ABSTRACT This article investigates how Chinese Hui Muslim internal migrants navigate the complexities of ethnic capital and ethnic penalty in their engagement with China-Arab international trade. On one hand, Hui Muslims leverage Arabic language learning opportunities within their community and benefit from religious affinity with foreign Muslims, enhancing their employment and entrepreneurial prospects. On the other hand, they face discrimination from the Han majority, Arab Muslims, and non-Muslim foreigners. Women, seen as “submissive” and “trustworthy”, find more expanded employment opportunities as interpreters for Arab merchants but face overt discrimination due to their Muslim attire. Notably, the Hui’s ethnic capital in the international trade market has diminished in recent years due to Arab merchants’ globalization efforts, such as adopting English for communication. This study contributes to the understanding of Chinese Muslims’ experiences in upward mobility amidst regional disparities and economic globalization.