Beyond the Single Actor: Why the Gulf Isn't Choosing Between the US and China

Hello everyone and welcome to Geopolitical Trends, where truth matters. In 2024, Gulf states have trade with China that passed $300 billion. That's more than the Gulf trade with the United States and the European Union combined. And yet American warships still sit in Bahrain as of today. American troops still rotate through Qatar. Saudi Arabia still has a strategic defense agreement with Washington that goes back decades. So which is it? Is the Gulf drifting towards Beijing, or is it staying anchored to Washington? I've spent years working regional security issues out of Washington watching exactly this kind of questions gets asked in a room most people will never see. And the honest answer is neither. The Gulf isn't choosing. It's running one of the most sophisticated hedges in modern geopolitics and understanding how it works tells you more about where global power is actually heading than almost anything else in the news cycle right now. So I'm going to divide this analysis for you into 6 sections, uh, just to make it easier for you to follow. So we start with Section 1. And for that, I'm going to be talking about the security ledger. Why is this important? Let's start with what the United States still provide today, because this side of the ledger hasn't moved much in decades. Washington has defense cooperation agreements with Bahrain, Jordan, Kuwait, Qatar, and the United Arab Emirates. All 5 of which also host US military bases. Saudi Arabia sits on the top of, of that with its own longstanding strategic defense partnership. This is the actual security architecture of the region, and no other power comes close to matching it as of today. Here is the part most coverage skips. This isn't nostalgia or inertia. It's because nobody else can currently do what Washington does here. Let's take, for example, China. China has never fought a war in the region or defending the Gulf States and never flown an air defense mission over the region— Riyadh, Qatar, Doha, what have you— and never once put its own military credibility on the line to protect a Gulf ally from some other, uh, neighboring. And this is not criticism, it's a structural fact, and it's the whole reason the security side of this triangle looks so different from the economics. Section 2: The Economic Ledger. Now this is the other side. China takes in roughly a third of its crude oil from GCC countries, which makes the Gulf central to China's energy security in a way few other regions in the world are. Layer on the top of that is the Belt and Road Initiative, BRI, which poured about $39 billion into the wider region in 2024 alone. More than double the year before. Saudi Arabia's Public Investment Fund has signed about $50 billion in deals with the Chinese companies. The United Arab Emirates has about $5 billion partnership with Chinese firms, specifically on artificial intelligence infrastructure and data centers. And here is the number that should reframe how you think about Gulf capital allocation entirely. In just the first half of this year, 2026, Gulf sovereign wealth funds deployed about $53.9 billion across 108 deals. Roughly half of that went to the US China and the UK were the next largest destinations. Read that carefully. The Gulf isn't abandoning American capital markets for Chinese ones. No, it is not. It is running both simultaneously at a scale in the same fiscal year without treating either relationship as exclusive. If the truth matters to you, hit like, subscribe, and tap that bell. No spin, no agenda, just the stories they don't want you to know. Don't watch from the sideline, be part of the movement. Your support keeps the truth alive. Thank you. Section 3: Not one Gulf, but several. Here is where I want to sort of complicate the picture for you, because most coverage treats the Gulf region as one actor with one strategy. It isn't. Oman, for example, has been the most vocal about wanting real distance from Washington. Its foreign minister published an op-ed this year calling for post-American security order that includes the Gulf monarchies, Iran, and Iraq altogether. Saudi Arabia has been quietly diversifying its security relationship too, signing a mutual defense pact with Pakistan and a defense cooperation memorandum with South Korea on top of everything else it still has with Washington. So think about it, compare that to Bahrain, Kuwait, and the United Arab Emirates, all of which have actually moved closer to the United States in the past 2 years, not further away. Of course, their argument— they're facing direct Iranian pressure with no other credible protector in sight. Moving deeper into Washington's orbit reads to them as the safer option, so they think, not the outdated one. Yet current event proved otherwise. And as I argued in my book, The Ambiguous Foreign Policy of the United States Towards the Muslim World, which I published a few years ago, and my argument still holds, is that all these dynamics suggest that the Middle East is embarking towards a new security environment. One marked by hostilities, distrust, and constant undermining. What role might the Allies play in this new security environment? So the honest framing isn't the Gulf is hedging between the United States and China. The right framing It's that individual Gulf states are running different versions of the same hedge calibrated to their own specific threat exposure. That's much more useful lens for understanding this region than the single actor narrative most commentary defaults to. Section 4: the complication nobody wants to say out loud because it triggered some sort of heated arguments. This year gave us a real stress test of a whole arrangement, and it exposed something important. When the United States And Israel attacked Iran. That put pressure on the Gulf energy infrastructure and the shipping routes. Gulf states looked to China for backing. What they got instead was trade, not protection. Beijing wants the oil, the ports, the artificial intelligence partnerships It has shown no appetite whatsoever for taking on the security responsibilities that would come with really actual— because it will actually replace Washington in this region. Beijing has no interest into that, and that's the load-bearing inside of this whole topic. The hedge isn't unstable because Gulf states are indecisive. No, no, it's stable precisely because the two relationships aren't interchangeable. China offers economic depth without security responsibility. The United States, on the other hand, offers security guarantees on the paper that no other power will currently match, or even wants to. As long as that asymmetry holds, and I see no evidence it's, it's sort of closing anytime soon, the triangle isn't a phase the Gulf is passing through. No, it's the actual equilibrium. Section 5: The AI Wildcard. Now, there is one place where this balance is getting genuinely harder to hold, and it's worth flagging because it is moving very fast. Washington's own US-China Economic and Security Review Commission has flagged AI partnership between the Chinese companies and the Gulf firms as, in its own word, a new vector of vulnerability. Export controls on the advanced semiconductors, first tightened back in 2023, as you remember, are aimed and were aimed directly at closing off Chinese access through exactly these Gulf partnerships. So the problem for Saudi Arabia, for example, and the United Arab Emirates is that the advanced chip they need to become genuine data centers hub, if ever, still come almost entirely from the American side and its allied firms. So both countries are visibly creating now a distance from China— I mean, United Arab Emirates, Saudi Arabia— on the chip and the infrastructure side, specifically to preserve access to the technology only Washington's ecosystem can currently provide, while keeping the Chinese capital and the algorithmic partnership are running everywhere else. So the way you look at this is the triangle trade playing out in real time, sector by sector. And the AI is the sector most likely to force a real choice first. Section 6: Why this matters beyond the headlines. Why it's in it for you. What do you need to know? Zoom out for a second, and this triangle is a preview of how middle powers are going to operate across the next decade, not just in the Gulf, by the way. Extract security from one great power, capital and infrastructure from another, formal alignment with neither. That's not indecision, it's genuinely rational strategy for any state sophisticated enough to run it. And the Gulf States is running it better than almost anyone. For organizations, investment companies, AI firms trying to operate in or around this region, the practical implication is direct. Reading only the security relationship or only the economic one will consistently miss where the real risk and the real opportunity actually sits. You have, and you must, read both ledgers at once, and you have and must read them country by country, not as region-wide. Getting my conclusion for you, because I want to keep this short and to the point: that kind of a dual reading, holding the security picture and the economic picture in view simultaneously, country by country rather than region-wide, is exactly the lens I bring to advisory and speaking work outside this channel. And of course, I draw on the years I spent framing exactly this kind of questions for U.S. officials directly. So if that's useful to your organization, there's more detail in the description. As always, remember Geopolitics impacts your daily life in more ways than one. My name is Dr. David Oualaalou. This is Geopolitical Trends, and I will see you in the next one. Bye-bye.