German newspaper Deutsche Welle published an article that discussed the reason behind China’s growing interest in the Middle East.
The article takes note of the differences between the United States and China’s approaches and roles in the region. Last year, under China’s mediation, Iran and Saudi Arabia restored diplomatic relations. The analysis examines why Chinese leadership has concentrated so much diplomatic energy on the Middle East, arguing that the geostrategic interests centered on oil acquisition have undergone a shift.
Fifty years ago, the US and Saudi Arabia reached a “petrodollar agreement” which established the US dollar as the international reserve currency. With the maturation and widespread use of shale oil extraction technology in the US, however “the region’s (Middle East) oil has become less important to the US.” While the US still imports oil from Saudi Arabia, the volume has declined to less than a third of what it was 22 years ago. Notably, the US has risen from being one of the largest oil importers to the third largest oil exporter.
In contrast, China is now Riyadh’s largest crude oil customer, buying over 20% of Saudi Arabia’s total output. China’s energy security is heavily dependent on the Middle East, and it is also the largest buyer of Iranian oil, accounting for 37% of Iran’s oil exports. China has not joined Western sanctions on the Iranian regime and its state-owned firms have capitalized on the absence of Western companies in the Iranian market.
Amid geopolitical tensions, China is increasingly interested in trading in its own currency rather than US dollars to purchase the coveted oil. Direct RMB settlement also makes sense for many countries in the region as China has surpassed the US as the largest trade partner.
The Deutsche Welle article says that “In the past decade, Beijing has cleverly expanded its influence, filling every vacuum left by Washington. But this also means increased vulnerability, as Middle East political stability aligns with China’s interests due to robust bilateral trade and energy needs. Unlike the US, China does not view Iran as an adversary, nor does it feel a special affinity towards Israel for moral or historical reasons, opening up new operational space for Beijing in the region.”
Source: Deutsche Welle, August 19, 2024
https://p.dw.com/p/4jde8