Middle East moves closer to China with comms deal

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• Unnamed wealth fund invests $150m
• Guodong Group to expand base stations
• China-GCC talks at ‘critical’ stage

China’s Guodong Network Communication Group has raised $150 million from a Middle Eastern sovereign wealth fund in a further sign of strengthening relations between Beijing and the region.

The proceeds will support the expansion of Guodong’s communication base stations, Reuters reported, citing a statement from Guodong’s deputy general manager Ji Xiaoling.

The statement did not name the sovereign wealth fund.

• What China’s economic challenges mean for the Gulf
• New Middle East members expand Brics reach
• Saudi Arabia first choice for China’s BRI investment

Last week, four Middle Eastern nations were admitted into the Brics bloc of developing countries – made up of Brazil, Russia, India, China and South Africa – bridging regional political divides and signalling increased Chinese influence around the world.

The decision to add another six members – Saudi Arabia, Iran, the UAE and Egypt, as well as Argentina and Ethiopia – was described as a political victory for China in its bid to bolster the “Global South” against perceptions of US domination. 

Founded in 1997, Guodong, a communications infrastructure and service provider, has 40,000 base stations and provides data centres to support cloud computing in China.

The company has received funds from investors including Morgan Stanley, the investment arms of top Chinese investment banks CICC and CITIC and a sovereign wealth fund from Abu Dhabi, according to its website.

The China-GCC free trade agreement negotiations have entered the “final and critical stage”, Zhang Yiming, ambassador extraordinary and plenipotentiary to the UAE, said in November last year.

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The two sides have agreed on most issues and are putting the final touches on the agreement, he told the UAE state-owned news agency Wam.

China’s outward foreign direct investment (FDI) has increased by 20 percent each year over the past decade.

The Arab world accounts for about $23 billion of the total, according to Saudi Arabia’s investment minister Khalid Al Falih.

“There is, however, potential to increase investment flows in the other direction, to take advantage of China’s large and prosperous market,” he told the Arab-China Business Conference in Riyadh in June, adding that FDI volume in China in 2021 stood at some $3.6 trillion.

China is the biggest export market for oil and gas from the Gulf states.

Saudi Arabia remains one of China’s strongest global trade partners, leading Chinese engagement in the construction sector during the first half of 2023, according to the latest Belt and Road Initiative investment report issued by the Green Finance & Development Center at Fudan University in Shanghai. 

Chinese president Xi Jinping launched the Belt and Road Initiative in October 2013 as a global infrastructure development strategy to invest in more than 150 countries and international organisations across Asia, Africa and Latin America. 

In the Middle East, China established full strategic partnerships with Algeria, Egypt, Saudi Arabia, the UAE and Iran.

Engagement has since expanded well beyond that to include heavy investment in other countries such as Iraq, as well as diplomatic mediation including the rapprochement between Iran and Saudi Arabia earlier this year.