Chinese technology firms are increasingly competing with US ones in major Middle Eastern markets, escalating technology-related US national security concerns.
London (Special to Informed Comment; feature) – Chinese technology companies are poised to play a growing role in the Middle East’s digitalization process, amid expanding ties between Chinese entities and local regional partners. Firms including Huawei, Alibaba and Tencent — which face various longstanding US measures to monitor or blacklist them — are partnership with local telecommunications companies like Saudi’s Zain KSA to enter local technology sectors like cloud computing. Tencent launched a new regional cloud service in the kingdom in February. Meanwhile, Alibaba entered Saudi Arabia’s market via a joint venture with Saudi Telecom Company (STC), the Saudi Cloud Computing Company. This entity will aim to support Saudi Arabia’s 2030 Vision development initiative, which is backed by the kingdom’s de facto ruler, Crown Prince Mohammed bin Salman. Qatar’s government said in February it was seeking more Chinese companies to move to the country and that it had invested $2.5 billion in data and artificial intelligence.
Washington has growing concerns about Middle Eastern firms’ links to Chinese entities, with US officials forcing United Arab Emirates (UAE) technology company G42 sell stakes in Chinese firms last year. Moreover, Chinese firms’ expanding role in the Middle East’s growing digital infrastructure also threatens to challenge the significant commercial role played by US technology companies in the region in areas such as cloud computing, artificial intelligence or building smart infrastructure. The result is likely to be growing US-China technology competition in Middle Eastern states.
US & China Race for Middle Eastern Investment
The Middle East is a commercially attractive area for Chinese technology companies seeking to expand their global operations. Geographically, it stands at the cross-roads of Europe, Africa and Asia, meaning entities with a presence there are easily able to reach other markets in neighbouring regions. Many parts of the region are also digitalizing rapidly, especially Gulf Arab states like Saudi Arabia, the UAE, Qatar or Bahrain. US companies took an early lead in these efforts, with Amazon Web Services launching a data centre in Bahrain as early as 2019. Today, US firm Oracle operates multiple cloud computing services across Saudi Arabia and the UAE, while Google, Microsoft and Amazon have all established footprints in various Gulf countries.
The US government is wary of Chinese technology companies’ entrance into Middle Eastern digital technology or infrastructure markets, especially ones belonging to US regional allies. Chinese companies have been aligning their proposals with regional governments’ economic and political priorities to deepen commercial ties. China’s growing success is one reason the White House is keen to rejuvenate political and commercial ties between the US and Middle Eastern states. However, Chinese companies may benefit from US pressure on regional governments to make economic concessions to Washington under US President Donald Trump’s America First policies. In April, President Trump posted on his Truth Social platform that Egypt should allow US commercial and military shipping to pass through the Suez Canal without being charged. He wrote: “American Ships, both Military and Commercial, should be allowed to travel, free of charge, through the Panama and Suez Canals! Those Canals would not exist without the United States of America.” Trump tasked US Secretary of State Marco Rubio to examine the issue in the same post.
Trump Visits US Gulf Allies, Pushes for Closer Links
Despite tensions between Gulf governments and the US over Gulf-China technology ties, the coming summer is likely to see more US efforts to cultivate its allies for economic and geopolitical reasons. President Trump will visit US allies in Saudi Arabia, the UAE and Qatar in May, where he hopes to pressure for more Middle Eastern investment, including in technology-related areas like artificial intelligence. The European Council on Foreign Relations said that Saudi Arabia has offered $600 billion in trade and investment with the US over the next four years. It also said the UAE had announced plans to invest $1.4 trillion over the next decade in the US. The focus of this investment would be in semiconductors and artificial intelligence infrastructure, likely in part to assuage US concerns about growing China-UAE economic and technology collaboration in recent years. The US president has pledged a “very, very big announcement” ahead of his visit, indicating his trip will see Gulf leaders line up to re-confirm their diplomatic and commercial ties with the US and the Trump administration itself.
Photo of Dubai by Aleksandar Pasaric: https://www.pexels.com/photo/concrete-high-rise-buildings-under-blue-sky-618079/
A major aim of Washington’s in 2025 will be to limit further Gulf States’ movement towards Beijing, especially in areas that trigger US national security concerns like technology. However, the expansion of Chinese technology companies in the Middle East marks a new movement in the region’s evolving technology landscape, independent of their links to China’s government. It signals Gulf countries and likely other regional governments want to reduce their dependence upon US technology companies and see China as offering a legitimate alternative. The Middle East meanwhile offers China and Chinese technology giants a region to invest in as Beijing seeks to cultivate alternative markets to Western countries, where firms like Huawei are closely monitored or simply barred from building or operating digital infrastructure.
China will not simply replace the US as Middle Eastern countries’ sole economic or technology partner in 2025, especially US allies like the Gulf States. However, Beijing and Chinese technology firms’ ambition to expand overseas into new regions like the Middle East will grant local governments more leverage in their bilateral relations with Washington. For example, the US administration recently said it was “very excited” to help Saudi Arabia develop a civil nuclear program, with US Energy Secretary Chris Wright saying there would be “meaningful developments” this year. Trump had previously said Riyadh would need to recognize Israel to achieve this step. Gulf States are likely to continue to invite Chinese companies to partner with local firms to counterbalance the region’s early dependence upon US technology firms too. As a result, US unease about Gulf-China ties and Chinese penetration of Middle Eastern digital networks will persist long after President Trump returns from his trip in May.
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