Chinese artificial intelligence is knocking on the doors of the Gulf
Chinese artificial intelligence is knocking on the doors of the Gulf
As the "technological cold war" between Washington and Beijing intensifies, initial public offerings (IPOs) of Chinese artificial intelligence companies have transformed from a tool for raising capital into a "strategic bridge" to alternative markets, primarily the Gulf states. This shift was evident last December, reflecting a new equation in the financial markets: "Gulf money in exchange for technology localization.”
Chinese companies, besieged by US export restrictions and a lack of Western funding, turned to sovereign wealth funds in Saudi Arabia and the UAE as "saviors," not only through listing their shares on the Hong Kong Stock Exchange but also by accepting stringent conditions requiring the relocation of their operational headquarters and research centers to Riyadh and Abu Dhabi. This was demonstrated by the investment surge that accompanied the record-breaking IPO of Shanghai Biren in the final days of 2025, according to a Reuters report.
Regarding the actual extent of "technology transfer," the facts indicate that it goes beyond simply opening sales offices, reaching what is described as "extracting technological secrets" through partnership agreements. Recent negotiations between the Saudi Public Investment Fund and Chinese technology companies seeking to participate in the NEOM project revealed stringent conditions that go beyond mere financial investment. These conditions mandate the establishment of joint ventures in which the Kingdom holds a controlling stake, and require Chinese companies to open the "black box" of their algorithms and hand over the source code to local authorities to ensure digital sovereignty.
Some Chinese companies complained about this requirement, deeming it a "harsh condition" for market access, but they accepted it under pressure from the need for liquidity and to escape the saturation of the domestic market in China, according to an assessment published by China Briefing, a website specializing in analyzing foreign investments in China.
Technology transfer to the Gulf
In this context, Recep Yorulmaz, president of the International Association for Economic Policy Research, tells Al-Araby Al-Jadeed that the initial public offerings (IPOs) of Chinese companies specializing in artificial intelligence have an indirect, but strategic, impact on the transfer of technology to the Gulf Cooperation Council (GCC) countries. Despite the absence of direct offerings on the Gulf stock exchanges, the success of these companies in raising capital through the Hong Kong and mainland China stock exchanges has given them global credibility and the financial resources necessary to expand their activity in the Middle East.
This expansion is typically achieved through capital-intensive strategic partnerships and large-scale infrastructure projects, which serve as the primary channels for transferring advanced technological knowledge to local markets, according to Yorulmaz. He points out that technology transfer occurs through three main channels. The first is the localization of algorithms and products, where Chinese companies adapt their core models to suit Arabic language processing and local cultural norms.
The second channel is the establishment of regional data centers and cloud facilities, effectively localizing technology within the Gulf countries, which Yorulmaz considers pivotal in driving technological progress in the region.
The third channel involves joint research and development laboratories playing a crucial role in fostering collaboration and innovation, where Chinese engineers exchange expertise with local talent in areas such as algorithms and software systems. This is clearly evident in smart city projects, autonomous vehicles, and health information technology.
The impact of this investment flow is not limited to digital infrastructure, but extends to tangible benefits for citizens, especially in terms of job opportunities and vocational training, according to Yorulmaz, explaining that each artificial intelligence center or large joint venture would generate between 150 and 250 highly skilled jobs.
Early access to the codes
Walid Karam, an academic specializing in technology and digital transformation, confirms to Al-Araby Al-Jadeed that the Gulf states are not playing the role of a passive investor in the context of the global race for dominance of artificial intelligence algorithms, but have turned into an "active" player seeking to own the technology, not just finance it.
Karam explains that by early 2026, Gulf sovereign wealth funds' subscriptions to Chinese AI startups will shift from a portfolio diversification tool to a systematic strategy for transferring and localizing advanced technology. He notes that these subscriptions are now managed through "technical conditions" imposed by Gulf investment funds, which go beyond simply providing capital to include tangible commitments to knowledge transfer.
For example, in the Hong Kong IPO of the Chinese company MiniMax in December 2025, Gulf participation was linked to the establishment of local data centers in the region, according to Karam. He believes this model grants Gulf countries "early access" to source code and Large Language Models (LLMs), which may be prohibited or restricted under Western policies, and allows for the transfer of model training processes to supercomputing centers.
Regarding the practical impact on the labor market, Karam points out that every billion dollars invested in this sector—provided effective localization agreements are in place—generates between 500 and 800 high-value direct jobs. He notes that current partnerships between the Gulf and China are expected to create more than 25,000 job opportunities by the end of 2026 in fields such as data engineering, cybersecurity, and cloud computing management.
Karam also mentions that major Chinese companies like Huawei and Alibaba have already begun implementing "digital citizenship" initiatives, which aimed to train more than 100,000 young Gulf nationals in advanced programming and generative artificial intelligence skills last year alone.
Karam emphasizes that the benefits are not limited to the technical elite but extend to the average citizen through two main avenues. The first is improving the quality of public services, as integrating advanced Chinese technology into "smart city" projects leads to more efficient management of traffic, healthcare, and energy consumption.
The second path is embodied in enabling local entrepreneurship, where Chinese companies provide "open platforms" that allow Gulf youth to develop their own applications on top of a shared digital infrastructure, opening up broad prospects for small and medium enterprises in the digital economy.
Yayın Tarihi:
26 Ocak 2026