Author: Dr Shaul Shay 
The Institute for National and International Security

DOI: https://doi.org/10.37458/ssj.4.2.4

Research Paper
Received: September 13, 2023 
Accepted: November 24, 2023            

Abstract: As the Red Sea and the Gulf of Aden waters are projected to be one of the main geostrategic and geoeconomic flashpoints of the competition among great powers, China is expected to further bolster its profile as a commercial and military heavyweight in this critical saltwater artery connecting the Mediterranean Sea and the Indian Ocean. China is strategically leveraging its economic and military power to establish a significant presence in the Red Sea region, a critical maritime corridor. Through infrastructure investments, commercial partnerships, and naval deployments, Beijing navigates the delicate balance between economic expansion and military projection while managing the geopolitical implications of its growing influence, (Leonardo Jacopo, 2023). The article is based on my book: The Red Sea Region between War and Reconciliation, Liverpool University Press, 2019.

Key words: Red Sea, “One Belt, One Road”, China, Djibouti, Bab al Mandeb, Suez Canal.

Introduction

The Red Sea is one of the world's most important trade routes, with its southern tip in Bab al-Mandeb strait (between Yemen and Djibouti) and its northern edge in the Suez Canal and the Gulf of Aqaba. More than 10 percent of global shipping traffic passes through the Red Sea every month and approximately $700 billion worth of trade transits its strategic waterways and choke points annually (Think Research & Advisory, 2022).

The global economy depends on the free and undisturbed flow of goods and energy resources and any disruption to shipping on this route has a negative impact on the world economy. The Red Sea and the Gulf of Aden region are composed of nine countries along the coastlines: Somalia, Djibouti, Eritrea, Sudan, Egypt, Israel, Jordan, Saudi Arabia, and Yemen. But, in its wider geopolitical context, it also includes Ethiopia. 

The region’s unique mixture of historical colonial-power competition, political rivalries, state fragility and emerging circumstances made the Red Sea region one of the world’s most unstable theaters. Over the past years, the Red Sea region has seen dramatic military, economic and political developments that are changing the geostrategic landscape of the region. 

The region has experienced considerable challenges: civil wars (Sudan, South Sudan, Ethiopia, Somalia and Yemen), support for armed proxies (Iran supporting the Houthis in Yemen), mass displacements (in Somalia, Sudan, Ethiopia and Yemen), and humanitarian crises due both to conflict and to poor governance (in Yemen, Somalia, Ethiopia and Sudan).                         

The Red Sea has become an arena of geopolitical, rivalry and competition on one hand and offers opportunities for development and coordination on the other hand. Expanding economic and strategic interests of global and regional powers and new economic and military investments are driving the dynamics in the Red Sea region. The geostrategic shifts are challenging old political structures and old economic and social boundaries in the region. 

The competition between great powers

As a major transit waterway for world trade, the Red Sea has long caught the attention of great powers and the Red Sea region is a theater of competition and struggle for influence by the great powers US, China and Russia. The Red Sea region is a core part of China’s “One Belt, One Road”, or " the Belt and Road " initiative (BRI), which aims to establish land and sea routes linking China to Europe via Eurasia and the Middle East, equivalent of the lucrative Silk Road.  For many years, Beijing’s primary interests in the Red Sea region were to pursue trade relationships and secure access to resources. It also has a long-standing interest in safe shipping routes and joined multilateral efforts to combat piracy. These efforts are now wrapped into the broader Belt and Road Initiative (BRI), (Short,2020). China has decided to establish its first military base outside of its borders in Djibouti, a country that hosts the United States' largest base in Africa, and where France, Japan and Saudi Arabia also have military bases. The US has been a vocal critic of China's incursions in the region, especially in Djibouti, long perceived as an American zone of influence. In recent years, the U.S. has gradually come to perceive the rise of China and Russia, as the main threat it is facing in Africa and elsewhere. The U.S. government is putting more effort on the economic front as a positive alternative to China.  While the U.S. realizes that it cannot match the scale of Chinese investment in Africa, it is still looking to curb Chinese economic influence in the region. Part of its strategy is to encourage U.S. companies to invest more in East Africa as a positive alternative and make clear that engaging with the United States will mean greater prosperity and security for Africa.”

The Chinese “One Belt, One Road” strategy 

Launched by Chinese President Xi Jinping in 2013, the “One Belt, One Road”, initiative is a strategic infrastructure project to connect China with global markets and resource-rich areas through a network of transport nodes. The “One Belt, One Road” initiative’s two main components are the Land Silk Road, featuring high-speed railways and modern highways, and the Maritime Silk Road, encompassing all aspects of maritime freight transport, from shipping lines to seaport operations and intermodal re-export hubs, (Leonardo Jacopo, 2023). Seaborne trade is responsible for over 80 percent of global merchandise shipments. The global economy’s reliance on the maritime commercial connectivity infrastructure, including shipping lanes and coastal facilities, intensifies near maritime chokepoints. These chokepoints, either natural or artificial, funnel maritime traffic into narrow water channels due to the absence of alternate routes or the prohibitive increase in shipping time and associated costs, (Shinn,2021). The massive Chinese project is set to redraw the map of global trade with investments worth $8 trillion in infrastructure in 68 countries. To serve its trade and economic interests in Africa, China spent $8.7 billion on infrastructure projects in Sub-Saharan Africa in 2017 alone, (Mourad Hicham, 2018).

The Red Sea and the Chinese “One Belt, One Road” strategy 

The Red Sea holds significant geostrategic and geoeconomic importance for China. As a critical trade route linking the Mediterranean Sea and the Indian Ocean, this maritime channel is pivotal for ensuring the continuous flow of China’s seaborne trade to markets in Europe, Africa, and the Middle East. Moreover, it serves as a springboard for Beijing’s efforts to tap into African and Middle Eastern countries’ untapped economic and industrial potential, (Leonardo Jacopo, 2023).  As China’s geoeconomic interests in the Red Sea have grown, Beijing has aimed to secure access to multiple coastal facilities while presenting its expanding regional presence as non-threatening. Beijing’s efforts to develop a large-scale commercial connectivity network of state-owned ports and terminals extending from the Suez Canal to the Bab-al-Mandeb Strait have focused on three Red Sea littoral states: Egypt, Djibouti, and Saudi Arabia. This largely explains why China located its first and, so far, only foreign military base at Djibouti near the Bab al-Mandeb passageway between the Gulf of Aden and the Red Sea, (Shinn,2021). China is investing heavily in the construction of infrastructure in the east of the African continent. It has placed Chinese state-owned enterprises (SOEs) at the forefront of its regional push to achieve this. China’s state-led shipping and logistics service providers have become instrumental in financing, developing, upgrading, and operating new and existing maritime infrastructures in the Red Sea waterway.

Djibouti’s major infrastructure initiatives are being financed and spearheaded by Chinese companies and nearly 40% of the financing of major infrastructure and investment projects in Djibouti now comes from China. China’s Export Import Bank has granted $957 million to finance other infrastructure projects, including the railway line linking the Ethiopian capital Addis Ababa to Djibouti, (Mourad Hicham, 2018). 

Djibouti’s Multi-Purpose Port (MPP) facility at Doraleh, for example, is managed and part-owned by China Merchants Group (CMG). Since 2013, the Hong Kong-based conglomerate has owned 23.5% of Djibouti’s Port and Free Zone Authority and, in early 2017, bought a minority stake in Ethiopia’s state-owned shipping line, whose home port is Djibouti, (Lons,2018).  CMG is a leading commercial actor in numerous ports along China’s Maritime Silk Road, which links shipping lanes along Beijing’s global Belt and Road Initiative. CMG’s role in Djibouti mirrors Chinese involvement in ports and logistics elsewhere in Africa, (Lons,2018). In 2020, China made new strides in its push to deepen its economic penetration in Djibouti when CMG and Great Horn Investment Holding a DPFZA subsidiary, inked a $350 million investment deal for a massive urban redevelopment plan to revamp Djibouti’s more than 100-year-old port and downtown area. The multimillion-dollar project aims to turn the decayed complex into a first-class waterfront development serviced by luxury and financial facilities, (Leonardo Jacopo, 2023).  China's inroads in Djibouti’s maritime logistics sector are just a fragment of a strategy aimed at deepening China’s effect on Djibouti’s connectivity. Indeed, China is invested in the 759-kilometer Addis Ababa-Djibouti railway to the PEACE (Pakistan and East Africa Connecting Europe), the submarine fiber-optic cable system and the Ethiopia-Djibouti water pipeline. Chinese companies also have significant stakes in Ethiopia’s oil and gas fields in the Ogaden region, (Pakistan Defense, 2021). In November 2017, they agreed to construct a 650km oil pipeline to Djibouti and proposed building an LNG refinery at Damerjog. China will finance the Ethiopia-Djibouti oil pipeline and the Ethiopia-Djibouti freshwater pipeline, (Lons,2018).

Egypt - the "New Suez Canal" project

The Suez Canal is an artificial sea-level waterway running north to south between Port Said harbor and the Gulf of Suez to connect the Mediterranean Sea and the Red Sea and it provides the shortest maritime route between the Atlantic Ocean to the Indian Ocean. The canal is an economically important shortcut between Europe and Asia and the passage through Egypt meant ships no longer had to sail around the southern tip of Africa.  The Suez Canal was opened in November 1869 after 10 years of construction. The Suez Canal itself is 163 km long and 300 m wide. The Suez Canal is a sea-level canal and the height of the water level differs slightly and the extreme tidal range is 65 cm in the north and 1.9 m in the south. It also has a railroad running its entire length parallel to its west bank. Expansion projects over the decades have helped the canal accommodate more traffic and larger ship sizes, (The Suez Canal Authority website, 2018).

The Suez Canal separates the African continent from Asia and Egypt's mainland from Sinai. Egypt opened four new tunnels under the Suez Canal, taking the time it currently takes to cross via bridge or boat, down from hours or even days to just a few minutes, (Mail online, 2018). The Suez Canal is operated by the Suez Canal Authority and tolls paid by the vessels represent an important source of income for the Egyptian government. The objective of the "New Suez Canal"was to increase the canal’s revenue from $5.3 billion in 2014 to $13 billion in 2024.  Egypt, home to the Red Sea’s northern gateway and a crucial transit node for seaborne trade on east-west and north-south shipping lanes was an early target in China’s strategy. Egypt represents a major concentration of Chinese port and storage financing, construction, and investment (Kakissis, 2018).

The Suez Canal Economic Zone (SCZone) 

The idea of ‘the New Suez Canal project’ dates back to the reign of late President Sadat. When President El Sisi assumed office, the project proposal was once again examined and the decision was made to start the project on August 5, 2014. Egyptian military succeeded in finalizing the task in a year, which was the date set by the president, (Akkawi ,2018).   The total cost of the" new Suez Canal project" is valued at around $8.2 billion. The Egyptian government collected from citizens $US 8.17 billion by issuing five-year investment certificates at an interest rate of 12 percent. This is the highest interest rate for this type of saving scheme, (Akkawi ,2018).

Egypt opened in August 2015, a major expansion of the New Suez Canal, which deepens the main waterway and provides ships with a 35km channel parallel to it. The expansion allows two-way traffic along part of the route, as well as for larger vessels overall, (Egyptian street,2015). The new section of two-way traffic shortens the time spent waiting for ships to pass in the opposing direction. According to the Suez Canal Authority, completion of the new canal meant waiting times dropped to 3 hours instead of 8 to 11 hours, and transit times through the canal became 11 hours instead of 18 hours.

The "New Suez Canal" project also aims to develop the entire region surrounding the Suez Canal, turning the strategic waterway into a comprehensive global business center that would provide maritime transport services and the creation of industrial and logistical centers, (Mail online, 2018). The Suez Canal Economic Zone (SCZone) was launched in 2015, spanning 461 km2 and is projected to generate US$ 12 billion annually. According to Law No. 83, 2002, the SCZone will have a special customs and tax administration system and the plan is to develop Port Said, Ismailia and Suez to serve logistical and industrial projects that employ hundreds of thousands of people, (Arab Republic of Egypt, ministry of investment and international cooperation). Ismailia is the administrative center of the zone, and it is expected to host specialized clusters for R&D activities in both Communication and Information Technology (CIT) and renewable energy as well as some light industries like agribusinesses and textiles.  An urban area at Qantara and New Ismailia City will be developed, hosting over 350,000 residents, (the Arab Republic of Egypt, Ministry of Investment and International Cooperation). In Port Said, the Government of Egypt plans on establishing an industrial zone that focuses on light-intermediate industries with a capacity to support 80,000 jobs. Industries will include agribusiness, textiles, automotive assembly, pharmaceuticals and other export-oriented industries. New urban areas will be developed at East Port Said and Bardawil City, hosting up to 250,000 residents.

China has become the biggest investor in the Suez Canal Area Development Project. Among the main investors are Chinese TEDA Corporation, which signed a 45-year investment development agreement with SCZone, and China Jushi Group, which has one of the largest fiberglass manufacturing facilities in the world located in the SCZone. Over 80 Chinese companies have injected approximately $ 1 billion in infrastructure, industrial and recreational projects on a 1.3 square kilometer area. 

After consolidating its presence at the Suez Canal, Beijing shifted its attention to Ain Sokhna. Situated 120 kilometers east of Cairo and 55 kilometers south of Suez, the Egyptian city is one of the country’s largest ports on the Red Sea. China’s Tianjin Economic-Technological Development Area Group established a joint Suez-Economic and Trade Cooperation Zone in the Ain Sokhna district. COSCO then agreed to build a bonded logistics park in the zone to serve the BRI as a major logistics service provider, (Xinhua, November 2017). Beijing made significant strides in consolidating a strategic presence at Ain Sokhna’s strategic docks. On March 15, 2023, the parties finalized an investment deal to construct a new container terminal at Ain Sokhna. Under the 30-year operating concession, the Chinese consortium aims to bring the container terminal’s annual capacity to some 1.7 million TEUs when fully completed, (Leonardo Jacopo, 2023). 

The military deployment in the Red Sea region

The Horn of Africa and the Red Sea have been subject to heightened militarization due to a complex game of regional rivalries involving Iran, Saudi Arabia, the UAE, Turkey, Qatar, and Egypt. As Iran threatens to put constraints on access to the Strait of Hormuz, maintaining security and freedom of navigation in the Bab al Mandeb strait is crucial to Saudi Arabia and other Gulf states and the war in Yemen has given nearby African ports new geostrategic significance. The Bab al Mandeb strait is only 30 km wide and is divided into two channels by Perim Island. The Bab al-Mandeb strait is one of the world’s most critical chokepoints, particularly for oil flows. The U.S. Energy Intelligence Administration (EIA) estimates that 6.2 mbd of crude oil and refined products transited the strait in 2018, comprising some 10% of total seaborne-traded oil (The U.S. Energy Intelligence Administration, 2019).  In recent years various global powers including the US, China, Russia, France, Japan and other countries have established military bases near the Bab al-Mandeb strait that controls the passage between the Red Sea and the Gulf of Aden in the Indian Ocean.

China has dramatically expanded its military presence in Africa in recent years, launching a growing number of naval patrols, military training programs, exchanges, port visits, anti-piracy operations and joint exercises. In 2018 the PLA conducted drills in Nigeria, Cameroon, Ghana and Gabon. It has sharply increased its contributions to United Nations peacekeeping operations, sending about 2,400 Chinese troops to serve in UN missions in Africa (York,2019). Faced with the growing influence of China in the Red Sea, the Horn of Africa, and the African continent in general, the United States has been determined to counter the ambitions of Beijing. The battle for influence between China and the United States is expected to intensify over the next decade. 

Djibouti and the military deployment

Djibouti has a land area of only 23,000 square kilometers; a population of barely 830,000 and no natural resources but Djibouti's geographical location attracts foreign powers. Countries around the world race to establish military bases in Djibouti, because of its geostrategic location as it lies on the western coast of Bab al-Mandeb Strait. Another aspect of Djibouti's geographic position that makes it attractive to foreign powers is its proximity to potential crisis areas, not just in the Horn of Africa but also the rest of the African continent. Djibouti's nearest neighbors include two hot spots: Yemen and Somalia. Djibouti's relative peace and stability in an area of chaos provide foreign powers a suitable staging area for their military operations in the region, (Arab Republic of Egypt, ministry of Investment and International Cooperation). Djibouti hosts in its territory, military bases for the United States, France, Italy, Japan, China and Saudi Arabia. Renting military bases is considered one of the most important sources of revenue for Djibouti. 

The Chinese base in Djibouti 

China started building its first base out of China, in Djibouti, in February 2016, and formally opened the base, on August 1, 2017. China's agreement with Djibouti ensures its military presence in the country up until 2026, with a contingent of up to 10,000 soldiers and China is paying $20 million per year in rent, (Ben Ho Wan Beng , 2016). Satellite images show that the Chinese base includes a tarmac for helicopters and drones, repair facilities for commercial and naval ships, storage rooms for arsenals of weapons and a nine-meter-wide security wall around it (York, 2019). 

China's commitment has broadened in line with the deepening of its economic and commercial relations with the region and as part of a nascent but growing global military engagement policy stretching from the South China Sea to East Africa. 

This has meant the establishment of a strong navy allowing China to project its power around the world, and naval bases like that in Djibouti will be essential to achieve this ambition. The Djibouti base, along with naval patrols near the Gulfs of Oman and Aden and the regular visits of Chinese warships to foreign ports in the region, reflected China’s growing global influence. 

The official goals of China in Djibouti

The establishment of the first Chinese military base in the region in Djibouti came after several years of increasing economic and commercial involvement in Africa and the Middle East. Beijing is seeking through its base in Djibouti to secure natural resources and protect its growing economic interests in this part of the world. In addition to China’s economic aid, investment and business activities in the Horn of Africa and the Middle East, the region is also home to thousands of Chinese workers. 

China sought to send a message that it was not about projecting force or Chinese influence.  Chinese state-owned media outlet, Xinhua highlighted that the base "is meant for supply missions, is not a military outpost built to boost the country's military presence and play deterrent roles in the region."  The Djibouti base has nothing to do with an arms race or military expansion, and China has no intention of turning the logistics center into a military foothold," the media outlet pointed out, (Sputnik ,2017). According to the Chinese government, the base is intended to help Beijing in its humanitarian and peacekeeping missions in Africa (2,400 Chinese soldiers are now deployed on the continent) and Western Asia and to lead emergency relief, protection, and evacuation work of Chinese citizens living overseas and engage in military cooperation, including joint maneuvers, and combat piracy. The base will also be responsible for ensuring the security of international and strategic seaways near the Bab El-Mandeb Strait, in order to protect China’s massive economic interests in Africa and the Middle East.  Chinese ships have deployed to the Gulf of Aden since 2008 to help protect commercial shipping against piracy and other dangers. Though its forces have not been part of any of the other multi-national counter-piracy task forces in the region, China has conducted this mission unilaterally under the broad mandate of the UN Security Council. In 2011, China sent one of its warships together with military transport aircraft to help in the evacuation of about 35,000 Chinese citizens from Libya. In 2015, China detached three navy ships from the anti-piracy patrols to rescue Chinese citizens and other foreign nationals from fighting in Yemen, (Blanchard,2017).

China has also an unofficial purpose for its military base in Djibouti: to expand its geopolitical influence in a global hot spot, at the intersection of Africa and the Middle East (York, 2019). China increasingly intends to show that it is a global power and the new base in Djibouti should be viewed in this context. There are signs indicating that the Djibouti base won't be Beijing's only military installation abroad. China is increasingly focusing on the use of its Armed Forces for what they call the 'protection of foreign interests' which lie far beyond the borders of the PRC. China's interests in Sudan are related to its regional geography and the growing strategic importance of the Red Sea basin to world trade. China has only one military base in the Red Sea region in Djibouti and China is interested in ports in Sudan. U.S. and Chinese interests in Sudan and the region are at odds because the U.S. does not want a Chinese or Russian military or other port in Sudan, given the sensitive strategic locations of Port Sudan (Yeranian, 2023). China has recently increased its engagement with Eritrea. China and Eritrea have a long relationship, which predates Eritrea’s independence from Ethiopia. China is Eritrea’s largest investor, contractor, and trade partner, and Chinese companies built some of the country’s most important infrastructure. This includes an upgrade to the primary port of Massawa and a road that links Massawa and Assab, the site of another port. The already close relationship has grown noticeably tighter in recent years. In 2021, Eritrea officially joined the Belt and Road Initiative and trade between the two nations has surged as well (Meservey, 2023). 

The US-China competition in the Red Sea region

The Red Sea arena is a critical theater that directly affects U.S. strategic interests, among them freedom of navigation, the stable flow of trade and energy resources, countering violent extremism, and promoting democracy, good governance, and stability.  Both China and the United States share an interest in maintaining the security of sea lines enabling the free flow of trade, and supporting economic growth and regional stability, yet they have fundamental differences over governance standards, political norms, human rights, and economic models. Washington and Beijing bring different opportunities to the table and Red Sea arena states desire multifaceted engagement, including commercial partnerships, with both countries. Immediate challenges posed by the proximity of China’s military base to U.S. Camp Lemonnier and long-term challenges posed by China’s presence in the Bab al-Mandeb Strait and its growing ability to exert control over strategic waterways have also raised concerns in Washington, (United States Institute for peace, 2020).

The US, which has long dominated the region through its military presence and political influence, was caught off its guard by the decision of Djibouti to approve the installation on the soil of a Chinese naval base in 2016. However, Washington could do nothing to prevent China from setting up a base in Djibouti, given the solid and growing economic relations between the two countries. Shortly after the 2016 decision, the White House announced the renewal of the lease of the US base in the country for another 20 years and the doubling of its annual payments to Djibouti to $63 million, as well as plans to modernize the base at a cost of over $1 billion.

In its National Security Strategy for 2017, the Trump administration described China as a “revisionist power” and a “strategic competitor” of the US that was seeking to undermine US power, influence, security and prosperity. The establishment of a Chinese military base in the Horn of Africa, the first outside China, is a negative strategic development for the US, and it has serious implications for the long-standing US dominance in the region. Moreover, in March 2018, Thomas Waldhauser, commander of the US Africa Command AFRICOM, warned the US Congress that China could threaten US interests in Africa, especially in the Red Sea, should it be allowed to take over the key port of Doraleh in Djibouti. 

According to Waldhauser, Djibouti had assured the United States that it would not lease the port to the Chinese, but he still warned that the US could not afford to run the risk of seeing the port fall under China’s control, since this could affect the resupplying of the US military base in the country and the ability of US Navy ships to refuel there. There was a need for the “rewriting of US military strategy in the region with China in mind”, he said, (Idris and Stewart, 2018). In December 2018, the Trump administration unveiled a new Africa strategy. Then-National Security Adviser John Bolton said that China and Russia were “deliberately and aggressively targeting their investments in the region to gain a competitive advantage over the United States” and identified countering threats from these two nations as the “second priority” of the US strategy in Africa. This fits into a wider global strategy that identifies Beijing as America’s primary rival in strategic competition, (Short ,2020). However, despite concerns about China’s base in Djibouti and its regional and global influence, the Trump administration has not focused significant attention on the Red Sea region.

Summary

China the second-largest economy in the world after the United States, plans to become the largest by the 2030s. The Red Sea waters are an essential part of Chinese President, Xi Jinping’s, “One Belt, One Road”, initiative, which aims to establish land and sea routes linking China to Europe via Eurasia and the Middle East. Therefore, China’s growing geoeconomic presence along the Red Sea shores should be examined in the context of escalating economic competition and intensifying rivalries among the big powers. China's economic advances in the Red Sea region also have significant implications from a security perspective. The establishment of the first Chinese military base in the region in Djibouti came after several years of increasing economic and commercial involvement in Africa and the Middle East. Beijing is seeking through its base in Djibouti to secure natural resources and protect its growing economic interests in this part of the world. As the Red Sea and the Gulf of Aden waters are projected to be one of the main geostrategic and geoeconomic flashpoints of the competition among great powers, China is expected to further bolster its profile as a commercial and military heavyweight in this region.  The close proximity of the American and Chinese military forces at a time of escalating tensions between the countries presents some risks, but the Red Sea region is unlikely to be a hotbed for US-China conflict, as long as both China and the United States share an interest in maintaining the security of sea lines enabling the free flow of trade and regional stability.

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