1. China Backs Iran’s Move to End UN Oversight, Undermining Western Nuclear Leverage

In a joint letter to the International Atomic Energy Agency (IAEA), Iran, China, and Russia formally declared the expiration of UN Security Council Resolution 2231, which underpinned the 2015 nuclear deal (JCPOA).

According to Iranian Deputy Foreign Minister Kazem Gharibabadi, all provisions of the resolution expired on October 18, 2025, ending the IAEA’s authority to monitor Iran’s nuclear activities.

The letter, which follows an earlier communication to the UN Secretary-General, denounces Western efforts by Britain, France, and Germany to trigger the “snapback” sanctions mechanism as illegal. By supporting Tehran’s position, Beijing signals its intent to erode Western legal and diplomatic instruments used to constrain adversaries.

Strategic Takeaways

1. Beijing’s Legal Warfare Against U.S. Sanctions Architecture
   By co-signing the end of Resolution 2231, Beijing is directly contesting the legitimacy of Western-led enforcement frameworks. This aligns with its broader goal of creating parallel legal interpretations that weaken international compliance mechanisms rooted in Western norms.

2. Erosion of Western Leverage on Iran’s Nuclear Program
   The expiration of Resolution 2231 effectively strips the West of its remaining monitoring and enforcement tools. China’s support ensures Iran will continue to access diplomatic and economic cover from two UN Security Council members, making renewed sanctions or inspections nearly impossible to enforce.

3. Consolidation of the China–Russia–Iran Bloc
   This coordinated legal move marks a new phase in the Beijing–Moscow–Tehran axis: from transactional alignment to structural defiance of Western power. China now positions itself not just as Iran’s economic partner, but as its institutional shield.

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2. Saudi Arabia’s AI Revolution Is Opening a Digital Door for China

China’s shadow looms over Saudi Arabia’s plan to turn oil wealth into artificial intelligence power. Through Humain, a state-backed firm created in May by Crown Prince Mohammed bin Salman, Riyadh aims to capture 6 percent of global AI workloads by building massive data center complexes along both coasts. The initiative mirrors China’s model of state-led technological development, where infrastructure, capital, and centralized governance are fused to project influence.

As Saudi Arabia negotiates with OpenAI, Amazon, Microsoft, Oracle, and Elon Musk’s xAI, its growing cooperation with Chinese firms exposes a deeper tension in U.S. policy.

Beijing’s Digital Silk Road already links much of Asia, Africa, and the Middle East through data and cloud infrastructure. By engaging both American and Chinese technology ecosystems, Riyadh is positioning itself as a pivotal actor in the global AI race, one that could either align with U.S. strategic aims or expand China’s digital reach across the Gulf.

Strategic Takeaways

1. Saudi Arabia’s Digital Ambition Challenges U.S.–China Tech Containment
   Riyadh’s entry into the AI infrastructure race undermines Washington’s binary “with us or against us” framework in technology competition. By courting both American and Chinese firms, the kingdom is positioning itself as a neutral power broker in the global compute economy, much as it balances in energy markets.

2. The Gulf as the New Frontline of Tech Geopolitics
   Cheap energy, strategic geography, and sovereign wealth give Gulf states unique leverage over global AI supply chains. As data centers replace oil fields as critical assets, Saudi Arabia and the UAE are competing to define the region’s digital order, each seeking to anchor its economic future in compute infrastructure rather than hydrocarbons.

3. Risks of Overreach and Dependency
   The scale of Saudi ambitions may exceed its technical capacity. A shortage of domestic AI expertise, potential U.S. export restrictions, and oversupply in global data infrastructure could limit returns.

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3. China Exploits Viral Misinformation to Project Power and Intimidate Rivals

A viral video circulating on TikTok falsely claims to show a Chinese government spokesperson threatening war in response to remarks by Israeli Prime Minister Benjamin Netanyahu.

In reality, the man in the clip is a deputy from a Beijing-based think tank speaking at a forum in the Philippines. The speech—warning that “if you want to have war, you will get war” and that “China will not fire the first shot, but will not allow you to fire the second”—was not directed at Israel but has been manipulated to appear as an official response.

While Beijing has denied involvement, the spread of such content aligns with its broader strategy of using proxies, think tanks, and online ecosystems to shape narratives, intimidate adversaries, and blur the line between state communication and propaganda.

Strategic Takeaways

1. Information Manipulation as Statecraft
   China benefits from the viral spread of semi-official militaristic rhetoric. By allowing think tank affiliates and nationalist influencers to speak aggressively, Beijing signals power and resolve while maintaining deniability, a hallmark of its cognitive warfare tactics.

2. Weaponizing Ambiguity
   The blurred boundary between official and unofficial voices allows China to project hostility without diplomatic cost. These tactics create confusion, amplify fear, and undermine trust in verified information, especially in regions already on edge, such as the Middle East.

3. Digital Propaganda Infrastructure Is Expanding Globally
   Platforms like TikTok often serve as multipliers for narratives that reinforce China’s image as an inevitable global power. The manipulation of this video shows how Beijing leverages its digital reach to normalize intimidation and expand influence under the guise of public discourse.

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1. How China Circumvents U.S. Sanctions to Keep Iranian Oil Flowing

Between 2023 and 2024, China quietly developed a covert oil-for-infrastructure system with Iran that allows Beijing to purchase billions of dollars’ worth of Iranian oil while evading U.S. sanctions.

According to an October 5 Wall Street Journal report, Chinese state firms import Iranian oil—often disguised as Malaysian through ship-to-ship transfers near Malaysian waters—and pay not in cash but through infrastructure projects built inside Iran. The system relies on a Chinese state insurer, Sinosure, which channels funds through a financial vehicle known as “Chuxin” to pay Chinese contractors on Iranian soil.

This arrangement delivered as much as $8.4 billion in projects to Iran last year, effectively turning oil sales into sanctioned-proof barter. The scheme undermines Washington’s sanctions regime and reinforces the growing strategic partnership between Beijing and Tehran—two of America’s chief geopolitical adversaries.

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Strategic Takeaways

1. China’s Sanctions Evasion Network Is Expanding
   Beijing’s use of barter mechanisms and state-backed insurers reflects a broader pattern: building parallel systems to shield itself and its partners from U.S. financial pressure. The model could easily be replicated for Russia, Venezuela, or other sanctioned regimes.

2. Erosion of U.S. Financial Leverage
   By decoupling from dollar-based transactions, China is chipping away at one of Washington’s most powerful tools—control over the global financial system. This weakens the enforcement power of future sanctions campaigns unless the United States strengthens secondary sanctions enforcement and reasserts SWIFT dominance through coordinated financial diplomacy.

3. Tehran’s Economic Lifeline
   The barter system gives Iran both economic breathing room and political legitimacy, showing that defiance of U.S. sanctions can pay off when backed by China. This keeps the regime afloat despite Western isolation.

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2. U.S. Treasury Strikes Back: Trump Administration Launches Global Offensive to Cripple Iran’s Missile Empire and Expose China’s Role

Between September and October 2025, the U.S. Department of the Treasury, in coordination with the Departments of State, Homeland Security, and the FBI, launched a significant sanctions action targeting Iranian weapons procurement networks that support the regime’s ballistic missile and military aircraft programs.

The move follows the September 27 “snapback” of previously lifted U.N. Security Council sanctions on Iran—restoring international restrictions on Tehran’s nuclear, missile, and arms activities after the regime’s failure to comply with the 2015 nuclear deal (JCPOA). The Treasury’s Office of Foreign Assets Control (OFAC) designated 21 entities and 17 individuals across Iran, China, Hong Kong, Türkiye, Germany, Portugal, and Uruguay for their role in acquiring U.S.-origin electronics, guidance systems, and aircraft components for Iran’s Ministry of Defense and Armed Forces Logistics (MODAFL) and its subsidiaries.

OFAC identified three primary procurement networks linked to the Aerospace Industries Organization (AIO)—responsible for Iran’s solid-fueled missile program—and the Iran Helicopter Support and Renewal Company (PANHA), which builds and maintains aircraft for the IRGC. These networks sourced components including gyroscopes, accelerometers, and microelectromechanical systems (MEMS) used in Iran’s missile guidance and UAV programs. One network even illicitly obtained a U.S.-manufactured helicopter for modification and deployment by Iranian forces.

This action builds on National Security Presidential Memorandum 2, directing U.S. agencies to deny Iran access to weapons and financing that sustain its military buildup and proxy warfare. Secretary of the Treasury Scott Bessent underscored that, under President Trump’s leadership, the administration will continue to “deny the regime weapons it would use to further its malign objectives.”

Strategic Takeaways

1. Reassertion of U.S. Sanctions Leadership
   The snapback and new OFAC designations mark a return to maximum enforcement—a clear signal that the U.S. is once again leveraging its full financial and legal power to isolate Iran and its enablers. This is a reversal of the weak deterrence that characterized the previous administration’s Iran policy.

2. Dismantling China-Iran Procurement Channels
   Multiple sanctioned entities operate out of China and Hong Kong, underscoring Beijing’s continued role as Tehran’s lifeline. By targeting these intermediaries, Washington is directly confronting China’s complicity in arming Iran and circumventing international export controls.

3. Strengthening the Interagency Strike Capacity
   The joint action between Treasury, State, DHS, and the FBI reflects a more integrated enforcement model. This is the kind of whole-of-government response envisioned by “America First” national security doctrine—using every lever of power to disrupt hostile networks.

4. Undermining Iran’s Military Modernization
   By cutting off access to dual-use electronics, avionics, and missile guidance systems, the sanctions aim to cripple Iran’s indigenous production capacity—delaying or degrading its ability to field advanced UAVs and long-range missiles that threaten U.S. forces and allies.

5. Rebuilding Deterrence through Economic Force
   The designations reinforce the principle that financial warfare can achieve strategic results without deploying troops. They demonstrate to allies and adversaries alike that the United States retains unmatched control over the global financial system—and will use it to defend its interests.

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1. The first joint air force training between China and Egypt

Between April and May, Egypt and China completed the “Eagle of Civilization-2025” joint air force exercise at an Egyptian air base.

This marked a milestone for China, as it was the first time the Chinese Air Force had deployed combat units to Africa for joint drills. Upon arrival, Chinese forces quickly carried out equipment setup, operational briefings, mission coordination, and control rehearsals, followed by a successful first flight. The exercise showcased China's growing ability to project air power over long distances, rapidly deploy forces, and operate within a joint combat framework.

Despite Egypt’s status as a long-standing U.S. ally, this exercise highlights its willingness to deepen military ties with China, especially in areas such as air combat training that involve sensitive technology and coordination. Egypt’s decision to host Chinese air units reflects both its drive to diversify defense partnerships and its growing strategic autonomy.

Strategic Takeaways:

1. China’s Growing Military Footprint in Africa: This exercise signals Beijing’s intent to establish itself as a military actor on the African continent, not just an economic one.

2. Egypt’s Strategic Balancing: Cairo is hedging between Washington and Beijing, leveraging its ties with China to diversify its defense options and signal independence from U.S. pressure.

3. Chinese Air Force Maturity: The drill highlighted advances in China’s power projection, logistics, and joint operations—key indicators of a more globally capable air force.

4. U.S. Influence Erosion: Egypt’s willingness to host Chinese forces despite its U.S. alliance suggests limits to Washington’s ability to restrict Chinese military engagement in the Middle East and Africa.

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2. Xi Jinping is absent from a BRICS summit

The BRICS summit opens Sunday in Brazil—but for the first time, China’s leader Xi Jinping won’t attend.

Xi, who has made BRICS central to his global strategy, is skipping the meeting in Rio, sending Premier Li Qiang instead. His absence comes as BRICS faces pressure: some members are racing to avoid new U.S. tariffs, and all are grappling with global instability from Trump’s trade policies and recent U.S.-Israel strikes on Iran.

Still, Xi’s absence doesn’t signal a retreat from BRICS. China remains committed to using the bloc to counter Western influence.

Strategic Takeaways:

1. Internal Priorities: Skipping the summit suggests domestic or internal priorities may have outweighed the diplomatic benefits of attendance.

2. BRICS Cohesion Tested: U.S. tariffs and geopolitical tensions are pressuring BRICS to show unity; Xi’s absence risks signaling disunity.

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3. Allegations Mount: Beijing-Steered Smart Tech Gathering Data in Israel

IDF lieutenant colonels will no longer be driving Chinese-made BYD Atto 3 electric cars. Earlier this year, the Defense Ministry halted deliveries of the vehicles after sustained pressure from cybersecurity and intelligence experts over security risks.

This isn’t Israel’s first experience with Chinese cars in its defense system. Chinese-made MG ZS electric vehicles are still in use to guard the Defense Ministry headquarters in Tel Aviv, and about 600 Chery Tiggo 8 crossovers—also Chinese—remain in service, mostly assigned to officers with large families.

Strategic Takeaways:

1. Shift in Procurement Policy: This decision signals a shift in Israel’s defense procurement approach, prioritizing information security over cost or convenience, especially amid heightened global scrutiny of Chinese technology.

2. Existing Exposure Remains: Despite this halt, hundreds of Chinese vehicles—including MG ZS and Chery Tiggo 8 models—are still in active use by the IDF and Defense Ministry, leaving lingering cybersecurity risks.

3. Wider Geopolitical Implications: The move reflects a broader trend of Western-aligned nations distancing from Chinese technology in critical sectors, especially as U.S.–China tensions grow.

4. Potential Future Restrictions: This precedent could lead to further reviews and restrictions on Chinese products within Israeli defense and government institutions.

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4. China Strengthens UAE Trade Ties

China has launched a new shipping route to the Middle East with the maiden voyage of the UGR Zakher from Ningbo Zhoushan Port, carrying over 5,000 Chinese new energy vehicles bound for the UAE and Europe.

The vessel, with a capacity of 7,000 vehicles, is expected to strengthen trade links between China and Abu Dhabi. Cargo volume between Ningbo and Abu Dhabi has already surged in 2024.

AD Ports Group, one of the region’s largest port operators, officially named the ship in Ningbo, highlighting the port’s growing role as a strategic hub.

Bilateral trade between China and the UAE topped $1.3 billion this year, up 5.3% from 2023, with Chinese electric vehicles driving much of the growth.

Strategic Takeaways:

• Deepening China-UAE Trade Ties:
  The new shipping route reinforces growing economic ties between China and the UAE, particularly in high-value sectors like new energy vehicles (NEVs).

• Middle East as Logistics Hub:
  Abu Dhabi is positioning itself as a key logistics gateway for Chinese exports to the wider Middle East and Europe, enhancing its strategic importance in global trade.

• China’s Auto Export Push:
  The shipment highlights China’s aggressive push to dominate the global NEV market, using state-backed shipping capacity to secure overseas markets.

• Port-to-Port Alliances Rising:
  The partnership between Ningbo Zhoushan Port and AD Ports Group reflects a broader trend of direct port-to-port alliances, reducing dependence on traditional Western-controlled shipping lines.

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1. Hormuz Stable for Now, but the Risk is Real

Despite Israeli strikes on Iranian nuclear and energy infrastructure, crude oil flows through the Strait of Hormuz—transiting nearly 20 million barrels per day—remain uninterrupted. Analysts are now more focused on the absence of disruptions than the strikes themselves. While oil futures briefly spiked to five-month highs (Brent up 7% on June 13), physical supply remains stable and markets have partially cooled. Brent is down today, and under $70 per barrel.

Beijing is closely monitoring the situation. China is the world’s largest oil importer and a major consumer of Iranian crude, much of it routed through Hormuz. While no supply shock has materialized, the current volatility underlines how further escalation could threaten China’s access to discounted Iranian oil, which is an estimated 10-20% of China’s oil imports.

Strategic Takeaways:

• Energy Fragility: The lack of disruption masks deep fragility. Any spillover into maritime trade routes could harm China’s energy security and Belt and Road-linked logistics in MENA.

• Risk Hedging: China is likely coordinating with state oil companies to draw on strategic reserves and may increase near-term purchases from Russia or West Africa.

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2. Beijing Warns of Broader Conflict Fallout, Reaffirms Neutral Mediation Role

Foreign Ministry spokesperson Guo Jiakun issued a firm statement condemning Israel’s recent attacks on Iran, describing them as the catalyst for “the spike of military conflicts.” China called on all parties to “immediately take measures to ease tensions” and warned that continued escalation—or regional spillover—would cause “other countries in the Middle East to inevitably bear the brunt.”

In parallel, Foreign Minister Wang Yi held direct calls with Iranian FM Seyed Abbas Araghchi and Israeli FM Gideon Sa’ar, urging both to “resolve differences through dialogue.” Beijing stressed that “force cannot bring lasting peace” and reiterated its vision of “common security” based on multilateral consultation.

Strategic Takeaways:

• Dual Engagement Strategy: By speaking to both sides, China reaffirms its posture as a neutral powerbroker capable of maintaining access and influence across rival regional blocs.

• De-escalation Narrative: China’s public statements center on crisis containment, reinforcing its self-image as a peace-seeking major power to contrast their claimed Western-aligned militarism.

• Shielding Regional Investments: As China deepens its Belt and Road footprint across the Gulf and Levant, spillover conflict threatens billions in energy, logistics, and infrastructure investments. Just three weeks ago, China opened its railway to Iran— a major part of their 25-year agreement, and faster way of trading goods.

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I. China Warns Against Israeli Strikes, Calls for De‑escalation

China’s Foreign Ministry expressed “deep concern” over Israel’s recent military strikes on Iranian territory, urging both sides to exercise restraint and avoid further escalation. Beijing emphasized that “any escalation of tensions and expansion of conflicts… is not in the interests of any party,” and warned that continued hostilities could destabilize the broader region. China reiterated its longstanding position on respecting state sovereignty and resolving disputes through dialogue. It also signaled a willingness to play a “constructive role” in promoting regional peace and stability, offering diplomatic mediation in the aftermath of the attacks

Strategic Takeaways:

• Diplomatic Positioning: Beijing is carefully walking a diplomatic line—on one hand, aligning itself with Iran as a strategic partner; on the other, projecting itself as a neutral actor committed to international norms and multilateralism. China seeks to bolster its global image as a responsible great power, particularly in contrast to what it frames as U.S.-backed military aggression.

• Energy Security: As a major importer of Iranian oil—much of it under sanctions-evasion mechanisms—China is economically exposed to any disruption in Gulf trade routes or Iranian production. De-escalation is not only a diplomatic preference but also a strategic necessity to protect China’s energy flows and shipping lanes, especially through chokepoints like the Strait of Hormuz and Bab al-Mandab.

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II. Chinese Analysts Accuse U.S.–Israel Collaboration in Strikes

Chinese analysts argue that Israel’s airstrikes on Iran could not have occurred without prior coordination and approval from Washington. They point to the timing of U.S. military repositioning in the region—particularly the withdrawal of diplomats from Gulf embassies and the earlier deployment of B-2 stealth bombers to Diego Garcia—as signs of deliberate pre-strike planning. While U.S. Secretary of State Marco Rubio publicly denied involvement, Chinese state-linked media and policy circles dismiss those denials as implausible. They highlight the coincidence between the strikes and the IAEA’s June 12 resolution condemning Iran’s non-compliance with nuclear obligations, suggesting the IAEA rebuke was used to legitimize or provide diplomatic cover for the attacks

Strategic Takeaways:

• Narrative Shaping: By portraying the strike as a joint U.S.–Israeli operation, China reinforces its narrative of American military hegemony and strategic manipulation in the Middle East. China's implication is clear: the U.S. is not an honest broker but a destabilizing actor that fuels conflict under the guise of international order.

• U.S.–China Rivalry: Beijing is using the strikes to sharpen its ideological confrontation with Washington, particularly in multilateral forums such as the United Nations. Framing the U.S. as an aggressor and China as a peace-seeking power plays well with Global South countries, many of whom are skeptical of Western interventions. This narrative helps China court diplomatic allies and expand its soft power at the expense of American credibility.

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This special brief examines how growing China-Iran cooperation is shaping regional dynamics and challenging Western influence through expanded military and economic ties.

1. Iran Orders Missile Propellant from China

Iran has reportedly procured thousands of tons of ammonium perchlorate, a critical chemical for solid-fuel ballistic missiles, from China via a Hong Kong trading firm. The shipment—potentially enough for up to 800 missiles—is expected to arrive soon, with portions possibly routed to Iran-aligned militias like Yemen’s Houthis. The U.S. has responded with sanctions against both Chinese and Iranian entities involved.

Strategic Takeaways:

1. Expansion of Iran’s Missile Capabilities
   This procurement marks a significant step in Iran’s long-term strategy to expand and modernize its missile arsenal. Solid-fuel technology offers quicker launch times, improved mobility, and greater survivability compared to liquid-fueled systems, making Iran’s missile forces more agile and harder to detect or neutralize pre-launch.

2. Gray-Zone Escalation Through Civilian Channels
   By utilizing commercial intermediaries and dual-use materials, Iran and China are engaging in “gray-zone” tactics—activities that remain below the threshold of open conflict but strategically undermine adversaries. The use of civilian supply chains allows plausible deniability while complicating enforcement efforts by Western powers.

3. Strengthening of Proxy Forces
   The potential diversion of missile-grade materials to Iranian proxies, such as the Houthis, enables Tehran to project power and destabilize adversaries indirectly. These groups gain enhanced capabilities to strike regional targets—including U.S. allies—without direct attribution to Iran, thereby insulating the Iranian state from immediate retaliation.

4. Challenge to U.S. Nonproliferation Strategy
   The U.S. response, centered on sanctions, highlights the limitations of traditional tools in countering proliferation via globalized commercial networks. The case underscores the need for a more integrated strategy—combining intelligence-sharing, maritime interdiction, and diplomatic pressure on transit hubs like Hong Kong—to disrupt illicit missile supply chains.

5. Growing Sino-Iranian Strategic Alignment
   The transaction reflects a deepening strategic alignment between China and Iran, extending beyond energy and trade to military and technological domains. As Beijing asserts a more assertive global posture, its role in enabling Iranian military modernization raises new concerns for regional stability and U.S. interests in the Middle East.

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2. Iran FM, China’s Ambassador Discuss 25-Year Deal

Iranian Foreign Minister Abbas Araghchi recently held talks with Chinese Ambassador to Iran Cong Peiwu to reaffirm the importance of the 25-year strategic cooperation agreement between Tehran and Beijing. The meeting focused on enhancing bilateral ties and strengthening mutual understanding as both nations move forward with implementing the long-term accord, which has been in place for several years.

Iran continues to push for closer alignment with China and Russia as part of its broader vision for a multipolar world order—one that reduces dependence on the West. Amid ongoing tensions with Western countries, particularly regarding its nuclear program, Iran sees China and Russia as vital partners for diplomatic backing and economic cooperation.

Iran’s state media (IRNA) emphasized the mutual commitment of both sides to deepening strategic relations and fully activating the provisions of the long-term deal.

Strategic Takeaways:

1. Institutionalizing a Non-Western Axis
The reaffirmation of the 25-year agreement signals Iran’s intent to embed itself more deeply within a China-Russia-centered geopolitical bloc, aiming to counterbalance U.S. and European influence in the Middle East and beyond.

2. Hedging Against Western Isolation
With renewed international scrutiny of its nuclear ambitions, Iran is solidifying ties with powers that can offer diplomatic support at the UN and alternative economic lifelines to mitigate sanctions.

3. Long-Term Strategic Patience
The continued implementation of a multi-decade agreement suggests both countries are investing in a sustained partnership, likely to include infrastructure development, energy cooperation, and military coordination.

4. Strengthening China's Footprint in the Middle East
For China, deepening engagement with Iran advances its Belt and Road Initiative and extends its influence in a region traditionally dominated by U.S. allies, without directly confronting the West.

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Sorry for the wait— Hope everybody has had a wonderful week!

1. Chinese Robotaxi Firms Target Gulf for Expansion

As China’s domestic autonomous vehicle market hits regulatory and commercial headwinds, its leading firms are expanding into the Gulf. Companies like Pony.ai and WeRide are launching pilot programs and exploring joint ventures in the UAE and Saudi Arabia, where cities such as Abu Dhabi and Dubai offer advanced infrastructure and favorable regulatory oversight.

Strategic Takeaways:

• Digital Silk Road Deployment: Autonomous mobility becomes a channel for exporting Chinese cloud, sensor, and AI infrastructure.

• Competing with America: China's export of autonomous vehicles to the Gulf could capture the market before American companies, such as Waymo and Tesla, reach the region with their autonomous vehicles.

• Gulf as Testing Ground: China can experiment with smart-city concepts without facing Western compliance roadblocks.

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2. China Expands Visa-Free Entry for Gulf Nationals

Beginning June 9, citizens of Saudi Arabia, Oman, Kuwait, and Bahrain will be eligible for visa-free travel to China for up to 30 days. The policy shift follows increased high-level engagement between Beijing and Gulf nations, and comes as China pushes to position itself as a hub for tourism and consumption.

This can be seen as a diplomatic sweetener ahead of potential economic and defense agreements, helping to establish China as a reliable and welcoming alternative to Western partners. China wants to move beyond just being an investor— they want to establish ties between their citizens and the Gulf

Strategic Takeaway:

• Soft Power: China uses soft power strategies by promoting cultural exchange, increasing educational opportunities, simplifying visa processes, and strengthening diplomatic relations with Gulf countries. These initiatives help encourage tourism, attract students and professionals from the region to China, and expand trade in goods, services, and technology. Through these efforts, China builds mutual trust and familiarity, creating a favorable environment that supports its substantial investments in infrastructure and energy across the Gulf. This approach deepens China’s influence by embedding it more firmly in the region’s social and economic fabric.

• Chinese Expansionism: To expand its influence in the Middle East, Xi Jinping is pursuing a policy of openness towards Gulf nationals who can shape public opinion on Sino-Gulf relations. It’s a people-to-people policy that can serve as a future public diplomacy campaign.

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3. China, Iran, and Russia Conduct Naval Drills Near Hormuz

Warships from China, Iran, and Russia staged joint naval exercises last week in the Gulf of Oman, near the critical Strait of Hormuz. Though officially aimed at anti-piracy coordination, the drills—dubbed “Maritime Security Belt 2025”—coincided with rising Houthi attacks and ongoing U.S.–Iran nuclear negotiations.

Strategic Takeaways:

• Axis of Resistance: Naval coordination solidifies a multipolar security structure, complicating U.S. maritime dominance.

• Energy Corridor Pressure: By conducting military exercises and naval operations near major global oil transit routes such as the Strait of Hormuz or the Bab el-Mandeb, China signals its serious intent to protect the energy corridors that are crucial to its economic stability. These actions go beyond diplomatic assurances and reflect a concrete strategy to ensure uninterrupted access to vital resources. The visible presence of Chinese forces in these regions acts as a deterrent against potential threats and reinforces Beijing’s message that it is prepared to take active measures to secure its energy supply chains.

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4. Saudi–China Green Investment

Trade between China and Saudi Arabia reached $40.2 billion by the end of 2024, driven in part by a surge in investment in renewables and clean tech. Chinese firms are backing hydrogen, solar, and EV-linked projects that align with Riyadh’s Vision 2030 strategy—and differ from Western ESG frameworks.

The alignment between Beijing’s decarbonization goals and Riyadh’s diversification from an oil agenda shows how energy ties are evolving into deeper industrial and technological integration.

Strategic Takeaway:

• Clean Energy Leverage: China strategically integrates its clean energy technologies and standards into Saudi Arabia’s infrastructure projects, such as solar, wind, and grid systems, as part of broader cooperation under initiatives like the Belt and Road. This not only increases Chinese influence in a key Middle Eastern partner but also helps China diversify its energy routes. By investing in overland and regional partnerships, China reduces its dependence on maritime fuel transport routes that are vulnerable to geopolitical tensions, such as the Strait of Malacca or the Strait of Hormuz.

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This article was originally published by the Hudson Institute.

Trump Sends a Message: The Gulf Is No Longer China’s Playground

Zineb Riboua

President Donald Trump’s arrival in Riyadh at the outset of his broader Gulf tour signals a calculated attempt to reassert American power in a region where the United States’ retrenchment has reduced its influence. Over the past decade, China has exploited this political and strategic vacuum to expand its presence across the Middle East. By enmeshing itself into the Gulf’s infrastructural, financial, and technological development, Beijing has steadily tilted the regional balance in its favor. Trump’s visit is the first direct attempt to halt China’s momentum and reestablish the United States as the principal outside power shaping the future of the Gulf.

The stakes of Trump’s visit are high. While the US narrowed its military footprint and deprioritized the region in its diplomatic strategy, Beijing quietly deepened its Gulf relationships. For example, it brokered the normalization of relations between Iran and Saudi Arabia in March 2023. China is investing heavily in the Middle East because Beijing sees the region as an integral—not secondary—theater in its strategy for displacing US influence and reshaping global power dynamics. In particular, the region gives Beijing different options for challenging American dominance. Five factors drive this calculus.

First, the Gulf could provide the energy China needs to sustain its industrial economy. Producers in the region supply nearly half of China’s crude imports, and Beijing views long-term energy security as essential to regime stability.

Second, the Middle East serves as a geopolitical corridor linking East Asia to Europe and Africa. China’s Belt and Road Initiative (BRI) has prioritized ports, logistics corridors, and commercial access points throughout the Gulf, which give Beijing leverage over key maritime and overland trade routes. More importantly, the Digital Silk Road, the technology pillar of the BRI, is projected to contribute up to $255 billion to the gross domestic product of Gulf Cooperation Council countries and generate 600,000 tech-sector jobs by 2030.

Third, the region can provide China with capital and opportunities to export its technology. Sovereign wealth funds in Saudi Arabia and the United Arab Emirates could be deep, politically stable sources of investment for Chinese firms, making Gulf states ideal partners for Beijing as it seeks to globalize its industrial policy and scale its technology platforms. At the same time, Gulf states are pursuing rapid digital transformation. This could grant Chinese firms greater access to funding and the opportunity to shape emerging technology ecosystems from the ground up. As an example, Saudi Arabia signed a memorandum of understanding with China’s Huawei in 2022 to develop cloud computing and high-tech infrastructure in Saudi cities. The deal coincided with the Chinese president’s visit, which Beijing considered its largest diplomatic push in the Arab world.

Fourth, the Middle East can help China undermine US export controls and sanctions regimes. The region—especially sanctioned actors like Iran—and China can work together to circumvent Western restrictions. By leveraging regional networks and opaque financial channels, Chinese firms facilitate the transfer of sensitive technologies and capital, eroding the effectiveness of US sanctions and exposing the limits of Washington’s economic power. China has also developed a way to import Iranian oil while avoiding Western financial networks and shipping services. Using dark fleet tankers, Iran ships oil to China and receives payments in renminbi through smaller Chinese banks. With major state-owned refiners pulling back due to sanctions risks, around 90 percent of Iran’s oil exports are now handled by “teapots,” which are small, independent Chinese refineries.

Fifth, the Middle East provides China with operational space to weaken US-led coalitions and discredit American influence. By engaging both US allies in the Gulf and adversaries like Iran, Beijing positions itself as a strategic alternative unconstrained by Washington’s political conditions. Through state media, diplomatic outreach, and security partnerships, China promotes anti-US narratives that frame American policy as destabilizing and self-interested. This messaging resonates across the Global South and erodes US authority in key regions.

The consequences of China’s influence campaign are becoming increasingly visible in US defense relationships across the region. One example is the collapse of Washington’s sale of F-35 fighter jets to the UAE. Washington warned Abu Dhabi that the Gulf state’s recently built network of Huawei communications equipment could be used to surveil sensitive F-35 infrastructure. But Abu Dhabi did not comply with the US request to rip and replace the Chinese equipment. Within a year, the $23 billion F-35 deal fell apart, weakening one of America’s most advanced defense partnerships in the region.

This disagreement among once-close allies demonstrates Beijing’s long-term strategy. China aims to undermine US influence while avoiding military confrontation by embedding itself in systems that are difficult for host nations to remove and even harder for the US to contest. As Mao Zedong articulated in On Protracted War, the objective is not to defeat the enemy in a single stroke, but to wear down its position over time until resistance becomes untenable. China has retooled this logic for the digital age, applying it methodically across strategic theaters—nowhere more visibly than in the Middle East.

China leverages its engagement with the Middle East as a Trojan horse to entrench its influence through three key mechanisms. First, Chinese technology platforms integrate artificial intelligence–driven surveillance and governance systems directly into state institutions, which normalizes those states’ dependence on China for infrastructure and standards.

Second, cooperation agreements make China integral to core state functions like communications, making it difficult for Washington to compete for access and leverage. And third, Beijing’s deals aim to lock in long-term energy ties while expanding petro-yuan transactions to chip away at the US dollar’s position as the global standard. This model positions Beijing as an indispensable partner in everything from data to finance to security.

Trump’s decision to make his first major foreign visit to Riyadh rather than Brussels, London, or Tokyo is a deliberate signal. It indicates that the United States no longer views the Middle East as a peripheral concern, but as a vital theater of strategic competition with China. The scale of the announcements confirms that message. Saudi Arabia has pledged $600 billion in US-linked investment, including more than $100 billion in arms acquisitions. At the same time, Washington is preparing a deal to provide the kingdom with access to advanced US semiconductors—a move intended to shut China out of future Gulf infrastructure in AI, surveillance, and cloud computing. These agreements are part of the administration’s strategy to push back on China’s expanding influence by making digital sovereignty central to US security partnerships.

This shift is also visible in the administration’s approach to Syria. Trump’s decision to lift sanctions on Damascus is not a random concession to the post-Assad regime. Rather, it is an attempt to reenter a strategic theater that the Obama administration ceded to China, Russia, and Iran. For years, Beijing has shielded Bashar al-Assad’s Syria at the United Nations and positioned itself to lead postwar reconstruction efforts alongside Russian firms. US sanctions helped ensure Moscow and Beijing had minimal competition in that space. The sanctions’ removal signals a renewed American effort to prevent Beijing from monopolizing a strategically central part of the Middle East.

If Trump’s Gulf tour is successful, he will have made significant moves to push back against growing Chinese influence, reassert American dominance, and reassure longstanding allies. In a region marked by shifting allegiances and strategic uncertainty, the visit underscores Washington’s renewed commitment to shaping the balance of power, not just reacting to it.

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Hope you had a great Easter! Today’s brief:

1. Iran Briefs China, Blames Israel for Disrupting U.S. Nuclear Talks

In a calibrated move, Iran will brief China this week ahead of a third round of nuclear discussions with the United States, set to take place in Oman. Iranian Foreign Minister Abbas Araghchi’s visit to Beijing follows similar consultations with Russia last week, underscoring Tehran’s reliance on its strategic backers as it negotiates under pressure.

Tehran has also accused Israel of attempting to “undermine and disrupt” the diplomatic process—a narrative likely intended to preempt blame for any failure in talks and to rally support from Beijing and Moscow. Both China and Russia were original parties to the now-defunct 2015 JCPOA nuclear deal and remain critical voices in any successor arrangement.

Strategic Takeaways:

1. Axis of Coordination: Iran’s “consultation” strategy with China and Russia reinforces a multipolar negotiating structure that weakens Western leverage and complicates U.S. efforts to isolate Tehran.

2. Undermining U.S. Narrative Discipline Tehran’s accusation complicates Washington’s messaging. If the diplomatic breakdown is blamed on Israel, the U.S. risks internal and allied discord. China benefits from any wedge between the U.S. and its closest Middle East partner, especially as it expands influence in the Gulf and Levant.

3. Delay Benefits Beijing
   Every delay in resolving the Iran-U.S. nuclear issue buys China more time to:

• Secure discounted Iranian oil,

• Deepen its economic footprint via the 25-year cooperation deal,

• Expand military coordination with Tehran without triggering new Western sanctions.

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2. ADNOC Strikes Triple LNG Deal with China, Deepens Energy Convergence

In a weekend flurry of deals, Abu Dhabi National Oil Company (ADNOC) signed three long-term LNG supply contracts with Chinese firms, including China National Offshore Oil Corporation (CNOOC), ENN Natural Gas, and state trader Zhenhua Oil. The agreements mark a significant tightening of China–Gulf energy ties as Beijing races to secure energy diversification amid ongoing U.S. decoupling and maritime chokepoint risks.

These LNG contracts expand on existing crude and petrochemical deals, reinforcing the UAE’s position as a reliable supplier and strategic partner in China’s dual-circulation energy strategy.

Strategic Takeaways:

1. Gulf Anchor, Pacific Hedge: As China braces for potential Indo-Pacific disruptions, Gulf LNG offers a long-haul hedge—less exposed to U.S. naval chokepoints than South China Sea routes.

2. Petroyuan Infrastructure: The deals may be settled in renminbi under China’s broader push for petroyuan settlement frameworks, giving Beijing greater insulation from dollar-denominated energy markets.

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3. Aramco and China’s BYD Partner on EV Tech as Riyadh Eyes Clean Mobility Edge

Saudi Aramco has signed a joint development agreement with China’s electric vehicle giant BYD to co-develop next-generation new energy vehicle (NEV) technologies. The deal—brokered via Aramco’s tech subsidiary SATC—focuses on improving vehicle efficiency and environmental performance, aligning with the Kingdom’s broader push toward clean transportation under Vision 2030.

This marks Aramco’s first direct move into co-developing EV tech with a foreign automaker and signals a deeper fusion between Gulf petro-states and Chinese industrial innovation.

Strategic Takeaways:

1. Dual Play: Oil and Electrification: Riyadh isn’t abandoning hydrocarbons—it’s hedging. By investing in EV platforms while dominating upstream oil, Aramco positions itself to profit across the mobility spectrum.

2. Tech Transfer Without the West: China offers Gulf states a path to cutting-edge industrial development with fewer strings attached—no ESG conditionality, no export controls, and full-spectrum IP cooperation.

3. BYD as Geopolitical Export: BYD’s expansion into the Gulf makes China’s EV diplomacy tangible. It’s not just about cars—it’s about embedding Chinese standards in future transport ecosystems across Eurasia.

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4. U.S. Accuses Chinese Satellite Firm of Enabling Houthi Attacks in the Red Sea

The U.S. State Department has publicly accused Chang Guang Satellite Technology—a Chinese firm linked to the PLA—of supplying targeting imagery to Iran-backed Houthi militants in Yemen. The intelligence, reportedly used to strike U.S. and international vessels in the Red Sea, marks a rare direct attribution of military-grade support from a Chinese company to a designated terrorist proxy.

The accusation, first reported by the Financial Times, underscores rising tensions as Beijing’s so-called “neutrality” in Middle East conflicts is increasingly called into question. Despite prior diplomatic warnings, Washington says the support continues.

Strategic Takeaways:

1. Gray-Zone Escalation: This is not benign commercial cooperation—Beijing is probing the boundaries of conflict via deniable, tech-enabled support to U.S. adversaries.

Proxy Leverage, Superpower Cover: By arming Houthis with satellite intel, China helps Iran project power while keeping its own fingerprints indirect—forcing the U.S. to navigate multiple levels of deterrence simultaneously.

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1. As U.S.-China Trade War Escalates, Gulf States Emerge as a Manufacturing Haven

With the U.S. and China locked in a no-holds-barred trade war, manufacturers looking to dodge tariff crossfire may have found an unlikely safe haven: Saudi Arabia.

Energy-rich Gulf states stand to benefit as rising tariffs force companies to rethink supply chains. The Gulf’s appeal lies in its cheap energy, regulatory flexibility, and strategic neutrality.

Manufacturing is central to Crown Prince Mohammed bin Salman’s efforts to diversify the economy. In March, the kingdom reported a 13% year-on-year rise in non-oil exports (excluding re-exports). Yet oil still accounts for 87% of total exports.

The U.S.-China standoff could accelerate Riyadh’s industrial ambitions — by simultaneously depressing energy prices and undermining China’s export competitiveness.

Strategic Takeaways:

• China’s Pivot Pressure: The Gulf could feel pressure too. As Chinese firms lose access to the U.S. market, the Middle East may be flooded with cheap goods — adding competitive tension to emerging Gulf industries.

• Manufacturing Moonshot: While building industrial infrastructure takes time, Saudi Arabia has the capital, the land, and a leadership willing to fast-track transformation — especially with U.S. trade allies in search of alternatives.

• Energy Edge: With some of the cheapest energy on the planet, Saudi Arabia offers a compelling cost advantage for energy-intensive sectors like petrochemicals and aluminum.

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2. China’s Crude Imports Surge to Seven-Month High on Iranian, Russian Rebound

China’s crude oil imports jumped sharply in March, snapping a two-month slowdown and marking the strongest inflow since August 2023, driven by a surge in Iranian barrels and a rebound in Russian shipments.

According to data released Monday by the General Administration of Customs, China imported 51.41 million metric tons of crude last month, equivalent to 12.1 million barrels per day. That’s up nearly 5% year-on-year and the highest monthly volume in over half a year, Reuters data shows.

The rebound highlights how key shadow suppliers — particularly Iran and Russia — are regaining momentum despite ongoing geopolitical pressures and sanctions risk.

Strategic Takeaways:

• Iran Fills the Gaps: A surge in Iranian oil is propping up Chinese imports. Despite U.S. sanctions, Tehran appears to be moving barrels via non-blacklisted vessels and alternative channels — signaling continued enforcement challenges.

• Russia Ramps Back Up: Russian deliveries also saw a bounce, suggesting China’s refiners are continuing to prioritize discounted barrels over Western supply routes, even amid secondary sanctions risks.

• Record-Breaking Appetite: At 12.1 million bpd, China’s March import volume marks its highest since August — underlining its ongoing role as a demand engine in the global oil market.

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3. Vietnam-China Ties Deepen — and Echo Across the Middle East

As Xi Jinping prepares to mark the 75th anniversary of China-Vietnam diplomatic ties with a state visit to Hanoi, Beijing’s rhetoric around “shared futures” is resonating far beyond Southeast Asia — including across the Middle East.

Xi’s remarks cast the China-Vietnam relationship as a model of socialist partnership, industrial alignment, and multilateral cooperation in the Global South. But it seems to be a blueprint that is increasingly visible in China’s broader foreign policy — from Hanoi to Baghdad.

Strategic Takeaways:

• Ideological Soft Power: In Vietnam, China frames cooperation in terms of “shared revolutionary traditions” and socialist modernization. In the Middle East, where political models differ, the appeal is more pragmatic — centered on sovereignty, economic multipolarity, and non-interference. But the message of alternatives to Western liberalism resonates across both regions.

• People-to-People and Digital Ties: Xi's call for greater youth, tourism, and cultural exchanges with Vietnam echoes Chinese soft power initiatives in the Middle East — from language institutes and film festivals to rising interest in Arabic-Chinese academic partnerships and tourism corridors.

• Global South as Strategic Axis: Xi’s “community with a shared future for mankind” isn’t just rhetoric — it’s being actively implemented through platforms like the Global Development Initiative (GDI) and Global Security Initiative (GSI). For many Middle Eastern nations, especially Gulf states navigating between U.S. security ties and Chinese economic outreach, these frameworks offer a non-Western model of cooperation centered on sovereignty, infrastructure, and multipolar diplomacy. As Southeast Asia aligns through BRI corridors, the Middle East is emerging as the western anchor of China’s Global South strategy, linking ports, energy, and strategic industries into Beijing’s evolving global architecture.

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4. As China Faces Tariff Walls in the West, Will the Middle East Become the Next Dumping Ground?

With the U.S. slapping steep new tariffs on Chinese goods and Europe bracing for a potential flood of low-cost exports, global trade tensions are entering a volatile new phase. While the spotlight is on the transatlantic fallout, it is possible that the Middle East could quietly become the next pressure valve for China's industrial overcapacity.

A recent article in The New York Times paints a stark picture: Europe, long wary of China’s economic model, now fears an “economic disaster” as Chinese manufacturers, cut off from American buyers, look for new export markets. In response, the EU is establishing a task force to monitor for dumping and has issued warnings about overcapacity and illegal subsidies.

But unlike Europe, Middle Eastern countries have no comparable trade defense mechanisms — and that makes them vulnerable.

Strategic Takeaway:

The article paints a picture of Europe bracing against a flood of Chinese overcapacity. But in the Middle East — where open markets and fast-track industrial growth are the norm — the risk may be even sharper. Lacking Brussels-style trade defenses or coordinated policy tools, Gulf economies could become unwitting landing zones for China’s redirected exports.

The next move requires clarity — and speed: either absorb the surplus passively, or craft a focused industrial strategy that dictates how, when, and on whose terms Chinese capital and goods enter the regional market.

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This brief examines how China is using the Middle East to frame U.S. tariffs as a global threat, leveraging Gulf narratives to counter U.S. pressure and shift trade perceptions.

1. Beijing Strikes Back from Riyadh

China is mounting a sharp diplomatic offensive against the latest U.S. tariff hikes, framing them as unilateral, abusive, and globally destabilizing. At a media roundtable in Riyadh, Minister Counselor Ma Jian warned that Washington's escalation risks “serious harm” to global supply chains and deepens inequality between developed and developing economies.

The U.S. this week paused tariffs for all partners except China, pushing duties on Chinese goods to 125%, hours after Beijing hiked its own tariffs on U.S. products to 84%.

In pointed language, Ma accused the U.S. of “economic bullying,” calling the moves a “weaponization of tariffs” aimed at reshaping the global order around American exceptionalism.

Strategic Takeaways:

• Message Discipline: China is sticking to a script built around mutual benefit, peaceful deliberation, and WTO principles—positioning itself as the rules-based actor amid U.S. disruption.

• Global South Signaling: The Riyadh venue is no coincidence. Beijing is amplifying its message in emerging markets, warning that U.S. actions widen North-South trade imbalances.

• Systemic Framing: Chinese officials aren't just contesting tariffs—they’re accusing the U.S. of dismantling multilateral trade norms to serve hegemony. The goal is to isolate Washington diplomatically, not just economically.

• Red Lines Clarified: While calling for dialogue, Beijing has publicly affirmed it will “respond to the end” if provoked. This sets a ceiling on U.S. leverage and suggests retaliatory cycles are far from over.

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2. As U.S. Hits China, India and UAE Forge New Bloc in Sri Lanka

India and the United Arab Emirates have signed a landmark deal with Sri Lanka to jointly develop an energy hub on the island’s eastern coast. Announced during Prime Minister Narendra Modi’s visit—his first since Anura Kumara Dissanayake assumed the presidency—the agreement is both economic and symbolic: a signal that Beijing’s grip on Colombo may be loosening.

The UAE’s Expanding Footprint
Long a commercial powerhouse, the UAE is now asserting itself as a strategic player in the Indian Ocean. Its partnership with India in Sri Lanka is part of a broader Gulf-Asia corridor strategy, leveraging capital, connectivity, and clean energy to anchor influence across key maritime chokepoints.

While China focuses on hard infrastructure through its Belt and Road Initiative, the UAE brings a nimble, finance-driven model—faster, less intrusive, and increasingly aligned with India’s regional ambitions.

Sri Lanka: From Debt Trap to Diversification
Beijing’s earlier dominance in Sri Lanka came with visible costs. Projects like the Hambantota Port, funded by Chinese loans and ultimately leased to a Chinese operator, triggered public backlash and sovereign debt strain. That experience has left Colombo more cautious—and open to partners who offer infrastructure with fewer strings.

The UAE-India deal reflects that pivot: energy security, not just shipping lanes; regional integration, not just foreign debt.

Strategic Takeaways:

• Tripolar Momentum: The India-UAE-Sri Lanka energy hub is more than a project—it’s a template. A Gulf-South Asia strategic axis is taking shape, offering alternatives to Chinese dependency.

• Energy as Leverage: By anchoring infrastructure in Sri Lanka, the UAE and India gain a strategic foothold in Indian Ocean energy flows, undercutting China’s earlier investments.

• Messaging vs. Movement: China’s public condemnations of U.S. tariffs position it as a defender of the global order. But in key regions like South Asia, its real challenge is the erosion of trust—and the rise of agile coalitions offering less polarizing paths.

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3. Crude Reality: China’s Refiners Struggle as U.S. Pressure Bites

China’s independent oil refiners—known as “teapots”—have marginally raised run rates in recent weeks, but the sector remains constrained by a tightening mix of tepid domestic fuel demand and escalating U.S. economic pressure.

While refinery utilization in Shandong has edged up, analysts warn that tepid domestic fuel demand and sanctions-related supply risks continue to weigh heavily. The sector’s structural fragility underscores a broader vulnerability: China’s oil appetite is becoming a casualty of the tariff war and shifting trade dynamics.

Independent refiners account for nearly 90% of Iranian oil imports into China, but growing U.S. scrutiny—especially the recent blacklisting of Shouguang Luqing Petrochemicals—has chilled new purchases. This comes as the White House raises tariffs on Chinese goods to 125%, signaling a willingness to escalate on multiple fronts simultaneously.

Strategic Takeaways:

• Energy Meets Trade War: The U.S. tariff regime is no longer isolated to tech and goods. By tightening sanctions on oil-linked actors, Washington is extending pressure into China's energy arteries.

• Muted Demand Signals: Tepid fuel consumption at home—especially in freight, industrial, and mobility sectors—is compounding teapot woes. If run rates remain suppressed, China's overall crude demand could dip, adding bearish momentum to global markets already on edge over tariff-driven recession risks.

• Strategic Messaging vs. Economic Reality: While Chinese diplomats condemn U.S. tariffs as “abusive” from podiums in Riyadh, on the ground in Shandong, the pressure is real. Refiners are caught between geopolitical friction and declining margins.

• Oil Markets in Flux: As U.S. and China lock horns over trade, oil markets are caught in the crossfire. With Iran-linked flows under threat and Chinese demand uncertain, volatility is set to persist.

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4. China’s Subtle Offensive: Using the Middle East to Reframe the Tariff War

In a swift response to the United States’ April 2 announcement of sweeping new import tariffs—including a universal 10% duty and additional “reciprocal” levies targeting specific nations like China—Beijing has moved to reframe the conflict as a global economic threat, not just a bilateral dispute.

Less than 24 hours later, China Daily published a strategically timed article warning that Gulf Cooperation Council (GCC) nations could face indirect fallout from the U.S. trade war. While presented as economic commentary, the piece serves as calculated messaging: by highlighting risks to oil prices, budget deficits, and rising consumer costs in the Middle East, Beijing is using soft-power media channels to internationalize its narrative.

The underlying message is clear—U.S. tariffs are not just punitive toward China, but destabilizing for global partners, especially oil-dependent economies. By speaking through regional economists and avoiding overt confrontation, China is subversively recruiting the Gulf into its broader effort to diplomatically isolate Washington and reframe the U.S. as the aggressor in a global economic disruption.

Strategic Takeaways:

• Middle East as Narrative Theater: Beijing understands the Middle East isn’t just a trade partner—it’s a messaging platform. By pushing warnings through China Daily’s Gulf coverage, China is signaling to GCC elites that U.S. policies threaten their economies, too, especially through energy markets and import inflation.

• Soft Alarmism, Not Confrontation: The article leans on local voices—economists from Bahrain and Dubai—to lend credibility to the claim that the U.S. tariff regime may hurt regional consumers, increase deficits, and trigger oil price instability. The tone is subtle, but the implication is loud: U.S. policies are destabilizing, and China sees it coming before you do.

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1. China’s Non-State Refiners Recoil from Iran Oil Under U.S. Heat

Small Chinese refineries—known as “teapots”—are holding off on new Iranian crude purchases after the U.S. sanctioned Shouguang Luqing Petrochemicals, a non-state processor in Shandong.

Roughly 90% of Iranian oil to China lands in Shandong, where teapots dominate. While Luqing hasn’t been cut off from financing, its fate could shape risk appetite across the sector—especially for refineries reliant on Iranian feedstock.

Despite the freeze in new deals, March imports are still expected to rise month-on-month. Iranian cargoes on non-sanctioned vessels have continued to discharge at Chinese ports, suggesting enforcement gaps persist.

But those gaps may soon close. U.S. sanctions on the Huizhou Huaying terminal and two OFAC-blacklisted tankers that recently discharged in Yangshan and Dongying point to a tightening net.

Strategic Takeaways:

• Shadow Trade Strain: The U.S. is moving upstream—hitting infrastructure nodes, not just vessels. This increases compliance risk for terminals, not just traders.

• Energy Diplomacy Tightrope: Beijing must weigh its strategic alignment with Tehran against rising operational costs for importers and the potential diplomatic fallout with Washington.

• Testing the Periphery: Washington’s signal is clear: even non-state players operating at the edge of formal systems are now fair game. That widens the risk envelope for semi-official trade networks.

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2. China and Russia Shield Iran in Nuclear Standoff with the West

In a coordinated diplomatic show, Russian Foreign Minister Sergei Lavrov and his Chinese counterpart Wang Yi reaffirmed their joint stance on Iran’s nuclear program and the Korean Peninsula during high-level meetings in Moscow this week.

According to the Russian foreign ministry, the two sides agreed that nuclear negotiations with Tehran—pressed by the U.S.—should only resume on the basis of “mutual respect” and the full lifting of sanctions. This mirrors a joint statement issued last month, underscoring growing Sino-Russian alignment on key nonproliferation issues.

Wang’s visit, which included a meeting with President Vladimir Putin, is the latest signal of deepening strategic cooperation between Moscow and Beijing, as both powers seek to counterbalance U.S. pressure on multiple fronts.

Strategic Takeaways:

• Unified Front: China and Russia are reinforcing a shared diplomatic framework that resists Western-led nuclear negotiations with Iran unless sanctions are lifted.

• Parallel Pressure: By invoking the Korean Peninsula and Ukraine alongside Iran, Beijing and Moscow are asserting their role as alternative power brokers in regional security issues.

• Axis of Resistance? While not formalized, the messaging suggests a tightening bloc of strategic defiance against U.S.-led diplomacy.

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3. China’s Solar Surge Finds New Lifelines in the Global South

China’s solar exports surged into the Global South in 2024, with Saudi Arabia and Pakistan leading a wave of new demand. Over half of all Chinese solar panels went to developing countries, according to Ember’s latest export tracker.

While total exports rose 10%, shipments to the Global South jumped 32%. Exports to the Global North, meanwhile, fell 6%—a sign of shifting geopolitical energy flows and growing green tech competition.

Pakistan and Saudi Arabia saw distinct solar booms, but late 2024 also saw rising deliveries to smaller African and Latin American markets, signaling China’s push to open new frontiers for its solar dominance.

Strategic Signals:

• Pivot South: China is turning to emerging markets as traditional buyers cool and trade friction grows.

• Soft Power Play: Solar exports are Beijing’s diplomatic toolkit—clean energy with political leverage.

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4. ASEAN Eyes New Trade Bloc with China and Gulf Amid U.S. Trade Tensions

Malaysia has invited China and key Arab Gulf states to a joint summit with ASEAN in Kuala Lumpur this May—raising questions about whether a new trade alignment is emerging in response to Donald Trump’s tariffs.

Prime Minister Anwar Ibrahim, whose country chairs the 10-member ASEAN bloc this year, framed the move as an effort to secure the region’s “strategic relevance in a multipolar world.” He denied the summit was aimed at countering the U.S. or choosing sides.

But the optics are hard to ignore. A potential trilateral trade axis—ASEAN, China, and Gulf energy economies—would bind together several countries with large U.S. trade surpluses and shared incentives to de-risk from dollar-centric trade.

Experts warn Washington will be watching closely. “Trump isn’t afraid to use trade policy as a sledgehammer,” said Sam Baron of the Yokosuka Council on Asia-Pacific Studies. “Anwar needs to be cautious.”

What to Watch:

• Strategic Realignment: ASEAN may be testing the waters for new trade architecture outside the U.S.-led system.

• Energy-Industrial Fusion: A China-Gulf-ASEAN axis would combine capital, industrial capacity, and resource leverage.

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5. Chinese Ambassador Pushes Innovation Agenda as “Two Sessions” Open New Horizons for China-Israel Cooperation

What happened?

Beijing’s recently concluded “Two Sessions” spotlighted innovation and human capital as central pillars of China’s development strategy—signals that China’s Ambassador to Israel, Xiao Junzheng, has directly tied to expanding bilateral cooperation.

In an article published in Israel Hayom, Ambassador Xiao Junzheng underscored how the outcomes of the Two Sessions offer "new horizons" for China-Israel cooperation, particularly in technology, healthcare, and education. His remarks reflect a coordinated push from Beijing to align domestic innovation priorities with targeted international partnerships.

General Secretary Xi Jinping, during discussions with Jiangsu Province deputies, called for the integration of education, technology, and professional training to modernize China’s industrial system. He emphasized translating scientific achievements into real productivity—an approach that mirrors the operational model of existing China-Israel platforms such as the Changzhou Innovation Park, Shanghai Innovation Park, and the Guangdong Technion – Israel Institute of Technology.

These joint ventures, grounded in the “education + innovation + professionals” framework, have already yielded cooperation in life sciences, new energy, and intelligent manufacturing—areas where Israel has comparative advantages and strong commercial interest.

A second key policy shift from this year’s sessions was China’s focus on investing in people, with new commitments to channel public and private capital into sectors like education, healthcare, and elderly care services. According to Ambassador Xiao Junzheng, this trend unlocks “broader prospects” for Israeli companies operating in medtech, edtech, and aging-tech, which align with China’s growing domestic demand.

As China seeks to convert innovation into productivity and human development into growth, Ambassador Xiao Junzheng’s messaging signals a deliberate effort to position Israel as a strategic partner in delivering on both fronts.

Background:

Xiao Junzheng is the current Ambassador Extraordinary and Plenipotentiary of the People's Republic of China to the State of Israel. Born in March 1970, he holds a Ph.D. in history and is a member of the Communist Party of China. ​

Prior to his appointment in Israel, Xiao Junzheng served as China's ambassador to Greece. His diplomatic career includes extensive experience in the Middle East and North Africa, with postings in Iran, Turkey, and Egypt, as well as roles within the Ministry of Foreign Affairs focusing on the region. In November 2024, Xiao was appointed as China's ambassador to Israel, succeeding Cai Run. He officially assumed the position following his appointment by President Xi Jinping.

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In this episode, we explore: The U.S. has widened sanctions targeting China’s tech ties with Iran, aiming to block military-related exports and disrupt UAV and missile networks. At the same time, China is expanding its economic reach by using Egypt as a regional EV hub, engaging quietly in Libya’s political process, and diversifying energy imports away from Saudi Arabia toward Iran and Russia. A disputed $1B Chery factory plan in Turkey further highlights the complexities of China’s strategic expansion across the region.

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1. China-Iran Tech Axis Targeted as U.S. Widens Sanctions Net

In a sweeping escalation of tech restrictions, the U.S. Commerce Department has added 80 new entities to its Entity List, targeting firms from China, the UAE, Iran, South Africa, and Taiwan. The move aims to choke off Beijing’s access to cutting-edge technologies driving its military edge—from quantum computing to hypersonic weapons.

Among the newly listed are:

• Chinese firms advancing AI chips, supercomputers, and quantum systems for military use

• Entities tied to Iran’s UAV and missile programs, with the main goal of disrupting Iran’s procurement of unmanned aerial vehicles (UAVs) and related defense items

• UAE and South African actors linked to the training of Chinese military pilots using NATO-based systems

The message from Washington: advanced U.S. tech will no longer be allowed to flow—directly or indirectly—into China’s military-industrial machine.

“American technology should never be used against the American people. BIS is sending a clear, resounding message that the Trump administration will work tirelessly to safeguard our national security by preventing U.S. technologies and goods from being misused for high performance computing, hypersonic missiles, military aircraft training, and UAVs that threaten our national security,” said Under Secretary of Commerce for Industry and Security Jeffrey I. Kessler.

This isn’t just about semiconductors—it’s about the emerging battlefield of influence in the Global South. The U.S. is signaling that deepening security or tech ties with Beijing comes at a cost, even for countries that see themselves as neutral or non-aligned.

What This Signals About Iran-China Relations:

• Beyond Diplomacy: The U.S. now sees the Iran-China relationship as a growing military-technical alliance, not merely a diplomatic or economic partnership.

• Cutting the Supply Chain: Sanctions on Iran-linked entities aim to disrupt Beijing’s indirect support for Tehran’s drone and missile development.

• Calculated Alignment: China’s deepening ties with Iran reflect a strategic choice to engage sanctioned states when it serves its global positioning.

• Regional Rebalancing: As U.S. and European influence contracts in parts of the Middle East, China is filling the vacuum through industrial and defense partnerships.

• Reframing Iran: In Washington’s eyes, Iran is no longer a standalone rogue actor — it is increasingly treated as an integrated player in China’s expanding global defense network.

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2. China’s EV Strategy Finds a Hub in Egypt

China’s electric vehicle ambitions are no longer confined to its domestic market — they’re global, and Egypt is quickly becoming a central node in that expansion strategy.

In a recent interview with Xinhua, Khaled Geyushi, vice chairman of Geyushi Automotive, outlined how Chinese EV makers are fueling industrial growth in Egypt. His company sources powertrains from China’s FAW and assembles buses locally — 80% of which are exported to Saudi Arabia and Jordan. But this model isn’t just about regional exports; it’s about strategic positioning.

By partnering with Egyptian firms, Chinese automakers gain access not only to local assembly capacity but also to a wider trade corridor spanning over a billion consumers across Africa, the Arab world, and Europe — thanks to Egypt’s extensive trade agreements and its geographic position as a logistical bridge between continents.

This matters even more when placed in the context of Europe’s accelerating shift toward decarbonization. With the EU phasing out internal combustion engines by 2035, maintaining openness to Chinese investment, and accounting for over 20% of global EV penetration, Western Europe has become the top global destination for China-made passenger cars. But rather than exporting solely from China — where geopolitical tensions and trade barriers are growing — Beijing is increasingly turning to regional production platforms like Egypt.

This is where the Geyushi Automotive case becomes emblematic. By supplying Egyptian firms with critical components while keeping final assembly local, Chinese companies are embedding themselves within a friendly industrial base that offers more than just manufacturing capacity. Egypt’s trade agreements with the EU and others allow Chinese EVs to reach European markets without the political scrutiny, tariffs, or regulatory pushback that direct exports from China might provoke.

The strategy serves multiple goals:

• It helps Chinese firms offload domestic overcapacity through externalized production;

• It lowers export risk by operating through third-party host countries;

• And it allows China to hedge against rising trade friction with the U.S. and possibly the EU.

In short, Egypt isn’t just a partner — it’s a platform. It’s part of China’s broader logistical workaround and geopolitical hedge: a way to stay commercially competitive in the West while deepening economic influence across the Middle East and Africa.

Link to BBVA report on China | EV sector: forging ahead amid intensifying headwinds: https://www.bbvaresearch.com/wp-content/uploads/2024/06/202406_Chinese-EV-sector_forging-ahead-amid-intensifying-headwinds.pdf

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3. China Signals Interest in Libya’s Political Endgame

In Tunis, the UN’s special envoy for Libya, Raisedon Zenenga Tetteh, met with Chinese diplomat Liu Jianchao amid renewed international efforts to revive Libya’s frozen political process.

Tetteh briefed Liu on the UN-backed consultations, including work by the advisory committee aimed at securing a consensus between rival Libyan factions. Liu, in turn, reaffirmed Beijing’s support for the UN mission and the special representative’s role in breaking the deadlock.

The meeting signals quiet but steady Chinese engagement in North Africa’s most complex conflict. While Western powers push loudly for elections and political deadlines, Beijing is playing a quieter, slower game — presenting itself as a neutral, non-interventionist partner. But that neutrality is calculated. By avoiding overt political entanglement, China sidesteps risk while quietly building credibility with whoever comes out on top. Its focus isn’t on shaping Libya’s politics today — it’s on being first in line for tomorrow’s reconstruction contracts, energy deals, and infrastructure projects.

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4. China’s Crude Imports from Saudi Arabia Dip to 12-Month Low

Saudi Arabia’s oil shipments to China are expected to fall in April to their lowest level in over a year — about 35.5 million barrels, down from 41 million in March. The decline comes even as OPEC+ prepares to increase output, underscoring how China’s domestic dynamics, rather than producer policy, are now setting the pace for imports.

The dip is primarily due to scheduled maintenance at several Sinopec-run refineries, with at least 700,000 barrels per day of capacity offline through May. Affected plants include the Yangzi, Jiujiang, and Gaoqiao refineries, key nodes in China’s state-run energy system.

Meanwhile, Asian crude markets are rebalancing after recent disruptions caused by U.S. sanctions on Russian and Iranian oil. Chinese imports from both countries are expected to rebound in March, as non-sanctioned tankers enter the trade to replace embargoed vessels.

Implications:

• While the current drop is technical, it aligns with China’s broader efforts to diversify supply and de-risk its energy inputs.

• Rebounding flows from Iran and Russia, despite U.S. pressure, suggest that Beijing is willing to exploit gray-market opportunities when the price and leverage are right.

• Saudi Arabia remains China’s top supplier — for now. But as Beijing sharpens its energy playbook around price, flexibility, and political cover, even trusted partners will face competition.

5. Mixed Signals: Chery Disputes $1B Factory Plan in Turkey

Conflicting statements between Ankara and one of China’s top automakers highlight the murky politics of industrial expansion:

• Turkey’s Claim: Chery Automobile’s partners are investing $1 billion in a new factory with capacity to produce 200,000 vehicles annually.

• Chery’s Denial: The company immediately issued a statement denying any plans to build a factory in Turkey.

• Ankara’s Pushback: A Turkish industry ministry official reaffirmed the deal, clarifying that Chery’s “partners”are behind the investment—not Chery directly.

Chery is far from a minor player. As a major state-backed automaker and one of China’s leading vehicle exporters, it sits at the heart of Beijing’s strategy to dominate global EV supply chains. Turkey, meanwhile, sees an opening. Positioned at the intersection of Europe, Asia, and the Middle East, Ankara is actively courting Chinese capital to position itself as a manufacturing base and export gateway for China’s outbound industrial expansion.

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Founder/Manager Zineb Riboua ( X: @zriboua)

Contact: riboua@chinainmena.com

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China’s expanding footprint across the Middle East and North Africa is quietly—but decisively—reshaping the region’s strategic landscape.

From energy and infrastructure to diplomacy and defense, Beijing is becoming an increasingly influential player in a part of the world long dominated by Western powers. For U.S. policymakers, businesses, and analysts, grasping the nature and implications of this shift is not optional—it’s essential.

The region is emerging as a key arena in the broader U.S.-China rivalry. Through investments in ports, arms sales, and political engagement, China is steadily challenging longstanding U.S. partnerships and institutions in a region vital to global trade routes, energy flows, and security frameworks.

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At the same time, Beijing’s economic strategy is altering the commercial and security calculus. Its growing role in digital infrastructure, logistics, and critical minerals introduces new market dynamics and potential vulnerabilities. These developments directly affect U.S. business competitiveness and strategic planning.

Just as importantly, countries across the Middle East and North Africa are not merely reacting—they are recalibrating. Regional powers are actively engaging with China to diversify their alliances and reduce reliance on the West. Understanding this realignment is key to preserving U.S. relevance and shaping a forward-looking approach to diplomacy and defense.

To meet this moment, I’m relaunching the China in the Middle East and North Africa Project—an initiative originally founded in May 2020 to deliver clear and timely insight into China’s growing role in one of the world’s most strategically significant regions.

At the heart of the project is a twice-weekly newsletter (every Monday and Friday) that distills the noise into sharp, essential updates. It offers curated reporting, original analysis, and expert commentary on the developments that matter most—from infrastructure and technology deals to diplomatic moves and regional reactions.

The goal is simple: to equip readers with the insight they need to track China’s evolving strategy and understand its implications for U.S. policy, business, and global influence.

Thank you in advance for your interest and engagement!

— Founder, Zineb Riboua ( X: @zriboua)

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