China and Oman: Strategic Partner or Future Security Dilemma?
China’s deepening engagement with Oman is anchored in strategic investments that align Beijing’s Belt and Road Initiative (BRI) with Muscat’s Vision 2040, positioning Oman as a pivotal hub in China’s regional economic strategy. At the heart of this partnership is the China-Oman (Duqm) Industrial Park—a $10.7 billion megaproject established through a 50-year lease agreement between Oman Wanfang, a Chinese consortium, and the Special Economic Zone Authority at Duqm. The industrial hub has gradually transformed Duqm into a manufacturing and logistics powerhouse. It features an oil refinery, methanol plant, solar power equipment production, and a range of other industries critical to Oman’s long-term development ambitions.
Why does it matter?
Oman’s Role in China’s Expanding Maritime Strategy
Oman, and particularly Duqm, fits neatly into what western scholars term China’s “String of Pearls” strategy—a network of key ports and infrastructure investments aimed at securing China’s maritime supply chains and mitigating vulnerabilities along critical trade routes. While Duqm is officially framed as an economic hub, its location outside the Strait of Hormuz enhances China's ability to bypass geopolitical chokepoints, reducing exposure to potential disruptions in the Gulf. The development of commercial and industrial facilities in Duqm, combined with growing Chinese investments in nearby maritime nodes such as Gwadar (Pakistan), Hambantota (Sri Lanka), and Djibouti, signals Beijing’s broader effort to establish a secure network of logistics and replenishment points along the Indian Ocean rim.
Oman’s strategic position along the Arabian Sea makes it particularly valuable in this network. It would provide Beijing with a potential logistics and replenishment hub that is less vulnerable to U.S. naval dominance in the Gulf. While Oman has not granted China military access, its inclusion in China’s maritime infrastructure investments suggests that Beijing views it as an integral part of its long-term naval strategy. Furthermore, Chinese naval vessels already dock in Oman’s Port Sultan Qaboos, a key refueling and maintenance stop for international naval operations which reinforces Beijing’s growing logistical footprint in the region. China also participates in joint naval exercises with Russia and Iran around the Gulf of Oman, with Omani observers. Though China’s presence in Omani waters remains largely commercial and under a multilateral framework, these developments raise long-term questions about the evolution of Sino-Omani security ties. Given Beijing’s pattern of expanding dual-use infrastructure globally, its maritime engagements in Oman warrant close scrutiny from regional and Western policymaker
China depends on secure sea lines of communication (SLOCs) for energy imports, with over 40% of its crude oil coming from the Gulf region. Oman is strategically located at the intersection of multiple critical maritime routes—connecting the Gulf, the Indian Ocean, and the Red Sea. This makes it a key player in China’s efforts to secure its energy supply chains and reduce reliance on vulnerable chokepoints.
By deepening economic ties with Oman and developing infrastructure in Duqm, China may be hedging against potential supply chain disruptions caused by regional conflicts, U.S. maritime controls, or geopolitical instability in the Gulf. Unlike its heavily scrutinized presence in Djibouti, which serves as a military outpost for the Chinese navy, China’s investments in Oman remain predominantly economic—for now. However, its involvement in maritime security initiatives, counter-piracy operations, and maritime logistics indicates that Beijing is gradually expanding its strategic footprint in the region.
This has raised concerns among Western analysts regarding the potential for China’s military expansion. The port has already drawn significant military interest from various nations; the United Kingdom established a Joint Logistics Support Base there in 2017, and both U.S. and Indian navies have secured access agreements. A Chinese footprint in Duqm has been a concern for Western policymakers, who worry that this could complicate U.S. and allied naval operations in the region and lead to a more permanent Chinese naval presence in the Gulf. Chinese authorities maintain that their engagement in Oman is purely economic, but Western analysts point to China’s global pattern of dual-use infrastructure investments as a potential precursor to deeper security engagement.
China-Oman Economic and Investment Ties
Concerns over Duqm are just one facet of China-Oman relations. China has rapidly become Oman’s largest trading partner, with bilateral trade reaching $27 billion in 2023. Oman exports oil, gas, and petrochemicals to China, while Chinese imports—EVs, electronics, and machinery—support the Sultanate’s modernization efforts. Chinese FDI into Oman grew by 27.8% in 2023 to $3.45 billion, primarily in energy, infrastructure, and commercial sectors.
A central objective of China’s economic engagement with the Gulf is finalizing the long-stalled China-GCC Free Trade Agreement (FTA), which has been under negotiation since 2004. Oman has been a strong advocate, actively lobbying GCC partners on its benefits. Unlike Saudi Arabia, which fears an influx of low-cost Chinese goods could undercut its Vision 2030 industrialization goals, Oman sees no major barriers and champions deeper Sino-Gulf economic integration. Yet, bringing the rest of the GCC on board remains a challenge.
In September 2024, Chinese Premier Li Qiang met with GCC Secretary-General Jasem Mohamed Albudaiwi in Riyadh, urging a breakthrough in FTA negotiations. For Oman, the agreement could attract more Chinese investment, deepen its global trade linkages, and strengthen its role as a key hub between Asia, the Middle East, and Africa. However, growing economic ties come with risks. Some warn that Muscat could become financially overexposed to Beijing, particularly if it takes on excessive debt for infrastructure projects. As of 2023, Oman’s external debt stood just shy of $40 billion, with China-linked loans forming a manageable but growing share. While Oman has so far avoided the severe debt distress seen in other BRI partners, policymakers remain cautious about financial sustainability.
Beyond economics, China’s interest in Oman is also geopolitical. Unlike its more high-profile engagements with Saudi Arabia and Iran, Beijing’s approach to Oman has been pragmatic and relatively non-disruptive, aligning with Muscat’s traditional role as a neutral mediator. For China, Oman’s ability to engage all sides—GCC states, Iran, and Western powers—without entanglement in regional conflicts, as seen in its role in brokering the Iran-Saudi normalization, makes Muscat a natural partner.
Furthermore, Oman’s integration into the Belt and Road Initiative further cements its strategic importance within China’s economic ambitions. Its ports, free zones, and trade corridors make it an ideal logistical hub for Chinese commerce across Asia, the Gulf, and Africa. The China-Oman (Duqm) Industrial Park is a flagship BRI project and regional model China may use for investments in other regions.
Beyond trade and infrastructure, China and Oman are also expanding cooperation in space. In December 2024, Omani space firm Oman Lens signed a strategic partnership with China’s Deep Space Exploration Laboratory (DSEL) to collaborate on the International Lunar Research Station (ILRS). Oman is following the lead of other Gulf states, notably the UAE, in positioning itself as a forward-thinking, technologically advanced nation. It generally views China's expanding digital influence in Middle Eastern high-tech sectors and its growing role in global space diplomacy as strategic opportunities to enhance its own technological capabilities and international standing.
Why China? This shift is part of a broader GCC realignment, as Gulf countries pursue economic diversification, reduced Western dependency, and stronger ties with Beijing. Rather than a pivot away from the U.S., this is a strategic effort to balance relationships with both Washington and Beijing, leveraging opportunities from both global powers.
Oman, in particular, has positioned itself as a useful partner for China in advancing deeper Sino-Gulf economic integration. Muscat’s advocacy for the China-GCC Free Trade Agreement (FTA) and its openness to Chinese investment highlight its role in shaping this evolving dynamic. However, balancing these ties will be crucial. Overreliance on Beijing—especially in infrastructure financing and strategic sectors—could expose Oman to economic vulnerabilities. Meanwhile, its growing partnership with China will face scrutiny from the U.S. and key Gulf partners, particularly as U.S.-China competition intensifies in the region.
For now, China’s role in Oman remains largely economic, but any future expansion into security or military cooperation—such as logistical access at Duqm or maritime coordination—could provoke Western concerns and challenge Muscat’s delicate foreign policy balancing act. As Oman navigates this evolving geopolitical landscape, its success will hinge on its ability to leverage Chinese investment without compromising strategic autonomy. If managed effectively, Oman stands to benefit significantly from its position at the crossroads of China’s expanding Middle East footprint, securing economic gains while maintaining its long-standing neutrality.
Additional Reading
Atlantic Council. "China Is Getting Comfortable with the Gulf Cooperation Council. The West Must Pragmatically Adapt to Its Growing Regional Influence." January 25, 2024. https://www.atlanticcouncil.org/blogs/menasource/china-is-getting-comfortable-with-the-gulf-cooperation-council-the-west-must-pragmatically-adapt-to-its-growing-regional-influence/.
CACI Analyst. "China’s Debt-Trap Diplomacy in Central Asia." March 2023. https://www.cacianalyst.org/publications/analytical-articles/item/13823-chinas-debt-trap-diplomacy-in-central-asia.html.
Center for Strategic and International Studies (CSIS). "China’s Hidden Reach: Military and Economic Expansion in the Middle East." December 5, 2023. https://features.csis.org/hiddenreach/china-middle-east-military-facility/.
Embassy of China in Timor-Leste. "GCC Free Trade Negotiations with China Face No Obstacles, Says Omani Official." March 4, 2014. https://tl.china-embassy.gov.cn/eng/xwdt/201403/t20140304_1140112.htm.
LinkedIn. "China’s Potential Military Base in Oman: Reshaping the Middle East Balance?" March 2024. https://www.linkedin.com/pulse/chinas-potential-military-base-oman-reshaping-middle-east-al-badawi-9nuzc.
Middle East Eye. "Oman, China Bolster Strategic Military Cooperation During Defence Minister Visit." February 20, 2024. https://www.middleeasteye.net/news/oman-china-defence-minister-visit-bolster-strategic-military-cooperation.
Oman Observer. "China-Oman Bilateral Trade Surpasses $30 Billion in 2023." November 5, 2023. https://www.omanobserver.om/article/1154191/business/economy/oman-china-bilateral-trade-surpasses-30-billion-in-2023.
Rand Corporation. "The UK Should Be Careful Not to Hand the Middle East to China." August 2024. https://www.rand.org/pubs/commentary/2024/08/the-uk-should-be-careful-not-to-hand-the-middle-east.html.
Reuters. "China-Gulf Free Trade Talks Stall Over Saudi Industrial Agenda: Sources." May 14, 2024. https://www.reuters.com/world/china-gulf-free-trade-talks-stall-saudi-industrial-agenda-sources-say-2024-05-14/.
Reuters. "China's Premier Li Calls for Accelerated Gulf Trade Talks." September 11, 2024. https://www.reuters.com/world/riyadh-chinas-premier-li-calls-accelerated-gulf-trade-talks-2024-09-11/.
SpaceNews. "Omani Space Company Signs Up to China's ILRS Moon Base Project." December 2024. https://spacenews.com/omani-space-company-signs-up-to-chinas-ilrs-moon-base-project/.
Zawya. "Oman Enters Landmark Lunar Research Partnership with China." December 20, 2024. https://www.zawya.com/en/world/middle-east/oman-enters-landmark-lunar-research-partnership-u0zenzrf.
Zawya. "Oman-China Bilateral Trade Surpasses $30 Billion in 2023." January 15, 2024.https://www.zawya.com/en/projects/bri/oman-china-bilateral-trade-surpasses-30bln-in-2023-v0ybahn6.