On May 14 and 15, the leaders of the world's two largest economies are scheduled to meet in Beijing. A primary focus of this meeting is the issue of energy, particularly as the uncertainties and complexities of the US-Israel conflict with Iran and the continued closure of the Strait of Hormuz pose a threat not only to China's oil supply but also to its strategic goals for foreign investment and infrastructure development across the Middle East, North Africa, and the Gulf countries.
For over two decades, China has invested $2.57 trillion across 14 different sectors in 162 countries. More than half of this capital has been directed toward the energy and transport sectors to ensure energy security and secure trade routes. The most recent example in Iraq is the announcement of a new oil field discovery with reserves of eight billion barrels, alongside an investment in a power plant with a capacity of 2,100 MW.
If the Beijing meetings between American and Chinese leaders proceed as planned in the coming days, the resulting capital flow is expected to exceed $250 billion. One of President Trump's objectives is to shift the direction of energy supplies to China, at a time when one-third of all Chinese foreign investment has been concentrated in the energy sector.
Previously, the work of Chinese companies globally and in Iraq was largely limited to providing services and equipment for oil and gas fields (due to cheap labor and low-cost technology). However, the model has shifted. Year after year, they are moving toward investment and infrastructure construction; consequently, the lion's share of that $2.57 trillion spent globally has flowed toward the Middle East.
China's investment capital in the Middle East and North Africa (MENA) between 2005 and 2025 reached $295 billion. Iraq holds a significant share of this increase, ranking third behind Saudi Arabia and the UAE with approximately $40 billion.
Distribution of Chinese investment across different sectors
Out of the 14 sectors where China has allocated funds, the highest amounts were for energy and transport: $902 billion in oil and gas and $477 billion in the transport sector. This serves two primary goals:
Energy supply security: China imports 70 percent of its required oil and 40 percent of its gas. Regional tensions have created obstacles, and so far, it has only maintained market balance by utilizing stored oil reserves.
Global connectivity: Facilitating the transport of goods, as China exports half a trillion dollars worth of goods annually.
Notably, China has invested the least in the health and chemical sectors. This indicates that China's foreign investment is driven more by its own requirements than by the needs of host countries, particularly in the Middle East and Africa, which are in dire need of healthcare sector development.
Iraq's position on China’s map of foreign investment and construction
According to data from the American Enterprise Institute (AEI), Iraq ranks significantly ahead of Iran and Turkey in Chinese investment. Iraq accounts for 14.2 percent of China's total investment in the region. Of the $35.5 billion China has spent in Iraq, nearly $35 billion was in the energy sector alone ($15.5 billion as investment and $19.1 billion as construction). The real estate sector follows in second place with $2.4 billion. In contrast, Chinese investment in countries like Israel, Jordan, and Iran has declined in recent years, reaching zero in some instances.
Since 2018, when Iraq and China signed broad memorandums of understanding, the position of Chinese companies in Iraq has grown stronger by the day. If the strategic "Basra–Haditha" pipeline project is awarded to a Chinese company, we can say that China's control over Iraq's energy infrastructure will enter a new phase.
The upcoming meetings in Beijing between Presidents Donald Trump and Xi Jinping will be decisive—not only for issues of war and tension but for the future of the global energy market. China is expected to exert efforts through mediation to reopen the Strait of Hormuz. Conversely, the United States seeks to pull the direction of China's energy supply toward itself and change it toward America, both of which will have a massive impact on the market. Therefore, it can be said that Beijing and Tiananmen Square are awaiting major decisions.
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