Xi’s Visit to Saudi Arabia: New Horizon of Cooperation

At a time when Washington’s relations with Riyadh appear to be deteriorating, Saudi Arabia and China have reiterated their collaboration on the global oil market and the principle of non-interference in domestic affairs during a visit designed to strengthen strategic ties. Chinese President Xi Jinping went on a visit to the Kingdom of Saudi Arabia on 7 December 2022. Several strategic agreements, including one involving Chinese electronics giant Huawei, were inked by Saudi King Salman and Chinese President Xi Jinping. The two parties said they “exchanged ideas regarding how to reinforce and deepen comprehensive strategic partnership relations between the Kingdom and China” in a joint statement released on 9 December 2022. It reaffirmed the significance of the values of sovereignty and ‘non-interference’ personifying from both states. Therefore, the visit will open some new horizons of cooperation between the two countries.

However, bilateral commerce between Saudi Arabia and China reached $87.3 billion last year, an increase of 30% from 2020, and in the third quarter of 2022, it reached 103 billion Saudi riyals ($27 billion). Oil accounted for a large portion of trade. In 2021, China imported $43.9 billion worth of oil from Saudi Arabia, making up 77% of all of the country’s merchandise exports to China. Additionally, that sum accounts for about 25% of Saudi Arabia’s entire crude exports. The second-largest economy in the world is heavily dependent on imported oil and gas. According to government data, it imported 72% of the oil it used last year. The demand for natural gas came from abroad in 44% of cases.  Besides, there were a number of technological collaborations between the two states happened. China happens to be the number one crude oil importer while Saudi is among the top exporters.

Previously,Joe Biden, the US president, visited Saudi Arabia in July 2022 in an effort to persuade the Saudis to increase oil output and reduce petrol prices at the pump, despite criticism from Washington politicians over the country’s treatment of its citizens. Ahead of the 2022 midterm elections, the Saudi-led OPEC+ decided in October to reduce oil production by two million barrels, which Biden’s administration saw as a non-friendly gesture. As they attempt to navigate a polarized world order with an eye on national economic and security interests, Saudi Arabia and its Gulf allies have been stubborn in the face of US demands to rupture with partner OPEC+ oil producer Russia over its invasion of Ukraine and to limit dealings with China. Against such backdrop, the visit of the Chinese president shed significance on several issues which will also bring some ramifications. The paper will discuss the issues and the ramifications of those.

Saudi Arabia is a major energy supplier to China. According to Saudi official media, the agreements that both parties were to sign were expected to be worth roughly $29.3 billion. It will strengthen the current relationship in the energy domain.

Besides, on 7 December, while formation aircraft flew overhead during Xi’s trip, Saudi official media revealed 34 investment deals in industries such as green hydrogen, information technology, transportation, and building. On December 8, another 20 agreements totaling 110 billion riyals ($29.3 billion) were inked. Moreover, Xi and King Salman agreed to hold summits between the leaders of their two nations every two years which will pave the way to facilitate new cooperative measures. Besides, the agreement on housing sector intends to foster friendly and practical bilateral ties as well as mutual benefit and shared development in the housing sector between the two nations.

In the technological domain, per the Saudi officials, the contract involving Huawei Technologies has to do with establishing high-tech complexes in Saudi cities, cloud computing, and data centers. It reflects the KSA’s vision to brace an advancement in the technological domain.

There are other areas of enhanced cooperation discussed during the visit. The spots of collaborative efforts include surveying, design and construction, site management, health, safety and environment, building materials and energy-efficient structures, as well as the exchange of development plans, policies, measures, administrative expertise, and successful practices in the fields of urban development and housing construction. They also cover the training of engineers and technicians in both nations, the sharing of knowledge about contemporary building technologies, funding innovations and green building, the application of information and data technologies in smart cities and the building, manufacturing, and construction sectors. All these will help to open new era of cooperation.

The ramifications of the visit should be illustrated with deep understanding of the world politics since there are USA and Iran which have a great influence in the relation of the two countries.

Firstly,Riyadh reiterated its allegiance to the “one-China principle,” according to which Taiwan is an unalienable portion of Chinese territory and the People’s Republic of China (PRC) is the only legitimate government. It will also facilitate China not to interfere in KSA’s domestic issues. The human rights issue can be related. Secondly,according to the statement, the two parties emphasized the significance of stability in the global oil markets and decided to look into investment prospects in the petrochemicals industry as well as renewable energy sources. Thirdly, officials also applauded Saudi companies’ participation in a number of energy and investment alliances under the Belt and Road Initiative, a vast infrastructure development that would link East Asia with Europe and strengthen “the Kingdom’s location as a regional center for Chinese companies.

Fourthly, the cooperation in KSA’s Vision 2030, economic diversification and the technological support providing by the PRC authority will be buttressed since the world’s second-largest economy is seen as a crucial partner by Saudi Crown Prince Mohammed bin Salman (MBS) in his expansive Vision 2030 program and grandiose megaprojects, such as the futuristic $500 billion megacity Neom. However, while their relationships with their long-standing US partners look to be strained by conflicts, the Saudis are also striving to broaden their economic and political affiliations. Besides, Egypt, Tunisia, Iraq, Morocco and Lebanon can be added in the queue of investment and cooperation since there is another part of the visit and these countries’ heads will be met the Chinese president.

Fifthly, as an inexorably important actor in world events, Saudi Crown Prince and Prime Minister Mohammed bin Salman (MBS) will have a better opportunity to make his influence felt on the global platform thanks to Xi’s first visit to Saudi Arabia in six years. Sixthly, China and Saudi Arabia are working together to hasten the digital transformation of the economy and the energy industry in the country. As Saudi Aramco looks to increase its downstream activities in Asia, China is a significant investment destination for the oil and gas corporation. Hydrogen and renewable energy development collaboration is in its early stages but has the potential to take off.

Seventhly, China cannot expect to invest all its eggs in one basket and become a hostage of another power’s energy and geostrategic goals, therefore diversity is a crucial component of its long-term energy security and it will be ensured by the gulf giant. Eighthly, beyond supply security, Saudi Arabia might be able to give Beijing another benefit with more significant geopolitical implications. According to a Wall Street Journal article, Riyadh and Beijing have discussed pricing some of its oil supplies to China in yuan rather than in dollars. Beijing’s plans to increase the impact of the Chinese currency on the world stage may benefit from such an agreement.

Ninthly, they concurred on the need to “strengthen joint cooperation to ensure the peaceful nature of Iran’s nuclear program” and for Tehran to uphold “principles of good-neighborliness” in a hint to Gulf security worries over Iran, another oil supplier to China and with which Beijing has close relations. So, there will be some assertive change in the relation between KSA and Iran and China can be a mediator. Finally, the Biden administration’s overly critical or outspoken response to Saudi Arabia’s choice to host Xi could work against US interests. It will create a volatile situation for the global oil market.

In juxtaposition to the subdued welcome accorded to US President Joe Biden in July, Xi has received a grand display of pomp and pageantry, including an escort from Saudi air force jets, a 21-gun salute, and the harmonies of the Saudi Royal Guard cruising Arabian horses and conducting Chinese and Saudi Arabian flags. All these show the current intent of the KSA authority and that is to enhance its tie with China which in a nutshell paves the way to newer horizons of cooperation.

Syed Raiyan Amir
Syed Raiyan Amir
Research Associate The Center for Bangladesh and Global Affairs (CBGA)