Gulf states move to mitigate risk

With the US-Israeli war on Iran sending shockwaves across the region, Gulf countries are focusing on strengthening their domestic economic resilience while keeping their sights on building strategic international partnerships.
As part of a risk mitigation strategy, investors in the region are seeking to expand business ties in countries deemed safe havens, especially China.
One such investor is Khadija Al Saqatri, vice president for Global Investment Advisory at Sohar International, an Oman-based bank.
Sohar received initial approval from the Central Bank of Oman last December to establish a representative office in China’s Hong Kong Special Administrative Region.
On April 13, it officially received approval from the Hong Kong Monetary Authority to establish the bank’s representative office in the city. The bank’s office, which is set to be located in Central, and as confirmed by Al Saqatri, will open this June.
Al Saqatri was in Shanghai earlier this week for business meetings, which she said show that business flows between China and the Gulf Cooperation Council nations have not stopped, but are instead “blooming”.
The GCC is a grouping of six Gulf states — the United Arab Emirates, Qatar, Bahrain, Oman, Kuwait, and Saudi Arabia.

Crisis response
Al Saqatri noted that while the near-total commercial closure of the Strait of Hormuz this spring has shocked global markets — stalling a quarter of seaborne oil trade and prompting the World Bank to slash its 2026 GCC growth projections to 1.3 percent — the regional response “underscores a new era of structural resilience”.
“Oman remains uniquely positioned; our primary export infrastructure and ports like Sohar and Duqm sit outside the Strait, maintaining vital maritime lifelines while neighboring transit (has been) effectively halted,” Al Saqatri told China Daily in an exclusive interview.
She said the crisis “serves as a definitive stress test for the GCC’s diversification strategy”.
“With non-oil sectors now forming a robust pillar of our GDP, backed by significant sovereign buffers, regional liquidity remains healthy enough to absorb these supply-chain shocks,” said the senior bank executive.
“For our institution, our presence in Hong Kong is a strategic necessity. It serves as a resilient bridge, ensuring that Middle Eastern capital and Asian trade remain integrated despite localized volatility,” said Al Saqatri.
“We are not merely enduring this disruption; we are actively navigating it by securing alternative trade corridors. While our fiscal footing remains firm, we join the global community in calling for a swift return to peace to restore the international market equilibrium that the world depends on,” she added.
Abdulkhaleq Abdulla, a political science professor and former chairman of the Arab Council for Social Science, recently caused a social media stir after saying that the UAE “no longer needs the United States to defend it, as it has proven during the Iranian aggression that it is capable of defending itself with valor”.
Abdulla told Reuters that the UAE needs to acquire the best and latest weapons that the US has, but it is time to think about closing the US bases, as they are a burden and not a strategic asset.
“The comment that US bases are a ‘burden’ reflects a broader sentiment: Gulf states are reassessing the cost-benefit balance of their external security arrangements,” Anis Khayati, an economics professor at the College of Business Administration at the University of Bahrain, told China Daily.
“Certainly, this does not signify a break with the US, but it does indicate a willingness to reconsider long-held assumptions,” Khayati said.
“The GCC countries are diversifying their risks. (They are) seeking to expand their relations with several countries, including China, Pakistan, India, and Turkiye. This reduces their vulnerability to any geopolitical shock,” he added.
Recently, the board of the Saudi sovereign wealth fund, the Public Investment Fund (PIF) chaired by the Crown Prince and Prime Minister Mohammed bin Salman bin Abdulaziz Al Saud, approved the PIF’s 2026-2030 strategy, which, it said, is a continuation of PIF’s long-term strategy.
“The strategy will focus on delivering competitive domestic ecosystems to connect sectors, unlock the full potential of strategic assets, maximize long-term returns, and continue to drive the economic transformation of Saudi Arabia and further enhance the quality of life of its citizens,” according to a press release.
The PIF had grown assets under management from $150 billion in 2015 to more than $900 billion, invested more than $199 billion in new projects in Saudi Arabia from 2021 to 2025, and contributed more than $243 billion to real non-oil GDP from 2021 to 2024 — equivalent to around 10 percent of Saudi Arabia’s total non-oil GDP in 2024.
In the UAE, on April 26, Sheikh Mohammed bin Rashid Al Maktoum, vice president and prime minister of the UAE and ruler of Dubai, approved a comprehensive package of initiatives and measures to strengthen the industrial sector. These include the establishment of a 1-billion-dirham ($272.3 million) National Industrial Resilience Fund.
This is to boost localization within key industries, bolster supply chain resilience, and accelerate the adoption of artificial intelligence (AI) in manufacturing, operations, and planning.
They also approved the expansion of the National In-Country Value Program, mandating it across federal government entities and national companies, alongside a policy to ensure retail outlets and digital platforms prioritize Emirati products. Their objective is to achieve full localization of more than 5,000 essential products.
Khayati from the University of Bahrain noted that sovereign wealth funds, notably the Saudi PIF and the Abu Dhabi Investment Authority, control assets worth trillions of dollars. He said this gives them “an exceptional capacity to finance long-term transitions, even during times of instability”.
He also pointed out that Gulf energy producers remain crucial players in global energy markets, giving them geopolitical and economic bargaining power.
Control of key logistics corridors such as ports and aviation hubs is a key advantage for resilience strategies, Khayati said.
Compared with many regions, he said, GCC governments can implement policies, capital, and infrastructure projects very quickly, which is crucial for adapting to crises.

Resilient globalization
“I believe that the GCC countries are not withdrawing from the global economy but rather taking clear precautionary measures. This is attributed to an attempt to enhance self-sufficiency more than was the case a decade ago. Therefore, this can be seen as a strategic and economic reassessment,” said Khayati.
“The GCC’s position is neither a defensive retreat nor a continuation of the status quo. Rather, it is a deliberate shift toward ‘resilient globalization’: remaining globally connected while reducing exposure to shocks and political dependence,” he added.
Mike Champion, chief executive officer of Tahaluf, a Saudi Arabia-based business events organizer, told China Daily in an exclusive interview that for events originally scheduled across April and May, they engaged directly with core communities to assess whether rescheduling would enhance participation and overall engagement.
“In several cases, this proved highly effective,” said Champion.
For example, Champion said, LEAP — the world’s most-attended technology event, held annually in the Saudi capital Riyadh — was moved to September, a decision that has been “overwhelmingly well received”. He is optimistic they would be on track to deliver an edition that is “materially larger than would have been achieved under the original April schedule”.
Champion said a similar outcome is expected for CPHI Middle East, one of the region’s largest pharmaceutical events. Conversely, he added, the Umrah and Ziyarah Forum community, those working in Islamic religious tourism all around the world, had expressed a clear preference to retain its April dates in Saudi Arabia.
“Respecting that, we proceeded as planned and delivered the largest edition in the event’s history, including record international attendance. Taken together, these outcomes suggest that any short-term disruption has not materially dampened engagement with the Gulf,” said Champion.
“On the contrary, we are observing a more deliberate and strategic approach from partners, rather than any withdrawal from the market. It remains entirely plausible that Tahaluf will deliver its busiest and most successful second half on record,” he added.

Champion noted that across their broader events and partner ecosystem, momentum remains strong, particularly among Asia-based investors and technology companies, who continue to view Saudi Arabia as a compelling long-term growth market.
Tahaluf will be holding LEAP East in Hong Kong, for the first time, this July, positioning the city as a gateway between the Middle East and Asia’s technology ecosystems.
Jessica Wong, co-founder and managing partner at EWPartners, a global investment firm headquartered in Saudi Arabia and with an office in Oman in the Gulf region, was upbeat.
She told China Daily that even against the backdrop of ongoing regional conflict, Middle Eastern investors’ support for their firm never wavered, and that investment institutions from outside the Middle East have steadily advanced their collaboration.
The Gulf states, she said, are shifting from expansion-driven development to strengthening resilience.
“Which means a tilt toward defensive assets. Sovereign funds are increasingly focused not just on ‘What’s the ROI (return on investment)?’ but on ‘Does this project make every aspect of our country’s operations more secure?’” said Wong.
“From our observation, existing partners have largely not pulled back.”
In many cases, she said, they have maintained or even increased their commitment.
“Being a reliable bridge that connects Chinese industrial capacity with local demand is becoming an increasingly valuable strategic asset. On the demand side, we are seeing a rising interest in defensive asset categories — food security, healthcare resilience, and new energy,” said Wong.
She said these are exactly the areas where Chinese supply chains and execution capabilities can create value.
“Our investment efforts in areas such as cold chain logistics, big-data-driven offline distribution networks (focused on how to enter the Middle East market while serving global markets), high-end medical consumables, and healthcare services are all advancing further,” said Wong.
“Our observation is this: partnerships today are asking less about ‘How does your pricing strategy compare to competitors?’ and more about ‘How do you ensure supply and maintain operations under extreme circumstances?’ This conflict has not changed our direction — it has just made our direction clearer,” she added.
Champion, the CEO of Tahaluf, said that in their observation, the nature of the conversation has evolved.
“There is greater emphasis on resilience, localization, and operational continuity. We are seeing increased interest in sectors such as AI, cybersecurity, cloud infrastructure, and advanced manufacturing, all aligned with national priorities around economic diversification and sovereign capability,” said Champion.
In conversations with international tech firms, he said, there is also a greater emphasis on operational resilience — how partnerships are structured, how data is managed, and how they engage local ecosystems.
“There is more focus on adaptation, but there is no broad-based retreat,” said Champion.
“The Gulf continues to be viewed as a stable, well-capitalized growth market, with governments actively reinforcing investor confidence through policy, infrastructure investment, and long-term economic planning,” he added.

jan@chinadailyapac.com