China is looking to take on a bigger role in bringing water-related solutions to the Middle East. Among its latest deals is a three-year revolving credit facility agreement signed at the end of June between Saudi utility company ACWA Power and the China Construction Bank. 

The agreement will allow the company to access a $100 million credit facility that will support initiatives to expand its water generation and power portfolio. Chinese banks and financiers have contributed a total of $10 billion to ACWA since 2009.

This isn’t the first time that Chinese banks or the Chinese state has gotten involved with water projects in Saudi Arabia and elsewhere in the Middle East. In 2021, for example, Power China signed an engineering, procurement and construction contract to build a desalination project that when completed, will help meet growing water demands in Riyadh. Power China has pursued similar projects in Oman and Abu Dhabi.

Beijing’s increasing role in water politics

Last year, China’s Ningxia University and Egypt’s Ain Shams University jointly established a water conservation laboratory in Cairo to improve the North African country’s irrigation methods. Chinese academics also partnered with a research team in the UAE to “turn sand into soil” in the Abu Dhabi desert.

Such activities are a sign of the expanding role China is playing in the Middle East’s water politics. The Middle East and North Africa is the most water-scarce region in the world and unsustainable agricultural practices, rapid population growth, climate change and poor or mismanaged water infrastructure are making the situation even more precarious. It is in this context that Beijing has emerged as one of MENA’s most important financial backers for water infrastructure.

However, China has committed funds to several controversial projects that have raised fears the Asian country is making the prospect of viable water-sharing agreements in the Middle East less and less likely.

For example, in July, Iran opened the controversial Chamshir Dam in the southern province of Bushehr. The construction of the dam had been widely criticized by environmental groups, not least because of the impact the project would have on Khuzestan province in the country’s southwest, which is now cut off from the Zohreh River. Nonetheless, a $244 million loan from China ensured the project went ahead.

Ashok Swain, UNESCO chair of international water cooperation, believes the episode is symbolic of China’s approach to water management issues in the Middle East and globally. He told Al-Monitor that China is motivated to offer loans of this kind for political as well as financial reasons. Beijing, he said, wants to promote its idea of a new international order based not on the sharing of joint resources, but on brute force.

“This is part of the Belt and Road Initiative. It’s partly economic but, through its BRI activities, China reaches into different parts of the world and uses it to further their political and geopolitical ambitions,” he said.

Chinese-financed water projects are in some cases seen as attractive to MENA countries because the terms are less stringent than those on which international organizations such as the UN would insist. China isn’t a signatory to the UN Water Convention — nor is any Middle Eastern country apart from Iraq — and doesn’t accept the premise that transboundary resources should be jointly managed or shared.

For example, the World Bank refused to finance the construction of the controversial Grand Ethiopian Renaissance Dam because there was no agreement in place with Egypt. The dam is located on the main tributary of the River Nile and is therefore seen by Egypt as a threat to its water security. Tensions between Cairo and Addis Ababa have at times escalated to the extent that war between the two countries has seemed possible. However, China offered strong levels of financial backing to Ethiopia, which ensured that the construction of the dam went ahead.

In 2013, China offered Ethiopia $1.2 billion in loans to build transmission lines between the dam and local towns. Major Chinese companies including the state-owned China International Water and Electricity Corporation have been involved in the construction itself. In 2019, Ethiopian Electric Power paid China’s Gezhouba Group $40.1 million to help finalize the dam.

Swain suggested that in the case of the dam, “China has been trying to play a balancing act because it also has a number of economic interests in Egypt,” but supports the Ethiopian project because it’s keen to assert the rights of upstream countries in defiance of international norms.

He pointed out more widely that “for at least the last 10 years, China has been spending a lot of money building dams and they don’t insist on having water-sharing agreements in place.” In April last year, Power China agreed to build four dams in Iraqi Kurdistan without even informing the central government in Baghdad.

What explains this approach to water security issues in the Middle East? Edward Howell, a lecturer in Chinese politics at the University of Oxford, believes that China’s strategies in this field are part of a wider effort to remold international governance structures. Offering financial and political support to projects that defy what Western institutions deem the the rules-based international order could be part of an attempt to reduce the influence of such bodies.

“China’s economic investments in the Middle East cannot be understood without considering its geopolitical aims within the wider international order,” Howell told Al-Monitor. “Under Xi Jinping, China has actively sought to create a parallel order to rival both the US’ post-war hegemonic leadership as well as international forums such as the G7.”

Water sovereignty vision

China also has self-interested reasons to promote this vision of water sovereignty. Swain called China an “upstream country,” meaning that it’s able to use or divert water resources before they reach countries farther away from the source. China has built several dams within its own borders that divert water away from neighboring countries. For example, since 2021 China has been working on a new dam on the Mabja Zangbo River that could be used to reduce water flows to both India and Nepal. 

Swain noted, “China doesn’t really believe in having upstream countries being subject to restrictions. China has been very open about that, and when there have been votes at UN water conventions, they have openly voted against restrictions.”

Howell pointed out that there is a potential contradiction in China’s Middle Eastern foreign policy. At the same time as Beijing is taking an assertive approach to water issues, it is also trying to position itself as a broker of peace in the Middle East. This perceived role was on full display when China brokered a peace deal between Iran and Saudi Arabia earlier this year. “Beijing will seek to go beyond simply having an economic role in the region. It will seek to portray its involvement as beneficial for peace and stability in the wider region,” Howell said.

Could China’s muscular approach to water issues jeopardize these ambitions? Despite expressing their interest in playing the role of peace broker in the Middle East, China’s self-interested determination to assert the rights of upstream countries to use water resources as they see fit could help inflame tensions over the region’s diminishing water supplies.