Why Chinese banks are still lending dollars to the Gulf

At a time when war has disrupted Gulf energy exports and shaken investor confidence, four of China’s largest banks have agreed to lend QatarEnergy US$3 billion. Saudi Aramco is also reportedly negotiating a US$10 billion credit facility involving Chinese banks alongside American, European and Japanese lenders. The money is in dollars.

The puzzle goes beyond why two wealthy energy producers want to borrow. Chinese lenders sharply reduced their exposure to the region after the war began in late February. Why are some now willing to commit fresh funds, even as the risks persist?

Their decisions reveal a deeper feature of China’s relationship with the Gulf. Years of energy purchases, construction contracts and investment have made the region important to Chinese companies as customers, suppliers and project partners. Lending to selected Gulf giants can help Chinese banks preserve valuable clients and, indirectly, support the commercial networks in which other Chinese firms have built substantial stakes. Financial involvement deepens those relationships, while giving China more to lose if regional instability continues.

The Gulf’s need for credit

The Gulf’s wealth has never eliminated its need for credit. Saudi Arabia is spending heavily on infrastructure, housing and industries intended to reduce dependence on oil. Qatar is financing an extensive expansion of liquefied natural gas production. These investments require steady funding even when energy revenues are strong.

War has complicated those plans. Attacks on infrastructure and interruptions to shipping through the Strait of Hormuz have made oil and gas exports less predictable. Qatar’s government recorded a deficit of 21.2 billion riyals, roughly US$5.8 billion, in the second quarter of 2026, more than twice its first-quarter shortfall. State budgets and energy companies have separate finances, but disruptions to their main industry affect both.

For a large company, taking out a loan can preserve cash for operations and investment. It also spreads funding across more banks and markets. Western finance remains available to leading Gulf borrowers: in September, Qatar sold US$3 billion in government bonds, with Goldman Sachs, HSBC and JPMorgan among the arrangers. The appetite for Chinese financing reflects the value of having more options, especially when the regional outlook is uncertain.

Easier loans: when Gulf businesses partner Chinese companies 

For Chinese banks, Gulf energy companies are attractive long-term customers with extensive assets and established commercial operations. Loans earn interest; client relationships can also bring trade finance, project loans and other business. The lenders have become more cautious, however.

Asian bank lending to the Gulf was reportedly down 72% year-on-year by September, following a sharp pullback at the start of the conflict. Recent deals point to selective engagement with established borrowers amid continuing regional risks.

What makes these clients particularly important is how deeply Chinese companies are already involved in their businesses.

The US$3 billion loan is for QatarEnergy’s general operating needs. There is no public evidence that the banks earmarked it for Bul Hanine or intended it to rescue a Chinese contractor. Yet a financially resilient client is better placed to sustain investment and payments across its projects. The interests of Chinese financiers, builders and equipment suppliers can reinforce one another even when the transactions are legally separate.

In Saudi Arabia, the relationship is more explicit. In November 2025, Saudi housing bodies and ICBC’s Riyadh branch signed an agreement to develop financing arrangements for projects involving Chinese contractors. The approach combines engineering and construction with financing. Such arrangements can help Chinese companies secure overseas business, while creating additional opportunities for Chinese banks.

This commercial logic also sets limits on the geopolitical interpretation of new loans. With China’s major banks under state control, it is reasonable to ask whether Beijing is signalling confidence in the Gulf or hoping to influence the war. Gulf governments may welcome deeper Chinese financial ties as a way to encourage Beijing to press Iran to protect energy routes. Their underlying commercial incentives, however, are easier to identify than the political intentions behind individual loans.

Same currency, different source of financing

The currency adds another layer. Beijing has encouraged the use of renminbi in international trade and reduced its reported holdings of US government debt. Nevertheless, QatarEnergy is borrowing dollars from Chinese banks. That makes sense for a company operating in a global energy industry still heavily priced and financed in dollars, and for banks with international dollar businesses of their own.

China can expand its financial relationships with energy suppliers and construction partners while continuing to use the dominant global currency. These loans offer no evidence that Chinese banks are redirecting money away from US Treasuries; some Chinese commercial banks have continued purchasing them this year. The immediate change is in who provides financing and sustains the client relationship, even as the currency remains the same.

There may be diplomatic consequences. Gulf officials have sought a stronger Chinese role in encouraging Iran to ease threats to shipping. Greater economic exposure gives Beijing additional reasons to pursue stability, but financial ties cannot secure an energy facility or guarantee safe passage through Hormuz. China’s existing stakes did not prevent the disruption.

Wartime lending therefore captures a tension in China’s expanding Gulf presence. Chinese banks have commercial reasons to stand by carefully chosen clients whose businesses connect to China’s own industrial interests. Those commitments may help preserve trade, contracts and influence. They also expose Chinese capital to risks that Beijing has limited power to contain. The deeper China becomes embedded in the Gulf economy, the more costly instability becomes for China itself.

Related: The Mecca agreement’s implications for China | What Beijing really means by a ‘strategic partnership’ with Iran