In Depth: Bahrain Courts China as It Looks Beyond Oil

Irene Hong, a partner at CEC Capital Group, visited Bahrain unexpectedly after being invited to speak at the Gateway Gulf Investment Forum while she was originally preparing to attend a conference in Saudi Arabia. Her trip reflects Bahrain’s strategic push to attract Chinese capital, technology, and tourists. The kingdom is positioning itself as a cost-effective, business-friendly gateway to the Middle East, promoting its tax advantages, connectivity, and unique status as the Gulf’s only island country. It is also working to increase its appeal to Chinese visitors by enhancing direct air links and leveraging its distinctive identity. [para. 1][para. 2][para. 3]

Bahrain, an archipelago of 33 islands, is one of the region’s smallest countries in both size and population. It has a significant history: Bahrain was the first nation in the Gulf to discover oil in 1932 and export crude in 1934, leveraging natural resources to fuel economic growth for decades. However, its early start in oil gave it an early warning about the limits of natural resources, and Bahrain took the lead in economic diversification efforts in the region. In 2008, it became the first Gulf country to launch a long-term economic plan, Economic Vision 2030, which aims to shift from a state-driven economy to a private-sector-led model. The plan focuses on growth sectors such as financial services, manufacturing, logistics, healthcare, and tourism. [para. 4][para. 5][para. 6]

Attracting foreign investment has become central to Bahrain’s strategy, particularly from China. In May 2024, Bahrain and China elevated their relationship to a comprehensive strategic partnership during King Hamad bin Isa Al Khalifa’s state visit to Beijing. That same month saw the launch of direct flights connecting Bahrain with Shanghai and Guangzhou, further integrating the two countries and supporting increased tourism. According to Bahrain’s Minister of Tourism, Fatima Al Sairafi, Chinese arrivals rose by over 40% year-on-year in the first three quarters of 2025. [para. 7][para. 8] Chinese companies are also using Bahrain as a bridgehead into the broader Middle East market, evidenced by the presence of brands such as Oppo and Vivo in Manama. [para. 9]

Tourism promotion forms a key part of Bahrain’s economic strategy. Al Sairafi highlighted the kingdom’s unique value proposition as an island destination and emphasized its appeal for business tourism, major sporting events like Formula 1, and forums. Since launching its five-year tourism strategy in 2022, Bahrain has opened 22 new hotels and has 11 more under construction, with foreign direct investment in tourism up 35% so far this year. The China Ready program and targeted roadshows in China are designed to meet Chinese cultural expectations and build relationships with tour operators. [para. 10][para. 11][para. 12][para. 13]

For investors, Bahrain offers significant tax and cost advantages, with no corporate or personal income taxes, nor capital gains or repatriation taxes. This contrasts favorably with regional competitors such as the UAE, which imposed a 9% corporate tax in 2023. Bahrain also claims a 20–30% cost advantage compared to its neighbors, as well as free trade or investment agreements with economies covering one-third of global GDP. Priority sectors for Chinese investment include manufacturing (especially aluminum processing and renewables), logistics (tapping into Bahrain’s access to Saudi Arabia), and information and communications technology (with Amazon Web Services and Huawei already present). [para. 14][para. 15][para. 16][para. 17][para. 18]

Despite the advantages, business leaders like Irene Hong caution that successful entry and expansion in the Middle East require patience and relationship-building, not transactional approaches. Establishing networks of trust and advancing on multiple fronts are essential for achieving business success in Bahrain and the region. [para. 19][para. 20][para. 21][para. 22]