New Tech Transfer Between UAE and China Should Throw Sand in the Gears of U.S. AI Exports to the Gulf

The United States may have inadvertently green-lit funding for Chinese missile technology. On October 25, the Financial Times reported that U.S. intelligence agencies had collected information in 2022 suggesting that G42, a Microsoft-backed artificial intelligence (AI) flagship of the United Arab Emirates (UAE), had given flight software technology to Huawei, a U.S.-sanctioned state-backed Chinese telecommunications firm. That tech was used to improve the People’s Liberation Army (PLA) air-to-air missile systems.

The revelations, which follow the Trump administration’s efforts to expand American AI exports to the Gulf region, highlight the role of Chinese tech firms abroad in fueling PLA modernization.

Technology Transfer Reportedly Used To Improve PL-15 and PL-17 Missiles

The technology transferred between the UAE and China reportedly included components intended to improve the targeting and flight systems of the PLA Air Force’s air-to-air missiles, particularly the PL-15 and PL-17 variants. These variants, the former of which Pakistan may have used in its brief war with India in May, reportedly have significantly greater ranges than some American systems, giving Chinese stealth fighters a substantial advantage in any potential air-to-air engagement.

The transfer was allegedly funneled from the UAE to China via G42, the Emirates’ flagship AI group with substantial ties to Microsoft, a key investor, and the UAE government, and is led by Sheikh Tahnoon bin Zayed, the government’s National Security Advisor. According to the Financial Times, Huawei, a state-backed major Chinese telecommunications firm that has previously provided equipment to G42, received the technology before passing it to the PLA.

China Remains a Key Player in the Gulf’s AI Sector

While the report of G42’s involvement in the transfer remains unconfirmed, Washington has long worried over the firm’s extensive ties to China. In April 2024, The New York Times reported that American intelligence agencies had raised concerns over G42’s connections with Chinese firms, including Huawei, as well the connections of Presight AI, one of G42’s subsidiaries. These concerns pushed the Biden administration to prevent Microsoft from investing in G42 until securing several concessions from the firm, including a promise to remove Huawei’s equipment from its networks. These concerns also partially stemmed from the UAE’s connection to sanctions and export control evasion, particularly in harboring illicit Iranian shadow banking.

The Gulf region has become a front line within America’s escalating AI race with China, particularly as the region has sought to diversify away from energy-driven economic growth. While China has funded a range of AI projects across the region, from university laboratories to data centers, the United States signed a series of bilateral deals in May to sell hundreds of thousands of Nvidia, Advanced Micro Devices, and Qualcomm chips to the UAE and Saudi Arabia in exchange for domestic investment in the American AI sector.

Washington Should Prioritize Security in Exporting American AI 

The Financial Times report follows the Commerce Department’s International Trade Administration’s efforts to introduce a new export authority designed to accelerate the diffusion of American AI technology, showcasing the risks associated with substantial technology investments abroad in the absence of stronger security standards. Prior to launching new export regimes, the Commerce Department should ensure that the program prioritizes close U.S. allies and partners with a strong record of cooperating with American economic security policies while introducing stringent cyber-physical safeguards.

These measures should be paired with a stronger intelligence review on the transfer, particularly as Huawei and its affiliates remain subject to U.S. sanctions under the Treasury Department’s newly expanded Entity List. As a part of this review, the Trump administration should consider suspending further technology transfers to the UAE, including the possibility of Commerce revoking firms’ current export licenses.

Jack Burnham is a research analyst in the China Program at the Foundation for Defense of Democracies (FDD). For more analysis from Jack and FDD, please subscribe HERE. Follow Jack on X @JackBurnham802. Follow FDD on X @FDD. FDD is a Washington, DC-based, nonpartisan research institute focusing on national security and foreign policy.