The previously stable political and economic landscape of the Middle East has been fundamentally reshaped by a war. As the situation deteriorates and persists, it is fueling a rise in crude oil and precious metal prices. Concurrently, the blockage of the Strait of Hormuz, a critical global energy transit point, has posed significant challenges to global supply chains and ocean freight logistics.
In recent years, the Middle East has become one of the most important strategic footholds for Chinese companies expanding globally. Driven by their own needs for economic diversification, traditional energy producers like Saudi Arabia, the UAE, and Qatar are seeing burgeoning development in sectors such as new energy vehicles, photovoltaics, infrastructure, and the digital economy—all areas where China possesses expertise and can provide services. Cooperation between China and the Middle East holds substantial potential and broad prospects.
In the short term, the conflict will impact business operations in the Middle East, leading to inevitable pressures on business development, supply chain disruptions, delays in project delivery and capacity building, and communication difficulties. However, in the long run, this will not alter the major trend of Chinese goods and services expanding into Belt and Road Initiative countries. Indeed, the war may even generate increased demand for post-war reconstruction and recovery.
As Ray Dalio, founder of Bridgewater Associates, stated, "The Middle East is becoming the Silicon Valley for capitalists. People are flocking in, capital is flowing in, talent is pouring in. It is a paradise in a turbulent world." The Middle East remains a crucial destination for Chinese companies' global expansion, though they must wait for the current smoke of conflict to clear and the dawn of peace to reappear.
Missiles flying, flights grounded, straits blocked—the Middle East, the world's powder keg, has once again ignited. The ripple effects of the war quickly spread to global trade and economics. COSCO Shipping announced a suspension of new bookings for routes related to the Strait of Hormuz; Mediterranean Shipping Company also halted global cargo bookings to the Middle East until further notice; Hapag-Lloyd declared a pause on transit through the Strait of Hormuz until the situation eases.
Global capital markets experienced significant turbulence immediately after, with US, South Korean, and Japanese stocks showing substantial volatility, while prices for commodities like crude oil, natural gas, and strategic metals surged rapidly.
The Gulf states, situated between Iran and Israel—particularly the oil-rich nations like Saudi Arabia, the UAE, Qatar, and Oman—are core sources of energy essential for economic development in China and globally. Through decades of oil exports, these countries have amassed enormous wealth. The combined GDP of the six Gulf Cooperation Council (GCC) nations reached $2.19 trillion in 2024, which, on its own, would rank ninth globally. More notably, the sovereign financial assets of GCC countries total $3.2 trillion, accounting for one-third of the world's total sovereign financial assets. Their projected real GDP growth rate for 2025 is between 3.2% and 4.4%, far exceeding that of developed economies like the US, Europe, and Japan. Disregarding wealth disparity, their per capita GDP and resident wealth scales rank among the highest globally.
However, due to their geographical location and political alignments, they have also been affected in this round of conflict. The cross-border e-commerce sector is among the first impacted. SF International stated on March 2 that it would suspend international express and e-commerce services for imports and exports to multiple Middle Eastern countries effective immediately. J&T Express maintained normal operations in Saudi Arabia, but adjusted its local operations in the UAE following government guidance to work from home. ZTO Intercepting express deliveries to sensitive areas.
With logistics hampered, platforms like TikTok Shop, AliExpress, Temu, Shein, and Amazon are inevitably affected, experiencing significant delays in delivery times. In recent years, the Middle East had been a "golden region" for global e-commerce, with Chinese companies increasing their investments. The escalation of this conflict means related companies expanding overseas are already facing growing pains.
Currently, many Gulf states are undergoing economic diversification transformations to reduce their reliance on oil resources, with emerging tech industries being a particularly valued sector. This region has also become a preferred landing zone for Chinese autonomous driving companies, with players like WeRide, Pony.ai, Baidu's Apollo Go, and DiDi all establishing a presence and deploying Robotaxi services. On March 1, Apollo Go suspended testing and commercial operations; WeRide also notified a suspension of its Robotaxi services in Dubai, UAE, though operations in Abu Dhabi and Riyadh remained normal; WeRide similarly halted its fleet operations in Dubai.
Projects requiring heavy investment and long cycles for implementation, such as infrastructure and photovoltaics, are also highly likely to stall in the short term. Companies involved in constructing large solar bases in places like Saudi Arabia and Oman may face the dilemma of sharply rising logistics costs and unreliable delivery schedules.
For Chinese companies already operating in the Middle East, the immediate priority is to quickly activate alternative logistics plans or negotiate transportation, payment, and other matters with clients to facilitate business pauses as much as possible, while also assessing possibilities for business alternatives.
This conflict serves as another profound lesson for all Chinese enterprises exploring globalization. While fully recognizing the opportunities in global markets, developing a sufficient understanding of globalization risks will become a required course for more Chinese entrepreneurs.
"Both heaven and hell." This might be the most fitting description of the Middle East's complex geopolitics. The region boasts a long history and brilliant civilizations, having nurtured various ancient cultures and three of the world's major religions. As a bridge connecting Asia, Africa, and Europe, the Middle East was a "transit point" on the ancient Silk Road. In modern times, its unique geographical position, abundant natural resources, and relatively distinct civilization have made it a significant pole in the world.
The Middle East possesses the world's richest oil and natural gas resources, controlling one-third of the global oil supply. This has shaped these countries' economic structures and endowed them with vast wealth reserves and substantial sovereign (and royal) capital accumulation. In contrast, the Middle East is the frontline of global geopolitical contests, where various contradictions intertwine. Wars have been almost constant for nearly a century, religious conflicts are deeply entrenched, and any escalation risks drawing all Middle Eastern nations into the vortex. This is a challenge almost all Middle Eastern countries must face, and it is difficult to resolve in the foreseeable future. Companies entering the Middle East must be prepared to bear this risk as long as they choose to operate there.
Another serious regional issue is the extreme fragmentation in economic development levels among Middle Eastern countries, presenting a situation of "the extremely rich and the extremely poor." From Turkey in the north to Yemen in the south, from Egypt in the west to Iran in the east, there are significant disparities in economic development levels and resident wealth. Israel and the GCC countries are very affluent, while nations like Iran, Yemen, and Syria suffer from economic hardship due to domestic political turmoil or Western sanctions, even descending into chaos, as seen in Syria where administrative paralysis prevents the release of economic data. Among the six GCC nations, Qatar's per capita GDP is as high as $71,583—152 times that of Yemen—ranking first in the region and among the top ten globally, followed by Israel, the UAE, Kuwait, and Saudi Arabia.
Oil-derived wealth has transformed the former Arab world and created massive capital. This has turned entities like the Abu Dhabi Investment Authority (ADIA), Saudi Arabia's Public Investment Fund (PIF), and the Kuwait Investment Authority (KIA) into golden keys for their countries' global investments. Today, the turmoil in the Middle East, exacerbated by war, is likely to further widen the gaps in economic diversification and imbalance among these nations.
This imbalance has also led Chinese companies expanding overseas to focus primarily on wealthy countries, largely neglecting poorer ones. This conflict warns overseas-expanding companies against over-concentrating their bets on a single market or country. For instance, Saudi Arabia has been less impacted in this conflict compared to the UAE, while long-neglected countries are revealing new opportunities. For example, Iraq, quiet in news reports for some time, has become a new hotspot for Chinese investment. Beyond the engineering demands from post-war reconstruction, sectors like energy, automobiles, and electronic products are flourishing. Private enterprises such as Geo-Jade Petroleum, United Energy Group, Zhongman Petroleum, and Anton Oilfield Services plan to increase production in Iraq to 500,000 barrels per day, doubling the current level. BYD is set to commence operations in Iraq by the end of 2025, having launched eight new models. This demonstrates that even in an extremely polarized Middle Eastern market, significant opportunities still exist.
"Missing a season of business, but not the entire market." This might be the most apt portrayal of the current situation for expansion into the Middle East. Just like fluctuations in capital markets, crisis and opportunity often coexist. While there are signs the current Middle East situation is moving towards a stalemate, hopes for recovery are also emerging. For instance, reports indicate Iran has agreed to allow passage through the Strait of Hormuz for vessels belonging to Chinese companies. On March 4, Emirates flight EK362 took off from Dubai and landed at Guangzhou Baiyun Airport six hours later—the first flight to mainland China since Dubai Airport resumed operations, with flights to Shanghai, Beijing, and Hong Kong gradually restarting. This marks the potential restoration of temporarily severed connections.
In 2025 alone, the UAE attracted nearly ten thousand millionaires with its low taxes, luxurious lifestyle, and open policies. Saudi Arabia's economic transformation is also drawing in a wave of tech nouveau riche and hot money. Saudi Arabia's ambitious "Vision 2030" economic and social reforms are in their tenth year, with promoting energy diversification and reducing reliance on oil and gas being key tasks. This presents unprecedented opportunities for Chinese photovoltaic expansion. In 2025, China's exports of battery modules to the Middle East reached $2.997 billion, accounting for 10.63% of total exports. Major players have already established a presence in the Middle East: GCL plans to build a polysilicon base in the UAE; TCL Zhonghuan has a 20GW project planned in Saudi Arabia; Jinko Solar is deploying a 10GW cell + 10GW module project; Trina Solar, Xinyi Glass, CSG Holding, and Flat Glass have also expanded overseas.
The current Middle East turmoil brings short-term pain to the photovoltaic sector, but in the long term, it undoubtedly reinforces the strategic value of clean energy like solar. While high oil prices may benefit oil-producing nations, distributed photovoltaic systems offer greater security compared to large-scale oil refining projects. Giant energy facilities can be paralyzed if attacked, whereas dispersed solar-plus-storage assets function as independent modules, significantly enhancing safety indices. Following the recent conflict, countries like Saudi Arabia and the UAE are likely to place greater emphasis on the safety and reliability of new energy projects. Chinese solar and storage companies, already possessing production advantages and bolstered by modular and AI technologies, will have even greater opportunities.
Looking back at past Middle East wars, regardless of the scale of conflict rhetoric, the fires of war eventually subside. The reconstruction of facilities like buildings, energy infrastructure, communications, and water conservancy becomes a rigid demand for post-war economic recovery. However, infrastructure and production are clearly not areas of expertise for most Middle Eastern countries. With growing populations and wealth, local housing demand is inherently increasing, and reconstruction implies an even larger market scale. In the future, as conflicts ease, facilities like hotels and housing in the Middle East will require repair or renewal. Chinese companies can fully prepare in advance and research the post-war construction and building materials market.
Overall, while oil-rich nations like Saudi Arabia and the UAE have been affected to varying degrees, if the conflict does not intensify further, they are not the core areas of this confrontation. Their fundamental market bases and payment capacities remain intact. Should the conflict deepen, leading to a full-blown escalation of Shia-Sunni tensions, a more chaotic Middle East would require a longer recovery time but would also foster an even larger reconstruction market scale. Regardless of the scenario, the narrative of the Middle East's transformation will continue, though the duration of the market's dormancy becomes more uncertain.
Through this experience, Chinese companies expanding globally will gain a fuller awareness of the dangers and opportunities present in international markets. As an Arabic proverb says, "Trust in God, but tie your camel."