Exploring New Data on Sino-Mediterranean Relations: Trade, Energy, Security and Contracts

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Leonardo Bruni

An overview and analysis of ChinaMed's updated dataset on China's commercial, security and trade influence across the Middle East, North Africa and Southern Europe.

The ChinaMed Project is happy to announce the recent update of our database, ChinaMed Data, with the latest figures on China’s trade, energy and security relations with the countries of the wider Mediterranean, along with statistics on contracts awarded to Chinese firms and on Chinese contract workers. In this edition of the ChinaMed Observer, we will explore our updated dataset and analyze emerging trends.

The Wider Mediterranean Region: Pivoting to the Middle East

In a previous edition of the ChinaMed Observer discussing Chinese foreign direct investment, we noted that the stock of Chinese FDI in the wider Mediterranean had continued to grow, albeit at a notably slower pace. Moreover, this growth occurred mostly in the Middle East, as Chinese investments appear to have stagnated or even declined across North Africa and Southern Europe. This shift toward the Middle East can be partly attributed to China’s flourishing partnerships with the Arab states of the Gulf. With their abundant energy resources, political stability, and receptive stance toward China and Chinese businesses, these countries have emerged as Beijing’s preferred economic partners in the wider Mediterranean region (for further insights into China-Gulf relations, check out our recent report). Conversely, Beijing is seemingly pulling back from much of North Africa and the Horn of Africa, regions increasingly beset by conflicts and instability, while the European Union is becoming less receptive toward China, both politically and economically.

ChinaMed Data’s updated figures on Sino-Mediterranean trade relations seem to support this trend. The value of Chinese exports to the entire wider Mediterranean region has seen minimal growth, going from US$412.6 billion in 2022 to US$413 billion in 2023. This increase was mostly due to Chinese exports to the Middle East, which have increased from US$210 billion to US$217 billion. On the other hand, the value of Chinese exports to Southern Europe has declined from US$176 billion to US$163 billion.

Source: ITC Trade Map

While the value of Chinese imports from both the Middle East and the wider Mediterranean region as a whole have decreased significantly in 2023, this can likely be attributed to a drop in oil prices, which previously reached record highs following Russia’s invasion of Ukraine in February 2022. The impact of energy prices can also be observed in the decrease in the value of energy exports to China from the region.

We must acknowledge that our data on Chinese energy imports from the region is incomplete, as it relies on official figures. While our data indicates zero Chinese energy imports from Iran since 2019, in reality, it is almost certain that Iranian oil continues to reach China. However, both Beijing and Tehran likely avoid reporting these transactions to mitigate the risk of these flows being hit by American sanctions.

Source: ITC Trade Map
Source: ITC Trade Map

Turning now to contracts and contract workers, our figures indicate a notable increase in the value of contracts awarded to Chinese firms in the Middle East (from US$26.3 billion in 2021 to US$34.5 billion in 2022) and North Africa (from US$5.2 billion in 2021 to US$11.2 billion in 2022). This is a significant turnaround, as the value of contracts awarded to Chinese firms in the region had been declining since 2016.

Regarding this data, we make two clarifications. First, there is no way to verify whether and when these projects were actually completed. Second, it is very likely that Chinese financing only played a partial role in the expansion of Chinese contractors overseas. This is especially the case since 2017 when Chinese development and infrastructure financing under the umbrella of the Belt and Road Initiative began to substantially decline.

Source: ChinaMed Data

Meanwhile, the number of Chinese contract workers in the wider Mediterranean has declined in 2022, continuing a downward trend that began in 2016 and rapidly accelerated in the wake of the COVID-19 pandemic. This trend is unlikely to change, given the widespread unpopularity of employing Chinese workers instead of local labor in most host countries and China’s ongoing shift away from financing and constructing labor-intensive projects and toward “small and beautiful” sustainable and tech-intensive projects.

Source: ChinaMed Data

The Middle East: The Centrality of the Gulf

Zooming in on the Middle East, we can note interesting trends beyond the aforementioned fall in the value of exports to China caused by the drop in oil prices. For instance, despite an overall increase in Chinese exports to the region in 2023, not all Middle Eastern states spent more on importing from the People’s Republic. Bahrain, Egypt, Israel, Jordan, Lebanon, Oman, Qatar, Syria, and Yemen all experienced a decrease in the value of imports from China. The region's total increase in imports from China can be largely attributed to three countries: the United Arab Emirates (from US$53.9 billion in 2022 to US$55.8 billion in 2023), Türkiye (from US$34 billion to US$38.9 billion), and Saudi Arabia (from US$38 billion to US$43 billion).

Source: ITC Trade Map

This surge in Chinese exports is an issue of mounting concern in Türkiye, particularly due to the country’s exploding trade deficit with China, which soared to a record high of US$34.4 billion in 2023.[1] However, despite the collapse in oil prices, massive energy exports to China have enabled both the UAE and Saudi Arabia to maintain a positive trade balance with Beijing.

Remarkably, China has even become Riyadh’s first export and import partner in 2022. Besides Yemen, the only other Middle Eastern country to count China as its first export and import partner is Iran. Riyadh and Tehran’s robust trade relationship with China might explain their willingness to get Beijing to broker their diplomatic reconciliation in March 2023.

Saudi Arabia and the United Arab Emirates’ developing economic ties with China are further bolstered by the substantial value of contracts they awarded to Chinese companies in 2022, amounting to US$9.7 billion and US$4.8 billion, respectively. However, Iraq surpassed both by awarding Chinese firms contracts valued at US$10.5 billion in the same year. This surge is likely attributable to the 2019 China-Iraq “oil-for-reconstruction” deal. Under the yet to be fully undisclosed terms of this agreement, Chinese companies, in exchange for Iraqi oil, are contributing to Iraqi reconstruction and infrastructure projects, including the construction of one thousand schools.

Source: ChinaMed Data

Despite the significant value of contracts awarded to Chinese companies in Iraq, the number of Chinese contract workers in the country declined from 13,025 in 2021 to 9,831 in 2022. This drop could stem from the mounting concerns within Iraq on the need for Iraqi workers to constitute a substantial portion of the workforce in new energy projects. However, this trend can also be linked to broader regional dynamics, as the Middle East as a whole has witnessed a decline in the total number of Chinese contract workers, falling from 81,741 in 2018 to 53,034 in 2022. While these figures may have been influenced by China’s harsh zero-COVID policy, which was only lifted in early 2023, this downward trend already predates the pandemic.

Source: ChinaMed Data

There are two notable exceptions to this region-wide decline: Egypt, which has experienced an increase from hosting 1,197 Chinese contract workers in 2018 to 7,358 in 2022, and Israel, which has seen a massive surge from 385 Chinese contract workers in 2016 to 13,538 in 2022, the highest amount in the entire region.

The surge in Egypt can be attributed to Chinese companies’ continued interest in contributing to Egyptian infrastructure projects, particularly Egypt’s New Administrative Capital. Notably, the state-owned China State Construction Engineering Corp. signed a deal reportedly worth US$15 billion to fund the construction of various buildings in this new city, including Iconic Tower, slated to become the tallest building in Africa. Additionally, the presence of Chinese firms in Egypt is probably connected to the influx of Chinese investments into ports within the very strategically located Suez Canal Economic Zone.

In the case of Israel, this new wave of Chinese workers began in 2017 following a bilateral agreement between Tel Aviv and Beijing easing the entry of Chinese construction workers (with Beijing’s caveat that these workers do not contribute to the construction of illegal Israeli settlements in the occupied West Bank). Concurrently, Chinese firms secured contracts for significant Israeli infrastructure projects, including Tel Aviv’s first light rail line.

However, 2022 might mark a turning point. Pressure from the US has pushed Tel Aviv to institute new measures to limit Chinese involvement in strategic Israeli infrastructure projects. This move has allegedly contributed to Chinese firms losing bids to construct the rest of Tel Aviv’s light rail network. Moreover, the October 7 attack, whose hundreds of victims include three Chinese citizens, has prompted thousands of Chinese nationals to flee Israel. This exodus, coupled with the barring of Palestinians from the occupied territories from entering Israel and the mobilization of thousands of Israeli men, has brought the Israeli construction sector to a standstill.

Besides the ongoing violence in the Gaza Strip, Israeli animosity toward Beijing for its pro-Palestinian stance (see our previous ChinaMed Observer on this issue) has cast uncertainty on the potential return of Chinese workers and companies. This shift in sentiment has likely pushed Tel Aviv to prioritize importing labor from other non-Muslim majority Asian countries like India, Sri Lanka, Thailand and the Philippines.

Before leaving the Middle East to delve into data from the rest of the wider Mediterranean region, it is crucial to highlight that China’s dependence on Middle Eastern energy declined in 2022, the first drop since 2019. This shift is likely due to Chinese imports of discounted Russian oil. Moreover, it is also noteworthy that the People’s Liberation Army continues to contribute over 400 soldiers to United Nations Interim Force in Lebanon (UNIFIL). This presence of Chinese peacekeepers in Southern Lebanon is important to bear in mind amid escalating tensions between the Israeli Defense Forces and Hezbollah.

Source: ITC Trade Map
Source: UN Peacekeeping

North Africa and the Horn of Africa: The Significance of Stability

As depicted in the initial graphs illustrating China’s trade ties across the wider Mediterranean, Chinese imports from North Africa and the Horn of Africa continued to decline in 2023, while Chinese exports to the region surged. This trend of decreasing Chinese imports can be partly attributed to the instability in the energy-rich countries of the region, namely Sudan, South Sudan, and Libya, which were previously among the most significant import partners for China in the region. The only seemingly stable trade partner for China appears to be Mauritania, which exported US$1.2 billion worth of exports to China in 2022. This country is not only an important supplier of iron and copper ore for Beijing, but also stands as a beacon of stability in the increasing volatile Sahel. With China and Mauritania having recently signed a new cooperation agreement in July 2023, this is a relationship to keep track of.

Source: ITC Trade Map

When instead examining Chinese exports to North Africa and the Horn, two countries stand out: Morocco (US$6.5 billion) and Algeria (US$9.5 billion). The emergence of these two Maghrebi states as growing markets for Chinese goods has become an issue of increasing concern for many Southern European states, particularly France.

While Paris remains a more important import partner for Rabat, Franco-Moroccan relations are becoming increasingly fraught. As we explored in a previous ChinaMed Observer, Morocco is attempting to hedge between East and West by enhancing its economic engagement with China, particularly in the electric vehicle, battery, and renewable energy sectors. Indeed, recently, Chinese firms have been chosen over European ones for important Moroccan infrastructure projects. A relevant example is Morocco’s second high-speed rail line, whose construction contract was awarded to China Railway Construction Corp. instead of Spanish and German firms. France’s SNCF, which constructed Morocco’s first high-speed line, did not even present a bid.

Source: ITC Trade Map

On contracts, the era of extensive engagement by Chinese firms in the region is clearly over. Nevertheless, Chinese companies experienced a rebound in 2022 with regard to Algeria and Ethiopia, winning an amount of contracts valued at around US$4 billion and US$3 billion, respectively (the trends we discussed regarding Morocco will likely be reflected in next year’s data). These two countries are also home to the most Chinese contract workers in North Africa and the Horn, with Algeria having hosted 7,462 workers and Ethiopia 4,511 in 2022.

Source: ChinaMed Data

It is interesting to note that despite the declining stock of Chinese FDI in these two countries, Algiers and Addis Ababa are seemingly prioritizing Chinese firms. The reasons behind this commitment could be many - from Chinese companies offering the most competitive bids, to the governments of these states desiring strong ties with China, or perhaps limited alternatives to Chinese firms. However, it will be intriguing to observe whether Italy’s efforts, especially under the Meloni government's Mattei Plan aimed at bolstering economic and political relations with Algeria and Ethiopia and offering an alternative to China, will influence future data on Chinese contracts.

Source: ChinaMed Data

We conclude our analysis of North Africa with a focus on China’s security presence. On December 23, 2023, the tenth and final batch of around 400 Chinese peacekeeping troops that participated in the United Nations Multidimensional Integrated Stabilization Mission in Mali (MINUSMA) returned to China. The end of MINUSMA was requested by the ruling Malian junta, which already expelled the French-led military mission Operation Barkhane back in 2022. Despite the end of this decade-long Chinese military presence, analysts suggest that China's influence in Mali will persist, pivoting more toward economic engagement. Indeed, also in December 2023, China hosted a delegation that included the Malian ministers of finance, commerce, and foreign affairs, and promised Bamako that it would deepen cooperation. It remains to be seen whether future FDI data will reflect a renewed commitment from China or if the ongoing instability in the country will scare off Chinese firms and investors.

Source: UN Peacekeeping

Southern Europe and Western Balkans: The De-Risking Divide

When exploring the data on Chinese contracts in Southern Europe, a noticeable divergence emerges between Balkan nations and larger EU member states like France, Italy, and Spain in their approaches regarding economic engagement with China.

Source: ChinaMed Data
Source: ChinaMed Data

Among all the states considered, Serbia stands out. In 2022, Belgrade awarded contracts worth over US$4.6 billion to Chinese companies, marking a decrease from the previous year's value of US$6.5 billion, yet still surpassing the combined total of the next three Southern European countries: Spain (US$1.6 billion), France (US$1.3 billion), and Bosnia and Herzegovina (US$1 billion). Moreover, the number of Chinese contract workers in Serbia increased from 6,618 in 2021 to 7,791 in 2022, which is more than the number of Chinese contracts workers in the rest of Southern Europe combined.

These trends not only reflect the projects Serbia has entrusted to Chinese firms and contract workers, notably the Budapest–Belgrade high-speed railway, whose Belgrade-Novi Sad section commenced operations in March 2022, but also underscore the deepening economic and political ties between the two states. President Aleksandar Vučić's Serbia has not been shy in declaring how under his leadership, Belgrade has fostered an “ironclad friendship” with China, exemplified by President Xi Jinping’s stop in Belgrade during his recent trip through Europe (see our recent ChinaMed Observer on how the Serbian media analyzed this visit and Chinese investments in Serbia).

While one can attribute these outlier figures from Serbia to its non-membership in the EU, it is important to note that other countries in the Balkans have also ramped up their engagement with Chinese firms, irrespective of EU affiliation. Between 2021 and 2022, Greece, Croatia, Bosnia and Herzegovina, and North Macedonia all awarded significantly more contracts to Chinese companies in terms of value. Notably, while Greece (US$93 million to US$409 million) and Croatia (US$19 million to US$109 million) are EU member states, Bosnia and Herzegovina (US$594 million to US$999 million) and North Macedonia (US$40 million to US$264 million) are not. These increases are significant considering the size of the populations and economies of these countries.

Although the absolute numbers are low, it is interesting to notice that, after Serbia, the three Southern European countries with the highest number of Chinese contract workers in 2022 are all states in the Balkan Peninsula: Croatia with 629, Greece with 537, and Albania with 439.

These trends may reflect China’s continued economic presence in this region due to BRI projects like the Budapest–Belgrade–Skopje–Athens railway, which is supposed to connect the Chinese-operated Port of Piraeus with Central Europe. However, they may also indicate the openness of these countries to Chinese economic engagement, relatively to the major European economies.

It is to be seen whether future data will reflect the EU’s vision to "de-risk" from China, first announced by European Commission President Ursula von der Leyen in March 2023. This approach arguing for EU countries to reassess their economic dependence on China could potentially impact the stable, but stagnant engagement between major Southern European economies and Chinese firms. Moreover, it could create divergence regarding China between EU member and non-member Balkan countries. The Balkans are an area of interest for Brussels as in March 2024, the Commission launched an investigation into a deal involving the Chinese company CRRC Qingdao Sifang Locomotive Co. Ltd. regarding supplying and maintaining twenty electric trains in Bulgaria, as this agreement is accused of violating the EU’s newly passed Foreign Subsidies Regulation.

If you are interested in delving deeper into these figures and exploring additional data on China's trade, energy and security relations with the countries in the wider Mediterranean region, check out ChinaMed Data for more.

Leonardo BRUNI is Research Fellow at the ChinaMed Project. He is also a Research Fellow at the University of Milan and a graduate of the Sciences Po-Peking University Dual Master’s Degree in International Relations. His research interests include China-EU relations and international development cooperation.

This work is licensed under the Creative Commons Attribution-Non Commercial-No Derivatives 4.0 International License. To view a copy of this license, visit http://creativecommons.org/licenses/by-nc-nd/4.0/ or send a letter to Creative Commons, PO Box 1866, Mountain View, CA 94042, USA.

[1] For more on Sino-Turkish economic relations, see the summary of the recent ChinaMed-sponsored webinar by Prof. Kadir Temiz (National Intelligence Academy of Türkiye), “Evolving Dynamics in China-Türkiye Relations: Prospects and Challenges”, and our previous ChinaMed Observer on “Sino-Turkish Competition and Cooperation in the EV Sector”.

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Published with the support of the Ministry of Foreign Affairs and International Cooperation pursuant to art. 23-bis of Presidential Decree 18/1967. The views expressed in this publication are solely those of the authors and do not necessarily reflect the views of the Ministry of Foreign Affairs and International Cooperation.
Published with the support of the Ministry of Foreign Affairs and International Cooperation pursuant to art. 23-bis of Presidential Decree 18/1967. The views expressed in this publication are solely those of the authors and do not necessarily reflect the views of the Ministry of Foreign Affairs and International Cooperation.
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