Dr. Manochehr Dorraj's blog

China is the number one producer of and investor in renewable energy globally. Illustrating this, it has over 500 solar panel manufacturing companies, including the world’s top three solar panel producers. Its capabilities have allowed it to take a leading role in renewable energy investment in the Middle East and North Africa (MENA). The latter’s interest in renewables seems surprising given that MENA countries are primarily known for their massive oil and gas reserves and reliance on fossil fuel as a major source of domestic energy and export earnings.

Many political observers predicted that in the aftermath of the Iran nuclear deal and the subsequent lifting of a multitude of economic sanctions imposed on the country we would witness a diminishment of bilateral links between China and Iran, especially on the economic front.

“The Asianization” of the Middle East, fostered by expanding trade, energy, immigration, military and political ties between Asia—most notably, China, Japan, South Korea, India and the region—foretells a political realignment in which the Asian powers are filling the vacuum created by diminishing US and European influence. The most significant indicator of this trend is China’s expanding energy-related trade and investment links with the region, complemented by substantial increases in bilateral trade, military and political ties.

China’s policy banks, particularly the China Development Bank (CDB) and China Exim Bank (EXIM), are playing an increasingly active role in its energy acquisition strategy. The two banks finance the overseas investments of China’s National Oil Companies (NOCs) and the development of host country infrastructure to deliver oil and gas to China, and further provide credit to foreign energy companies in return for long-term energy contracts.