How MENA’s ports could become the connecting nodes in China’s expanding global industrial web
Beijing’s evolution from an exporter of finished goods into an organiser of overseas production networks offers MENA a significant industrial opportunity—but only if market access is exchanged for local capacity, skills and exports.
China shipped more than 1mn vehicles overseas in June, the first time monthly exports crossed that threshold. It also sold about 32bn integrated circuits abroad as total exports rose 27 per cent year on year and the monthly trade surplus widened to $125.6bn.
At the same time, Beijing sent no gallium, dysprosium, terbium or yttrium to Japan. The US received no yttrium for a second consecutive month. Yet China’s overall exports of rare-earth magnets rose to 5,649 tonnes from 4,730 tonnes in May, pointing to selective supply management rather than a universal embargo.
The combination of export strength and upstream control illustrates China’s changing international economic role. Zhiwei Zhang, chief economist at Pinpoint Asset Management, expects Chinese exports to “remain strong in the second half”, but warned that this would place further pressure on trade relations, particularly with Europe.
For Middle Eastern and North African governments, this creates a strategic choice. The region can remain a destination for competitively priced Chinese vehicles, batteries and renewable-energy equipment—or use its ports, capital and industrial zones to become part of the production system through which China serves Africa, Europe and the wider Middle East.
From exporter to supply-chain organiser
China is no longer expanding abroad solely by loading finished goods onto ships. Its companies are increasingly establishing factories, distribution centres, service networks and engineering operations closer to overseas customers.
This does not mean that China is abandoning its domestic manufacturing base. Rather, it is extending that base internationally. Core technologies and high-value components can remain anchored in China while selected stages of assembly, processing, servicing and distribution are moved nearer to foreign markets.
The model gives Chinese companies several advantages. Overseas production can shorten delivery times, reduce shipping exposure, adapt products to local regulations and, where rules permit, improve access to markets facing higher barriers against direct Chinese exports.
China’s control of critical materials adds another dimension. Its companies can expand sales of vehicles, electronics and clean-energy systems while many competitors remain dependent on Chinese-refined minerals and magnets. The result is a shift from simply exporting goods towards influencing how international industrial networks are organised.
For MENA, that transformation offers opportunities but also considerable risks. The region could attract capital and manufacturing as Chinese groups seek new markets and diversified production bases. But it could equally become an outlet for excess Chinese capacity, exposing local producers to intense price competition while capturing little beyond port, retail and distribution revenues.
The first industrial links are forming
Morocco offers the clearest example of the potential transformation. Gotion High-Tech is developing a battery gigafactory near Kenitra, with an initial investment of $1.3bn and planned annual capacity of 20 gigawatt-hours. The project is also intended to manufacture cathodes and anodes, with much of its output directed towards European markets.
Production has not yet been confirmed. Gotion previously targeted the third quarter of 2026, while a May research note cited by Moroccan business publication Médias24 refined the expected start to August. The timetable therefore remains a forward-looking target rather than evidence that commercial production has begun.
In Egypt, Chinese energy-technology company Sungrow is to establish an energy-storage battery factory in the Suez Canal Economic Zone. Part of the factory’s output is expected to supply a large Egyptian solar and battery-storage project, linking local production with domestic infrastructure demand.
Saudi Arabia is pursuing a complementary position further upstream. Riyadh estimates that its untapped mineral resources—including phosphate, gold, bauxite and rare-earth elements—are worth about $2.5tn. Its Manara Minerals investment vehicle is seeking overseas exposure to copper, lithium and other materials needed by electric vehicles and renewable-energy systems.
The kingdom has also progressed beyond preliminary discussions on rare-earth processing. In November, Maaden agreed with MP Materials and the US defence department to build a rare-earth refinery in Saudi Arabia. Maaden is to hold 51 per cent of the venture, with MP Materials and the US government holding the remaining 49 per cent. The partners are also discussing possible magnet manufacturing in the kingdom.
The project demonstrates that MENA countries do not need to choose exclusively between Chinese and western supply chains. Saudi Arabia is seeking to use its energy, capital and location to build partnerships with competing industrial powers while developing domestic processing capability.
From competing ports to complementary corridors
MENA’s geography provides the physical structure for a wider industrial network.
Egypt’s Ain Sokhna and East Port Said could form the Red Sea–Mediterranean hinge of a wider China–MENA industrial network. The Suez Canal Economic Zone’s four industrial areas and six ports allow Asian components to enter through the Red Sea, undergo processing or assembly in Egypt and leave through the Mediterranean for European and African markets. The opportunity extends beyond vehicles and batteries to electronics, household appliances, solar equipment, chemicals, construction materials, food processing, pharmaceuticals and machinery. Chinese-backed projects in Sokhna—including electronics, photovoltaic glass and chemicals—already point towards a cluster model in which imported technology is combined with Egyptian materials, labour, engineering and supplier networks to produce goods for domestic and export markets.
Egypt’s trade agreements and geographic position strengthen this proposition. Qualifying products manufactured locally can potentially reach Arab, African and European markets, while Sokhna can serve the Gulf, Red Sea and East Africa and East Port Said can handle Mediterranean and Europe-facing exports. The corridor could also work in reverse, bringing African agricultural commodities, minerals and intermediate materials into Egypt for processing before re-export. To capture lasting value, incentives should be tied to local-content targets, supplier development, technology transfer, servicing capacity and exports to third countries. The objective should be to turn Egypt from a transit point into a manufacturing, maintenance and re-export platform linking Chinese technology, African resources and global markets.
On the other hand, Jebel Ali and Khalifa Port could anchor Gulf distribution, trade finance, inventories and advanced assembly. Jebel Ali’s adjoining free zone provides manufacturers with integrated access to sea, land and air links serving the Middle East, Africa and South Asia. Oman’s Sohar, Duqm and Salalah ports could support mineral processing, heavy industry and route diversification. Sohar lies outside the Strait of Hormuz, Salalah is positioned beside the principal east-west shipping lane, and Oman’s bonded corridors connect its ports with free zones, warehouses and airports. Tanger Med could serve as the network’s western gateway, connecting Morocco’s automotive and battery industries with Europe and West Africa. The complex provides regular links to more than 180 ports in 70 countries and combines maritime services with an integrated industrial and logistics platform.
Recent shipping disruption demonstrates why such a multi-port network would matter. Idriss Aarabi, managing director of Tanger Med, told Reuters that vessels diverted around the Cape of Good Hope could face an additional 10 to 14 days in transit. The port was consequently focusing on “capacity management and the prevention of congestion”.
The value of the proposed web would therefore come from specialisation and redundancy rather than duplication: Gulf finance and distribution, Omani processing and route resilience, Egyptian manufacturing and Suez access, and Moroccan automotive production and European connectivity.
A tougher commercial bargainTrump-Xi Summit Signals Strategic Stabilisation Ahead of High-Stakes September Talks
MENA governments would need to attach measurable conditions to Chinese investment. Industrial land, tax incentives, infrastructure and access to public procurement should be linked to local sourcing, supplier development, technical training, research spending and exports to third countries.
A plant that imports almost all its components and sells only to its host market would provide jobs and tax revenues, but limited industrial transformation. A stronger investment would qualify regional suppliers, manufacture selected components locally, train engineers, maintain spare-parts centres and export a growing proportion of production.
Electric vehicles provide a practical test. A Chinese car arriving at a MENA port can remain an imported finished product. Alternatively, Gulf aluminium and petrochemicals could supply inputs, Egypt could host selected assembly and engineering operations, Morocco could produce battery materials, and regional ports could distribute vehicles to African, European and Arab markets.
Such a chain remains aspirational. It would require compatible customs systems, investment incentives, technical standards and commercial agreements among countries whose ports often compete for the same cargo and factories.
Access to Europe would also not be automatic. EU rules require goods containing imported components to undergo sufficient processing before they can qualify for preferential origin. Rules of origin are based on where products are genuinely manufactured, not simply the port from which they are shipped.
European authorities have already shown that they will act when Chinese products or subsidies are judged to be circumventing trade measures through regional manufacturing bases. That makes substantial local production and transparent sourcing essential to the long-term credibility of the model.
The region must also guard against being confined to lower-margin assembly while design, software, advanced materials and intellectual property remain abroad. Investment performance should therefore be assessed through measurable indicators: the proportion of regional inputs, the number of local suppliers certified, engineers trained, research conducted and production exported.
China would gain resilient routes, shorter delivery times and production bases closer to expanding markets. MENA would benefit only if those advantages were exchanged for durable manufacturing capacity, technical skills and a meaningful position in global value chains.
The success of the emerging relationship should not be measured by how many Chinese vehicles, batteries or solar panels are unloaded at MENA ports. It should be measured by how many are increasingly manufactured, serviced, financed and re-exported from the region.
Related news:
US and Japan Deepen Critical Minerals Alliance Around Lynas
Egypt Opens 9 Industrial Projects in Suez Canal Economic Zone with $182.5mn Investments
Read also:
The Iranian War: Between Subduing China and American Lobby Agendas
