The Chinese-brokered rapprochement between Iran and Saudi Arabia announced last week contains both good news and bad news for the US Stabilizing relations between the two Gulf countries. It is an important precondition for the grand pivot away from the Middle East that was established as the strategic goal of US regional policy by Barack Obama, and then re-emphasized by Joe Biden.
That’s the good news. The bad news is that the main beneficiaries of US policy are the Chinese.
China is sponsoring the current Iran-Saudi rapprochement in order to exploit the strategic vacuum created by America’s oft-stated desire to downgrade its role in the region. As a country that sees itself as a great power rival to the US, China is eager to take control of the key global resources that flow through Gulf waterways and are crucial to China’s economic security. In the absence of an active American presence that can guarantee the flow of oil, the chance to broker a deal between the region’s leading powers is a huge step-up in influence and prestige for Beijing at a cost of close to zero.
Beijing has eagerly sought its new role as a regional power broker. News of the Saudi-Iran deal followed closely on the heels of a state visit by Chinese leader Xi Jinping to the kingdom in December. Xi’s goal during that visit was to begin the process of supplanting the US as Riyadh’s primary security and trade partner. By brokering a rapprochement with Iran, the Chinese have succeeded in demonstrating their potential value in that role.
The fact that China is currently running the table in Riyadh doesn’t mean that its leaders are held in higher esteem by the kingdom’s rulers. It simply means that, at the moment, China is the willing partner. While the US seems to prefer pivoting away from the region, ostensibly to focus on the Chinese threat, the Chinese are pivoting toward the region in order to compete with the US, and protect their own interests.
In doing so, Beijing is offering Riyadh a simple deal: Benefit as you like from cooperation with us on defense, aerospace, the automotive industry, health, and technology, and most importantly sell us your oil and choose whatever military equipment you want from our catalog in return, help us to stabilize global energy markets. In other words, the Chinese are offering the Saudis a bargain that appears to be modeled on the American-Saudi deal that stabilized the Middle East for 70 years, until US policymakers led by Obama proposed a nuclear deal with Iran that was structured to allow for a quick American exit from the region, putting an end to costly military commitments like the Iraq War.
And where the collapse of the Soviet Union appeared to leave the region with zero alternatives to US leadership, China has now become a plausible great-power rival to the US, especially when it comes to trade. China’s gross domestic product has nearly doubled in the past decade, to over $30 trillion when adjusting for currency conversions, making it one of the largest, fastest-growing, and most attractive markets in the world. And as China’s domestic markets have grown, so has its trade with the Gulf. In 2021, China’s imports from Saudi Arabia totaled $57 billion. And while the kingdom today supplies China with 18% of its crude oil needs, that number still leaves tremendous room for growth. Chinese exports to Saudi Arabia in 2021, meanwhile, reached $30.3 billion—a number that could easily double with expanded orders for petrochemical, industrial, and military equipment that the kingdom has historically obtained from US suppliers.
China’s trade relationships with Iran, meanwhile, are even more important to that country’s economy. China buys Iranian oil and invests hard currency in Iran because it has the luxury of ignoring US sanctions. As Iran’s largest trade partner and the source of the lion’s share of foreign currency arriving in the country, Chinese trade literally puts food on the table in Tehran. The outsize role it has established in the Iranian economy in turn gives Beijing significant leverage over a country that has frequently endangered regional security, including by sponsoring large-scale missile attacks on Saudi airports and oil fields from Yemen.
While the Iranian regime continues burning American flags in the street, managing a healthy relationship with China is a matter of survival. Without strong relations with China, little stands between the Mullahs’ regime and economic collapse. In turn, strong relations with China allow Saudi Arabia a lever to potentially moderate threatening Iranian behavior.
Which is not to say that the kingdom prefers to deal with Beijing. The US is the security partner that the kingdom’s rulers know and trust. All of Saudi Arabia’s systems are American. For the most part, especially when it comes to advanced weapons and large industrial systems, US equipment continues to be superior to what China can offer. The kingdom just signed a $37 billion dollar deal with Boeing to purchase aircraft for its recently announced Riyadh Air. The US will continue to be valued as an indispensable strategic partner by Riyadh.
This deal is therefore not an indication of a Saudi pivot toward China or the replacement of the US as a strategic partner. Rather, it is a demonstration of China’s rise as a strategic player in a region suffering from a power vacuum created by a deeply confusing American policy of denigrating longtime allies while embracing former enemies in the interests of what Obama called “balance.” After all, the idea that the Saudis should engage in dialogue with Iran toward the goal of “sharing the region” originated in Washington—not in Riyadh. Today, the only global actor with enough leverage and clout to meaningfully alter Iranian behavior is China, not the US.
While the strategic significance of the region might be lost on a certain class of Washington policy makers, the Chinese don’t have the luxury of geostrategic daydreaming. They understand the benefits that flow from being able to secure—or turn off—the world’s supply of oil. They also recognize that major world economies—starting with China—will continue burning carbon fuels in order to generate electricity, to heat and cool the homes of their citizens, power factories, get to work, and grow food. The fact that Washington may prefer not to compete for influence in the region will not protect either Middle Easterners or Americans from the consequences of a fight that China seems determined to win.