China-GCC This Week
This week was dominated by final exams for me, but there were some interesting China-GCC stories that I was watching.
One that Bloomberg reported and hasn’t drawn as much notice as I’d have expected was this story: Saudi Arabia’s $100 Billion AI Fund Will Divest China If US Asks. The money quote:
“So far the requests have been to keep manufacturing and supply chains completely separate, but if the partnerships with China would become a problem for the US, we will divest,” said Amit Midha, the chief executive officer of Alat, an investment firm backed by $100 billion in capital from the Public Investment Fund. “We are seeking trusted, secure partnerships in the US,” Midha said in an interview with Bloomberg News on the sidelines of the Milken Institute Global Conference in California. “The US is the number one partner for us and the number one market for AI, chips and semiconductor industry.”
This is clearly tied to the ongoing negotiations of the US-Saudi security deal that would link Saudi-Israeli normalization with a deeper US security commitment, a civil nuclear program in the Kingdom, and presumably a commitment from Riyadh to stop working with China on AI.
This follows the same pattern of G42 in the UAE. After years of deepening AI ties between China and the UAE - see this deep dive from The Wire China’s Katrina Northrop for a great overview - G42 divested from Chinese tech last year and has enhanced its partnership with Microsoft.
I expect the same for Saudi, and likely other regional countries with defense/facilities cooperation agreements with the US. I’ll write more about this in a standalone post soon.
I don’t think this means the end of Chinese tech in the Gulf - it does reflect a much trickier dynamic though. What I think we can expect is more cooperation in non-critical tech that supports regional governments’ development agendas without bumping up against US interests. This story about Chinese electric vertical takeoff and landing (eVTOL) aircrafts trials this week in the UAE is a illustrative example. Two different eVTOLs were tested, one in Al Ain, and one in Abu Dhabi with passengers.
Other news: Ambassador Chang Hua arrived in Riyadh on Friday as the new ambassador to the Kingdom. His previous posting was to Iran; he was there for the Saudi-Iran rapprochement, so this is a smart move. He’s also served as ambassador to the UAE and Yemen.
Chinese diplomacy has definitely improved in the region in the past few years. I heard the ambassador to the UAE speak at the China-Gulf forum at NYUAD last month and was genuinely impressed - great public speaker, great English, went off-script several times to give insightful asides, and impressive messaging.
The other news this week in China-GCC was a sizable delegation from Oman to Beijing to drum up business for OPAZ, or the Public Authority for Special Economic Zones and Free Zones. Way back in 2017 there was a lot of speculation about Chinese investment into Oman’s Duqm Port project, which has since been folded into OPAZ. There were MoUs of nearly $11 billion, much of which was earmarked for the China-Oman Industrial Park, and the depth of the economic relationship was magnified when China provided Oman with a $3.55 billion loan to cover its federal budget for the year. Since then, however, there hasn’t been much movement, in Duqm or elsewhere in the Sultanate. A good reminder to look at all those MoUs with a critical eye.