Middle East Offers New Opportunities for China’s Belt and Road Investors, Analyst Says

05 Jun 2023

The Middle East is likely to become the next hot spot along the Belt and Road, as countries in the region offer a wealth of infrastructure investment opportunities for Chinese companies, a senior analyst said.

The demand for infrastructure investment from 64 members of the China-led initiative is booming and could reach as much as $2 trillion every year, said Robin Xu, deputy head of China research at UBS Securities Co. Ltd.

Middle Eastern nations are increasingly standing out as their public finances are in better shape, Xu said at a UBS-hosted media briefing on Tuesday. Many of them are able to leverage their crude oil and natural gas reserves to fund infrastructure construction.

The opportunities for cooperation between China and the Middle East are also stemming from the region’s willingness to wean itself off its dependence on oil, and China’s need for alternative export markets as relations with the U.S. continue to sour, according to a UBS research report released last month.

Middle Eastern countries’ interest in developing infrastructure, including internet-related projects, and their capability to invest in China’s capital markets are all drivers for future collaboration, Xu said.

The Belt and Road Initiative was established by China to strengthen ties with other countries through trade and infrastructure investment. It includes more than 100 member countries from regions including Africa, Central Asia and Southeast Asia.

The UBS report estimated that 64 countries geographically along the Belt and Road, excluding China, have potential infrastructure investment needs of more than $1 trillion per year. This figure could double if the countries catch up with China’s pace of infrastructure spending.

Looking forward, Xu said that China may become more mindful of the returns on its infrastructure investment in Belt and Road countries with weak public finances, while increasing spending on countries with more sustainable fiscal resources.