China’s Tech Outreach within the Center East and North Africa

The Middle East and North Africa region has become a hub for Chinese technological outreach. Over the years, Chinese entities have invested heavily in MENA’s railways, ports, and the energy sector. However, absent an internet connection, software, and cybersecurity, much of this architecture would not be able to operate effectively.

Enter Chinese Big Tech.

Huawei provides communication technology for Morocco’s national railway system (ONCF), has constructed a logistics center at Tangier Med Port, and was involved in building and launching the Marrakesh Safe City project. Roughly 7,000 kilometers away, the UAE’s Cybersecurity Council inked a Memorandum of Understanding with Huawei at the GISEC 2022 cybersecurity conference in Dubai to collaborate in strengthening local cyber strategies. Meanwhile, governments and telecom companies in eight MENA countries have been working with Huawei to trial, develop, and roll out 5G. In 2021, Huawei committed to pumping $15 million into the Middle East’s cloud computing market.

And that’s just one Chinese company out of dozens active in MENA.

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Unlike traditional Belt and Road Initiative (BRI) projects that are often led by state-owned enterprises (SOEs), this Digital Silk Road (DSR) is being spearheaded by private tech companies that are primarily profit-driven.

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Efforts by MENA nations to digitize and diversify their economies have made them attractive markets for these Chinese firms to expand their presence abroad. Draws for companies looking to enter the region include a relatively stable physical and digital infrastructure compared to other developing BRI regions, steadily growing internet penetration, and a digital economy projected to reach $400 billion by 2030.

All this creates the impression that China-MENA technology cooperation is simply being driven by market forces. However, the logic driving China’s engagement with the MENA region extends beyond the law of supply and demand and into the realm of geostrategy.

Ubiquitous Connectivity

In a 2016 speech, China’s top leader Xi Jinping said, “We must encourage and support China’s internet companies to go global … so as to achieve the principle of ‘wherever our national interests are, [our] informatization [technology] will also cover those areas.’” Through the DSR, China seeks to connect its civilian and military assets along the Belt and Road Initiative. The Pakistan & East Africa Connecting Europe fiber optic cable, or PEACE, exemplifies these efforts.

PEACE travels from the BRI’s flagship $62 billion China-Pakistan Economic Corridor to Djibouti –where the Chinese military established a naval base in 2017. From there, it traverses the Bab al Mandab strait, a critical maritime choke point, and moves toward China-Egypt Teda Suez Economic and Trade Cooperation Zone, where China has built a 7.34 sq km industrial estate. PEACE then travels through the Mediterranean and onward to Europe.

Infrastructure like PEACE ensures that Chinese port operators enjoy the high-speed, low-latency connectivity critical for maintaining the integrity of supply chains and other activities that promote China’s economic stability. Add to the mix that China, like other countries, relies on this vulnerable civilian infrastructure to coordinate military operations and Beijing’s impetus to establish control over these networks should come as no surprise.

Scholars like Zheng Anqi of the China Academy of Information and Communications Technology have directly linked military power with “information power.” According to Zheng, “The foundation of an information force is the network. Without the support of ubiquitous, broadband, and mobile networks, a powerful information army is just empty talk.”

The 1996 Taiwan strait missile crisis illuminated precisely how a missing link in the technology stack can disrupt military operations when the PLA lost track of two missiles it fired into the East China Sea. Chinese military officers attributed the failure to a disruption in the U.S.-controlled Global Positioning Satellite (GPS) technology. Since then, China has worked hard to develop its own BeiDou Navigation Satellite System and has looked to MENA for cooperation partners.

In 2017, the country launched the China-Arab States BeiDou Cooperation Forum. Shortly after the second forum concluded in Tunis in 2019, Saudi Arabia’s Ministry of Defense and the Equipment Development Commission of China signed an MoU to cooperate in the military use of BeiDou. Admittedly, the data gathered from these satellites have applications that extend far beyond the military domain. For example, BeiDou has been deployed commercially in fields as diverse as environmental monitoring, smart agriculture, disaster relief, and transportation in Saudi Arabia, Algeria, Lebanon, Oman, and Morocco.

Data as a Source of Power

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Much of the infrastructure along the Digital Silk Road is data-driven. Undersea cables, for instance, transmit more than 95 percent of global internet traffic and facilitate trillions of dollars in international financial transactions daily. Beyond the PEACE cable, Chinese companies like HMN tech (formerly Huawei Marine), China Telecom, and China Unicom have constructed, upgraded, or acquired ownership stakes in at least nine other cables traversing MENA.

Meanwhile, companies like Shenzhen-based Beijing Genomics Institute (BGI) have won hundreds of millions of dollars in contracts with U.S. allies like Israel, the United Arab Emirates, and Saudi Arabia. Thanks to these deals, BGI is now privy to reams of sensitive biological data.

China has come to view data as a critical commodity and source of power. Key policy documents like the Action Plan to Promote the Development of Big Data (2015) and the 13th Five-Year-Plan (2016) designate data as “a foundational strategic resource” alongside land, labor, and capital. The Action Plan calls for the country to “comprehensively advance the development and application of big data” and “accelerate the construction of a strong data country.” Beijing has since created legal frameworks for companies to provide data to the central government on national security grounds.

Analysts have since raised concerns that data collected along China’s Digital Silk Road may help China manipulate political perceptions, spread authoritarianism, and undermine democracy. The opaque public-private sector nexus and the ambiguity surrounding what constitutes ‘national security grounds’ have only reinforced these fears.

Countering US Containment

Against the backdrop of renewed great power competition, Beijing has come to view its technology cooperation with MENA as increasingly important in countering U.S. efforts to contain China’s rising power and influence. Since 2018, the United States has succeeded in persuading many firms and allied nations worldwide to “decouple” from Chinese technology and supply chains. That year, Chinese investment and infrastructure projects declined in every region – except the Middle East and North Africa.

The flow of capital is also slowly becoming more bi-directional: Oil-rich Gulf countries are now investing in China’s high-end manufacturing, advanced technology, and research and development. For example, when Jaka Robotics, a Chinese startup that makes collaborative robots, pulled in a Series D funding round of over $150 million in July 2022, a growth fund under Saudi Aramco Ventures was among the lead investors. Two months later, the Saudi Company for Artificial Intelligence (SCAI) announced it would inject around $206 million into a joint venture with China’s SenseTime to build a state-of-the-art AI lab and advance Saudi Arabia’s AI-tech ecosystem.

In its quest to dominate the strategic technologies of tomorrow, China has also turned to MENA nations to acquire digital innovations and know-how. Israel’s vibrant innovation ecosystem has become a prime target in this regard. Since 2002 the vast majority of Chinese investments and M&A deals in Israel have been in the tech sector – over $9 billion worth. Through these deals, Huawei acquired Israeli cybersecurity startup Hexatier for $42 million and IT company Toga Networks for over $100 million. Today, Toga employs over 350 leading experts and continues to serve as a Huawei R&D center.

With 9,547 active high-tech companies, Israel is undoubtedly the most enticing source of innovative technologies in the region. But when it comes to Chinese R&D partnerships, Beijing has looked beyond Israel’s “Silicon Wadi.” Huawei has set up OpenLabs in Cairo, Dubai, and Istanbul to develop innovations in cloud computing, big data, smart cities, and other core technologies. The facility in Turkey is Huawei’s largest overseas R&D operation and receives over $20 million annually in funding.

Beyond Huawei, 2018 saw Alibaba Cloud and the UAE’s Khalifa University of Science and Technology agree to launch a Joint Innovation Laboratory of Artificial Intelligence for Clean Energy. That same year the UAE’s International Center for Biosaline Agriculture in the United Arab Emirates partnered with BGI to establish an advanced genomics center.

China Wins Twice

On the face of it, these partnerships appear a win-win. However, an April 2022 study by political economy researcher Tin Hinane El Kadi suggests that this is not always the case. In her examination of Huawei’s localization efforts in Algeria and Egypt, El Kadi notes that Huawei often “engaged in training, manufacturing, and R&D in a way designed to maintain the firm’s technological edge” and “without engaging in meaningful capacity building.”

To qualify: not all Chinese technology systems are malignant. Moreover, there are immense economic and social benefits to cooperating with China in the digital realm, including enhanced industrial efficiency, job creation, better access to education, crime reduction, improved road safety, and more financial inclusion. Chinese companies offer cutting-edge technology at an affordable price, and China doesn’t condition cooperation on democratizing or liberalizing local institutions.

Regardless of these perceived benefits, pundits and policymakers would be naive to ignore the geostrategic dimensions of China’s technology outreach. In a May 2021 speech before hundreds of the nation’s elite scientists gathered in Beijing’s Great Hall of the People, Xi Jinping himself declared: “Technological innovation has become the main battlefield of the international strategic game.” MENA countries are part of this game, whether they acknowledge it or not.

As MENA nations become ever more reliant on Chinese technology systems, Beijing is accruing leverage and influence. These emerging dependencies serve as a deterrence mechanism in that any governments or companies that dare offend China would risk being cut off from its massive market and the critical technologies that enable daily life. From Beijing’s perspective, this framework would ideally contribute to shaping a world more accommodating to China and its interests.

Artmotion China

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