smaller Arab Summit in Riyadh. The basic and mutual contour of foreign policy, non-interference in the domestic realm, by both sides was also reinstated to excel the relations for a longer period.
The Kingdom of Saudi Arabia and China signed several strategic and economic partnerships landmark deals, an approximation of $30 billion, based on energy interests, particularly. Not only are energy interests on the board but also Chinese firms have made forays into technology and infrastructure sectors—Saudi Arabia agreed to work on cloud computing and building high-tech complexes in Saudi cities.
The deal over Huawei Technologies is an example of it. US security officials have warned that equipment from Chinese brands such as Huawei could be used to interfere with fifth-generation (5G) wireless networks and collect sensitive information. Yet Huawei has taken part in building 5G networks in most Gulf states despite the US concerns. The forging ties will help the Gulf States, which were US-dependent, to diversify their economic and political interests and alliances.
The most important thing to notice here is that China is more interested to buy oil and gas in Yuan, the Chinese national currency, which is a part of Chinese policy to establish its currency internationally to weaken the US dollar’s grip on world trade.
“The Shanghai Petroleum and Natural Gas Exchange platform will be fully utilized for RMB settlement in oil and gas trade,” Xi said, according to a transcript of his speech published by the government-owned China Daily.
It’s not clear if any of the Gulf nations are taking up the proposal, but Saudi Arabia—the world’s top oil exporter—has been in talks to use the yuan to settle its energy sales to major consumer China.
“The Saudis have a lot to buy from China and China has a lot to buy from Saudi Arabia. Why should they transact in a third-party currency and incur all of these exchange-rate costs?”
According to Gal Luft, a director at the Institute for the Analysis of Global Security think tank, China is already using the yuan to buy Russian energy. Beijing has ambitions to make the yuan the most dominant reserve currency in the world, but it has a long way to go, mainly because Beijing still manages its value tightly. It also isn’t fully convertible to other currencies on the global market right now. In addition to this, China is determined to build up its soft power by propagating the culture—a deal was also signed on the teaching of Chinese languages.
The China-Arab summit marks a paradigm shift in Arab states’ policies which will give leverage to China to fulfill its energy demands; establish the Yuan as an international currency; and improve its soft image in the world. Needless to say, it, ultimately, will also support Arab states to take advantage of changing world order by improving economic and strategic ties with China—one of the leading economic giants in the world.