Wired In? The Middle East's Pursuit of Digital Sovereignty in the era of U.S.-China Competition
China’s rise, accompanied by the concurrent growth of other BRICS economies—Brazil, Russia, India, and South Africa—is driving a global shift toward regionalization, reshaping the way states approach technology, economy, and governance. The Middle East is at the intersection of this emerging dynamic. China's Belt and Road Initiative (BRI) draws regional institutions, particularly the Arab League and the African Union, into strategic partnerships with Beijing by offering digital infrastructure and technology cooperation to countries which cannot afford it. This has positioned China as a leading player in the region’s 5G infrastructure, AI industries, and cross-border digital connectivity.
Intensifying U.S.-China technological competition is pressuring Middle East states to align with one of two competing digital models: the U.S.-led ecosystem or China’s Digital Silk Road (DSR), defined by centralized state control and tightly managed networks. In this polarized landscape, Middle Eastern states—particularly in the Gulf—must navigate complex choices, weighing short-term economic gains against long-term strategic risks in shaping their digital futures. Middle Eastern countries want digital sovereignty, but obtaining requires exposing themselves to a large degree of political vulnerability. At its core, digital sovereignty for Middle Eastern states means achieving sufficient control over a state’s digital infrastructure and data governance to ensure national security, economic resilience, and geopolitical autonomy.
How do Arab states balance economic incentives and strategic risks while navigating competing U.S.-China technological ecosystems to enhance digital sovereignty without exposing themselves to political vulnerabilities?
What is China’s Digital Silk Road?
China’s Digital Silk Road (DSR) is a central feature of the Belt and Road Initiative (BRI). The DSR is a conceptual umbrella which outlines a series of technology and digital initiatives which, when combined, have the potential to expand China’s influence by equipping countries with the digital infrastructure they need to modernize and broaden Beijing’s technology ecosystem, as well as the norms that come with it. Through companies like Huawei, ZTE, and Alibaba Cloud, Chinese companies are rolling out 5G networks, fiber-optic cables, data centers, and AI-driven smart city technologies across emerging markets, particularly in the Middle East, where digital infrastructure remains relatively weak. For many states, these investments provide an opportunity to affordably leapfrog into the digital economy by developing and adopting e-government services, expanding internet access, and bolstering e-commerce capabilities for local digital ecosystems and economies. Beijing’s relative success with some countries has embedded China’s digital footprint into key regions and enabled states to develop and govern their own technology sectors, albeit with potential Chinese oversight.
Beyond physical infrastructure, the DSR provides a framework for cross-border e-commerce, digital finance, and cybersecurity—key priorities for many Middle Eastern states seeking to modernize their economies. The systems China builds are deeply embedded in its global supply chains and financial networks, facilitating easier market access for developing nations while reinforcing China’s position as a dominant exporter. Meanwhile, Beijing’s investments in submarine cables, satellite systems, and cloud computing hubs solidify its role as a central player in digital interconnectivity, particularly in the Gulf. Countries like Egypt view this as a strategic opportunity to accelerate digital transformation and strengthen their global economic standing with China’s support. However, such integration raises the prospect of long-term technological interdependence with China. As these digital ecosystems take root, states must grapple with a fundamental question: who controls the flow of data, governs AI systems, and defines the rules that will shape the next phase of the digital age?
The DSR in the Middle East
China’s Digital Silk Road (DSR) has rapidly expanded into the Middle East, providing a turnkey solution for governments looking to modernize their digital infrastructure and accelerate economic transformation. Across the region, Chinese technology firms have embedded themselves in telecommunications, artificial intelligence, and cloud computing, aligning their systems with the region’s national development strategies, like Saudi Vision 2030. Gulf states, particularly Saudi Arabia and the UAE, have emerged as early adopters of Chinese 5G networks, AI-driven governance, and smart city technologies, leveraging these investments to drive their economic diversification away from fossil fuels. Meanwhile, Egypt, Algeria, and Jordan have tapped into Chinese partnerships to expand digital access, strengthen cybersecurity, and develop fintech solutions, as well as integrating them into broader efforts to modernize their economies.
A quick look at recent deals (
is a solid source for tracking these kinds of deals).Telecommunications & 5G
Saudi Arabia: Huawei has major agreements with Saudi Arabia for 5G deployment, AI applications, and smart city development under Saudi Vision 2030. In 2022, China and Saudi Arabia signed multiple technology deals, including agreements on cloud computing and high-tech industries.
UAE: The UAE has partnered with Huawei to roll out 5G networks, with the company also contributing to AI-driven governance and smart surveillance systems.
Algeria, Egypt, and Jordan: Huawei has established digital training centers and signed agreements for telecom infrastructure expansion.
2. Artificial Intelligence & Digital Governance
Saudi Arabia & UAE: Both countries are collaborating with China on AI-driven governance, facial recognition, and cybersecurity. Chinese companies like Huawei and CloudWalk provide AI surveillance tools.
Egypt: Has partnered with China on AI and fintech solutions, including facial recognition systems.
3. Cloud Computing & Cybersecurity
UAE: The Abu Dhabi-based G42 group, backed by the UAE government, has multiple partnerships with Chinese AI firms. Huawei Cloud also operates in the UAE, helping develop digital infrastructure and cybersecurity frameworks.
Saudi Arabia: Huawei signed a deal to set up cloud computing services in Saudi Arabia, boosting digital transformation.
Egypt: Signed agreements with China to enhance cybersecurity and e-government services.
4. Space & Satellite Cooperation
Saudi Arabia: In 2022, China and Saudi Arabia signed a space technology cooperation agreement covering satellite development, communications, and space exploration.
UAE: The UAE’s space agency has agreements with China for joint satellite projects and potential space exploration missions.
5. E-Commerce & Digital Trade
Saudi Arabia, UAE, Egypt: Signed agreements with Alibaba and JD.com to facilitate cross-border digital trade, electronic payments, and cloud services.
Saudi Arabia: Established a joint innovation center with China for digital economy development.
For Arab states, the Digital Silk Road (DSR) offers a fast-track to digital modernization, free from the regulatory constraints that often accompany Western alternatives. Across the region, China is building cloud networks, digital trade platforms, and fintech systems. These major digital infrastructure projects are pushing the region deeper into Beijing’s expanding digital ecosystem. Deeper ties to the DSR mean states get to upgrade their infrastructure, but this comes at the expense of embedding themselves in a China-led digital order.
Unlike U.S. and European-backed initiatives, which impose stricter conditions on data security, governance, and human rights, China promotes state-driven cooperation with minimal oversight. This flexibility is welcomed by governments who have previously deployed surveillance technologies for domestic monitoring, tracking dissent, and, in some cases, facilitating arrests and political crackdowns.
This pragmatic model is particularly appealing to governments seeking technological advancement while maintaining full control over governance and information flows. However, it also raises serious human rights concerns, particularly for the U.S. and Western governments, who warn that China’s approach enables authoritarian surveillance, digital repression, and abuses of privacy rights.
Chinese officials leave how the technology is used domestically to the discression of the state, and even set a strong precedent through the use of its own tech for domestic surveillance and security. The China option gives countries unrestricted digital expansion while bypassing the bureaucratic and ethical hurdles of the Western-led digital ecosystem. For China, this approach reinforces its development model, emphasizing state-led growth, technological self-sufficiency, and digital security—principles that align with the political and economic priorities of many Arab states.
Why does digital sovereignty matter to Arab states?
Middle Eastern states want greater sovereignty over their digital futures. Digital sovereignty defines a state's ability to control, regulate, and secure its entire digital ecosystem, including infrastructure, technology platforms, AI governance, and cybersecurity frameworks. It is similar to the concept of territorial sovereignty, but defined in the conceptual world of cyberspace, where the delineated virtual “borders” of a state’s sovereignty is difficult to fully assess. It involves determining who builds, owns, and operates critical digital networks—such as 5G, cloud computing, and smart city technologies—and ensuring that these systems align with national security and economic priorities. The objective of digital sovereignty is to uphold a state’s right to technological self-sufficiency while maintaining its national security, economic resilience, and geopolitical flexibility. But achieving this balance is far from straightforward.
They see digital sovereignty as a tool for securing their national security, economic independence, and geopolitical leverage in an increasingly digitized world. As global tech competition intensifies, Middle East governments must recognize that reliance on foreign tech providers—whether from the U.S., China, or Europe—creates vulnerabilities that could limit their strategic options in the future. Owning and controlling digital infrastructure, data governance, and AI development allows them to safeguard against external interference while positioning themselves as independent players in the global digital economy. And, localizing industries which produce the software and hardware make them critical stakeholders for foreign tech providers, and amplify their leverage in the industry.
By adopting Chinese digital infrastructure, they risk becoming locked into technology standards and systems that prioritize centralized governance, potentially limiting their ability to independently shape their digital governance models and data regulation frameworks. This creates an interesting dilemma where regional governments are forced to carefully weigh the immediate advantages of Chinese digital infrastructure against the long-term implications for their strategic autonomy, digital sovereignty, and access to other digital ecosystems evolving beyond China’s own.
For many states, national security and cyber resilience are at the forefront ditigal sovereignty. The region has long been a battleground for cyber warfare, espionage, and digital surveillance, with both state and non-state actors seeking to exploit technological weaknesses. The idea goes that greater control over telecommunications, cloud computing, and cybersecurity frameworks would enable Middle East governments to protect sensitive data, secure state operations, and minimize the risk of foreign intelligence access. U.S. and European have expressed concerns that certain forms of Chinese-built infrastructure creates the potential for unauthorized access. As a result, countries which partner with China face a growing number of restrictions on U.S. and Western tech exports to the region.
Economic independence is another driving factor. Gulf states, in particular, are investing heavily in technology as part of their economic diversification strategies. However, without digital sovereignty, these advancements could remain dependent on foreign providers, limiting the region’s ability to set its own rules and regulations for AI governance, digital trade, and financial technology. By strengthening local capabilities and localizing certain industries, many Arab states hope to build their own local ecosystems and capture more value from the global digital economy.
When combined, the pursuit of digital sovereignty may offer greater geopolitical flexibility. By controlling their own data and digital footprint, states can navigate between U.S. and Chinese tech spheres rather than being forced to align exclusively with one side. Countries like Saudi Arabia and the UAE have already demonstrated this approach, integrating Chinese 5G networks and AI tools while maintaining strategic partnerships with U.S. and Western firms. There are, however, limitations to how far this integration can go before one or both sides draws a red line. Furthermore, it creates long term challenges of integrating a state’s digital infrastructure cleanly into both a Chinese ecosystem and a Western-based system.
Losing out on other systems
The U.S. wants to insulate its technology from competitors, but that runs directly against the Gulf’s mix-and-match approach to digital modernization. Washington is increasingly wary of unauthorized Chinese access and technology transfer, especially as Saudi Arabia and the UAE deepen their digital partnerships with Beijing. These concerns aren’t new, but they’ve grown as Chinese firms embed themselves in the Gulf’s tech ambitions. For Gulf states, deeper integration with China limits their ability to fully align with the West and could strain their access to U.S. technology, investment, and defense cooperation.
A major sticking point is dual-use technology which could have military or intelligence applications. This has led to stricter export controls and licensing reviews for U.S. firms working in the Gulf, forcing Gulf-based companies into lengthy, politically charged approval processes that often end in denials or heightened scrutiny. In some cases, Washington has demanded full separation from Chinese firms before approving investments. The UAE’s AI firm G42, for example, was forced to cut ties with Chinese partners before securing U.S. approval for Microsoft’s $1.5 billion investment, which gave it access to advanced AI chips and cloud computing infrastructure.
Beyond technology transfer, Washington remains uneasy about how Gulf states use AI and surveillance tools, particularly given past scandals involving domestic repression and intelligence abuses. Both Saudi Arabia and the UAE have been criticized for “digital authoritarianism”, leveraging cyber tools to monitor dissidents and suppress opposition. The DarkMatter scandal, which exposed UAE intelligence agencies deploying sophisticated cyber surveillance, only deepened U.S. concerns. In response, Washington has tightened restrictions, including Bureau of Industry and Security (BIS) regulations limiting Gulf access to U.S. surveillance technologies. The Magnitsky Act looms as another potential roadblock, as both countries risk U.S. sanctions if they are found using American digital tools for human rights violations. At the same time, their collaboration with blacklisted Chinese AI firms like SenseTime, which has been linked to Xinjiang’s surveillance apparatus, further complicates U.S.-Gulf tech relations.
Geopolitical pressure adds another layer to the Gulf’s digital sovereignty dilemma. The U.S. and its European allies continue to push regional governments to curb their reliance on Chinese digital infrastructure, citing espionage and cybersecurity risks. Israel has drawn a hard line, blocking Chinese 5G expansion in favor of U.S.-approved telecom providers. Saudi Arabia and the UAE, however, continue to walk a tightrope, integrating Chinese-built digital systems while keeping close ties with Washington. This dual-track strategy reflective of the GCC”s regional hedging approach: leveraging China’s cost-effective digital solutions while ensuring continued access to Western technology, security partnerships, and investment. If global competition heats up, Gulf states will have to carefully manage this balancing act.
Beyond external pressure, economic and technological lock-in presents a deeper, long-term risk. China’s digital infrastructure investments are attractive because they offer advanced technology at a lower cost, but they also bind states to Chinese hardware, software, and cybersecurity protocols, making it harder to switch providers in the future and untethering from the Chinese firewall. Unlike Western-led models, which offer greater interoperability and open digital standards, China’s tech ecosystem is designed to reinforce state control over data and information flows, shaping AI governance, cybersecurity laws, and regulatory frameworks in ways that reflect Beijing’s own governance style, which states may attempt to replicate. This distinction is critical because digital sovereignty extends beyond physical infrastructure—it also encompasses data sovereignty.
Who owns the data?
Digital sovereignty and data sovereignty are often intertwined but not always aligned. A country may retain control over its digital infrastructure while still relying on foreign cloud services to store and process data, creating vulnerabilities in national security and regulatory oversight. At the same time, strict data localization policies, like those adopted in the European Union under General Data Protection Regulation (GDPR) or China’s Data Security Law, may protect information flows but do not necessarily ensure broader digital autonomy and sovereignty. Many Middle Eastern states will face this challenge. While they embrace China’s Digital Silk Road for telecommunications and advanced tech (like AI), they face the challenge of localizing data ownership and data storage, complex data governance challenges, and a lack of localized AI regulation. Thus, their digital sovereignty is both tied to who builds the infrastructure but also on who controls the data, sets the rules for AI governance at a national, regional, and international level.
While there is a growing movement to create complimentarianism and cohesion on technology frameworks at a regional level, regulatory fragmentation due to inconsistency across digital regulations across the region adds another layer of complexity. Middle Eastern states lack a unified digital governance framework, which risks leading to inconsistent cybersecurity policies, data localization rules, and AI regulations. The Gulf states have made significant digitization and tech progress, including through e-governance, cybersecurity, and digital transformation, embedding AI and cloud computing into state operations. But much of North Africa and the Levant remain digitally fragmented, leaving them more vulnerable to foreign influence and technological dependency. Without a coordinated regional approach to cybersecurity, data sovereignty, and digital regulation, these gaps will only widen, making it harder for states to assert any real form of digital sovereignty while balancing Chinese and Western technology partnerships.
A non-aligned option is complex
Three key forces will shape how Middle Eastern states navigate digital sovereignty: technological alignment (which ecosystem they adopt), the economic dependencies that arise from that choice, and the political governance model embedded within the chosen system. This sequence of considerations will determine whether the region can craft an independent digital strategy or be forced into alignment with either Western or Chinese technological ecosystems. As Beijing and Washington construct parallel AI and digital infrastructures, they embed competing governance models, making technological choices inherently political.
This growing bifurcation is already forcing Middle Eastern states into difficult decisions. Integrating Chinese-built AI, cloud computing, and surveillance technologies risks cutting off access to U.S. and European tech ecosystems, as Washington tightens export controls and technology transfer restrictions on countries working with blacklisted Chinese firms. Yet avoiding Chinese systems entirely is neither economically nor politically viable. Many states rely on Beijing’s digital infrastructure investments and see strategic value in diversified technology partnerships.
As a result, Arab states may attempt to carve out a non-aligned digital framework, leveraging both Chinese and Western technologies without full dependency on either. However, this approach carries risk. Economic leverage—through sanctions, supply chain restrictions, or regulatory barriers—can be used, particularly by the West, to steer their alignment, limiting the viability of hybrid models. Additionally, as digital ecosystems fragment, states pursuing dual-track strategies will face mounting security risks, interoperability challenges, and unforeseen economic pressures, particularly if Chinese and Western systems become functionally incompatible. Digital sovereignty may prove more aspirational than achievable if not carefully managed.
Creating leverage through localizing supply chain
Rather than choosing, some states seek instead to change their role in the equation to make themselves essential in the global supply chain and position their economies as critical nodes in the digital economy and next-generation computing production. By localizing key elements of supply chains, particularly in semiconductor fabrication, AI computing, and cybersecurity infrastructure, Gulf states have become strategic players in its production and distribution.
This forces both China and the U.S. to engage with the Gulf as an essential partner, not a client, in the technology supply chain, making it more difficult for either side to restrict access to dual-use technologies out of concern that they may end up in the hands of their competitor. This enables the Gulf to also cultivate greater leverage in negotiations over their access to AI chips, high-performance computing systems, and secure cloud technologies that both China and the U.S. might otherwise be reluctant to share. This evolving and sensitive posture positions Gulf economies to remain technologically competitive and, to a degree, autonomous in an increasingly polarized digital landscape.
A delicate balancing act
Gulf states can and already are diversifying their digital partnerships by broadening their collaboration beyond China and the U.S. by engaging with South Korea, India, Japan, and the EU. By reducing dependency on any single provider, individual states can enhance their bargaining power and reduce the potential of getting locked into technological dependencies that could limit future options.
Another way to diversify is by building indigenous digital capabilities. Investments in domestic AI research, cybersecurity expertise, and semiconductor manufacturing are essential to reducing reliance on foreign technology and strengthening digital sovereignty, even if developing this capability initially requires some level of foreign technology and support. Building homegrown alternatives to imported technologies requires putting real capital investment into regional startups, innovation hubs, and digital entrepreneurship initiatives—a move GCC states have mastered as part of economic diversification. This will better position the region as a major hub for the development of emerging digital technologies.
Security also remains a major concern. Cybersecurity and data governance will remain a top political and policy priority moving forward. Establishing a regional cybersecurity framework, modeled on Europe's GDPR, could help harmonize data protection laws, strengthen digital trade policies, and reduce vulnerabilities to cyber threats. Ultimately, a rules-based digital order that prioritizes transparency, accountability, and individual data rights would also enhance the region’s long-term security and economic resilience.
Rather than becoming overly reliant on Chinese-built digital infrastructure, Middle Eastern states have an opportunity to deepen collaboration with U.S. and other international partners (E.U., Japan, South Korea, etc) on technology standards, cybersecurity norms, and AI ethics. The overarching question is relatively simple—though far more complex in execution: should states adopt a digital ecosystem that prioritizes global interoperability and integration, or one that increases reliance on a single actor? A system aligned with open, rules-based digital frameworks offers greater long-term stability, economic opportunity, and security.
Proactively shaping global digital governance—through engagement in international forums and bilateral tech diplomacy—may be a more effective strategy for safeguarding strategic autonomy while ensuring interoperability with overarching international systems. Aligning with trusted digital ecosystems not only grants access to cutting-edge innovation but also mitigates risks of coercive economic and technological dependencies. In an era of growing digital fragmentation, maintaining flexibility without sacrificing security will be critical to long-term success.
Which ecosystem to choose?
Middle East states have a choice. While the U.S. remains the region’s primary security partner, its ability to compete in the digital and AI-driven economy is less assured. Washington promotes an open and competitive digital order, but export controls, technology transfer restrictions, and dual-use concerns have limited its ability to provide seamless technology partnerships. In contrast, China’s Digital Silk Road offers a more accessible, turnkey and integrated ecosystem—albeit one that embeds Beijing’s governance model into national AI, cloud computing, and cybersecurity frameworks.
This growing bifurcation presents a strategic dilemma for Middle Eastern states. Wealthier Gulf countries may have the leverage to balance between U.S. and Chinese technology systems, but others risk becoming locked into the digital infrastructure they initially adopt, with long-term consequences for economic and security partnerships. A fragmented digital landscape—where Middle Eastern states lean too heavily into Chinese-built systems—could complicate U.S. military cooperation, intelligence-sharing, and economic engagement in the region.
Washington also faces a unique challenge: it must recalibrate its digital engagement strategy to offer not just security guarantees but also competitive technology partnerships. Striking a balance between security concerns and economic incentives will determine whether the U.S. can maintain its strategic influence in a rapidly evolving digital Middle East—or whether China’s model will take root, reshaping the region’s digital future on Beijing’s terms.
For further reading:
Reports & Policy Papers
Middle East Institute (MEI). "China, the US, and the Battle for Middle Eastern Technology." MEI Publications, 2024. https://www.mei.edu/publications/china-us-and-battle-middle-eastern-technology.
Middle East Institute (MEI). "Bytes and Beltways: Decoding Beijing’s Tech-Centric Geopolitics in the Gulf." MEI Blog, 2024. https://www.mei.edu/blog/bytes-and-beltways-decoding-beijings-tech-centric-geopolitics-gulf.
Baker Institute. "Shaping the Energy Transition in the Gulf: China Collaboration." Baker Institute Research, 2024. https://www.bakerinstitute.org/research/shaping-energy-transition-gulf-china-collaboration.
Atlantic Council. "Forging the 5G Future: Strategic Imperatives for the US and Its Allies." Atlantic Council Report, 2024. https://www.atlanticcouncil.org/in-depth-research-reports/report/forging-the-5g-future-strategic-imperatives-for-the-us-and-its-allies/.
Carnegie Endowment for International Peace. "How Huawei’s Localization in North Africa Delivered Mixed Returns." Carnegie Report, 2022. https://carnegieendowment.org/2022/04/14/how-huawei-s-localization-in-north-africa-delivered-mixed-returns-pub-86889.
Chinese Government & Policy Sources
Guangdong Provincial Government. "China’s Digital Economy Development Policy and International Cooperation." Guangdong Commerce Department Report, 2025. https://com.gd.gov.cn/zcqggfwpt/tzjy/content/post_4669908.html.
Shanghai International Studies University (SAGGAS). "China’s Role in Global Digital Governance: A Strategic Perspective." SAGGAS Research Report, 2024. http://www.saggas.shisu.edu.cn/ArticleDetail/ArticleDetail?ArticleId=91ee771d-49df-4811-8fd3-cd643a1fd75c.
People’s Daily. "China’s Expanding Digital Infrastructure in the Middle East and Belt and Road Initiative." People’s Daily Online, 2025. http://paper.people.com.cn/rmrb/pad/content/202503/03/content_30059816.html.
Belt and Road Portal. "The Belt and Road Digital Economy and Its Global Impact." China’s Belt and Road Initiative Report, 2024. https://www.yidaiyilu.gov.cn/p/161474.html.
Industry & Chinese Sources
Huawei Technologies. "Middle East Leading the 5G Era." HuaweiTech, 2024. https://www.huawei.com/en/huaweitech/publication/202401/middle-east-leading-5ga-era.
Tsinghua University Institute for International and Area Studies. "Tsinghua University’s Analysis on Global Tech Competition." IIAS Research, 2024. https://iias.tsinghua.edu.cn/en/info/1196/3204.htm.
Global Times. "Huawei and China’s Digital Future in the Middle East." Global Times, 2024. https://www.globaltimes.cn/page/202405/1313252.shtml.
News & International Analysis
World Economic Forum. "Oil Futures, the Gulf, and Global Decision-Making." WEF Report, 2025. https://www.weforum.org/stories/2025/02/oil-futures-gulf-gcc-global-decision-making/.