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‘New Era’ of ties between China and Saudi Arabia

by Malo Phomsouvanh
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A series of bilateral agreements mark the strengthening of Chinese and Saudi ties as the US frostily watches on. We explain. During Chinese President Xi Jinping’s visit to the kingdom, Saudi Arabia and China signed a series of bilateral agreements, symbolic of deepening ties between the two countries. The US, watched on warily with the agreements being yet another signal of the growing rift between traditional allies Saudi Arabia and the United States.

Today, Saudi Arabia is the world’s top oil exporter while China is the world’s biggest energy consumer. The Indian Express delves deeper into the relationship between China and Saudi Arabia, the agreements that were signed, and their implication on global geopolitics.

Current relationship between Saudi Arabia and China

Currently, China is Saudi Arabia’s largest trading partner, with bilateral trade worth $87.3 billion in 2021. Chinese exports to Saudi Arabia reached $30.3 billion, while China’s imports from the kingdom totalled $57 billion. Below are a few areas where China and Saudi Arabia share close ties.

Oil and petrochemicals

Saudi Arabia is China’s top oil supplier. It makes up 18% of Beijing’s total crude oil purchases, with imports totalling 73.54 million tonnes (1.77 million barrels a day) in the first 10 months of 2022, worth $55.5 billion, according to Chinese customs data. Saudi state-run oil conglomerate Aramco has annual supply deals with half a dozen Chinese refiners.

In early 2022, Aramco decided to build a $10 billion refinery and petrochemical complex in northeast China, marking its single largest investment in the world’s second largest economy. The project, expected to be operational in 2024, combines a 300,000 bpd refinery and 1.5 million tonnes per year ethylene plant, with Aramco set to supply up to 210,000 bpd of crude oil.

China’s oil giant Sinopec also owns 37.5% in Yanbu Aramco Sinopec Refining Co (YASREF), a joint venture with Aramco that operates a 400,000-bpd refinery in Yanbu on the coast of the Red Sea.

Power

ACWA Power, partly owned by the Saudi sovereign wealth fund, said in September that it had agreed with Silk Road Fund to jointly invest in a 1.5 gigawatt (GW) gas-fuelled power plant in Uzbekistan for $1 billion as part of Beijing’s One Belt One Road initiative. State-run China Energy Engineering Corp (CEEC) is also building a 2.6-GW solar power station in Al Shuaiba in Saudi Arabia, also owned by ACWA Power, the Middle East’s largest solar project.

Military and Security

Saudi Advanced Communications and Electronics Systems Co (ACES) signed a deal with China Electronics Technology Group to manufacture unmanned aerial vehicle (UAV) payload systems in the kingdom, Saudi English-language newspapers Arab News and Saudi Gazette reported in March. Amidst growing tensions in Yemen and a perennially frosty relationship with Iran, these UAV payload systems will provide the Saudis with greater firepower without having to risk military personnel.

34 investment agreements between Saudi and Chinese firms

According to the Saudi state news agency, during Xi’s latest visit to Riyadh, Saudi and Chinese firms signed 34 investment agreements in green energy, information technology, cloud services, transport, logistics, medical industries, housing and construction. These agreements will strengthen economic ties between the two nations as well as bring Saudi Arabia into the fold of China’s Belt and Road Initiatives.

Some of the agreements include

MoU between the Saudi government and Huawei for cloud data computing and building high-tech complexes in Saudi cities.

MoU between Saudi Aramco and Shandong Energy that includes a potential crude supply agreement and chemicals products offtake deal, as well as exploring collaboration on integrated refining and petrochemicals in China.

Saudi ACWA Power said it signed nine MoUs with Chinese entities laying the ground for financing, investment and construction of ACWA’s clean and renewable energy projects in Saudi Arabia, and Belt and Road Initiative countries.

MOU between Saudi-based Sumou and China-based ENOVATE Motors to establish an electric vehicle factory in Saudi Arabia with a capacity of 100,000 cars per year.

A statement of solidarity between China and Saudi Arabia

Saudi King Salman and Xi signed a comprehensive strategic partnership agreement

In a joint statement, the two countries reiterated that they will continue to firmly support each other’s core interests, support each other in safeguarding national sovereignty and territorial integrity, and jointly defend the principle of non-interference in other countries’ internal affairs and other basic norms governing international law and international relations. The Saudi side also threw its weight behind the one-China policy when it came to China’s recent tensions with Taiwan.

Further, the two countries emphasised on the importance of their economic ties, and resolved to accelerate the synergy between the Belt and Road Initiative and Saudi Arabia’s Vision 2030

In an indirect swipe at the United States, the two sides also condemned “”double standards” on counter-terrorism.”

Further, the two countries emphasised on the importance of their economic ties, and resolved to accelerate the synergy between the Belt and Road Initiative and Saudi Arabia’s Vision 2030

In an indirect swipe at the United States, the two sides also condemned “”double standards” on counter-terrorism.”

The United States tensely watches from the sidelines

China and Saudi Arabia’s growing closeness comes at a time when relations between China and the US are as hostile as ever and ties between the Saudis and the Americans have grown sour following the death of Jamal Khashoggi. Chinese-Saudi relations are strengthened in these tensions, with the Saudi’s seeking a reliable alternative to the US and China wanting to rival the Americans in their diplomatic and economic strength.

Chinese premier Xi arrived in Saudi Arabia to much fanfare unlike the tepid reception received by US President Biden. The South China Morning Post carried an article on December 8, stating “After decades of US engagement and with little to show for it, Saudi Arabia is looking instead at tangible deals with China.”

The United States’ position as a global hegemon will not change overnight but as China and Saudi Arabia’s growing relations exhibit, the winds of change seem to be blowing hard.

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