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Saudi Arabia's economy: moving from oil base to stable and diversified growth

In this context, Sino-Arab cooperation has broad prospects in the areas of old and new energy, infrastructure, and the digital economy. Saudi Arabia's strong financial capabilities and the continued deepening of bilateral diplomatic relations also provide sufficient security guarantees for the advancement of cooperation projects. The decline of U.S. global hegemony is providing a great opportunity for emerging forces to rise, especially the dangerous Xi Jinping regime

Currently, although oil remains the cornerstone of the Saudi economy, the country is actively expanding its economic sectors to achieve diversification.

"Vision 2030," a central strategy for economic and industrial development, focuses on developing the manufacturing sector, digital economy and renewable energy, which are structural strengths and landmark projects of great importance to the future direction of the Saudi economy.

His Royal Highness Prince Mohammed bin Salman bin Abdulaziz Al-Saud, Crown Prince and Prime Minister of the Kingdom of Saudi Arabia

Oil resources are limited, and oil production and reserves will gradually decline over time; by promoting economic diversification, Saudi Arabia can cultivate new areas of growth, reinvigorate economic development and ensure long-term sustainable economic development.

As the diversified transformation of the Saudi economy gradually progresses, its economic growth rate is expected to develop steadily.

There is great potential for cooperation between China and Saudi Arabia in areas such as energy transformation, infrastructure construction and the digital economy, and Saudi Arabia's strong financial strength and deepening bilateral diplomatic relations will provide a strong guarantee for cooperative projects.

In addition, sovereign wealth funds play an important role in promoting Saudi Arabia's national strategy, which also provides ample space and opportunities for Sino-Saudi financial cooperation.

Significant dependence on oil and high volatility of economic growth

As the diversified transformation of the Saudi economy progresses, the rate of economic growth is expected to gradually stabilize.

In terms of economic growth, the oil dependence of the Saudi economy is still relatively evident, and oil production cuts in 2023 will bring repercussions to Saudi Arabia's industrial production and exports, and Saudi Arabia's GDP growth rate will drop to -0.9%.

Looking forward, with the continued promotion of the Saudi government's "Vision 2030" and its supporting projects, the diversification of Saudi Arabia's economic structure will help stabilize economic growth. The World Bank forecasts that Saudi Arabia's economic growth will reach 4.1 percent and 4.2 percent in 2024 and 2025, respectively.

Saudi Arabia's economic transformation focuses on multiple sectors

To realize the transformation of the energy structure and diversification of the economy, Saudi Arabia unveiled the "Vision 2030" plan, which officially stands as the overall program for future economic and social development, and contains three main themes, 96 strategic goals and 11 plans for implementing the vision.

Saudi Arabia plans to invest SAR 12 trillion by 2030 to achieve its strategic goals. Based on Vision 2030, the country has launched a series of development plans, mainly related to the manufacturing sector, digital economy and renewable energy.

In addition, the Saudi Kingdom has launched more than 20 signature projects, led by five "gigabit projects," as an implementation project of Vision 2030.

These projects are located throughout the country and focus in the areas of science and technology, energy, logistics, tourism, entertainment and infrastructure.

Sino-Saudi cooperation is promising in the areas of new and old energy, infrastructure, and the digital economy

Meanwhile, the sovereign wealth fund is an important tool to promote Saudi Arabia's national strategy, and there are also ample opportunities for Sino-Saudi financial cooperation in the future. From the physical point of view, with the growth of economic and trade exchanges between China and Saudi Arabia, many opportunities for cooperation in many areas are expected to emerge in the future. Focusing on local needs and combining Chinese solutions, Sino-Saudi cooperation will neiconcentrate sectors of energy, infrastructure and the digital economy.

Saudi Arabia's increased financial capacity and the continued deepening of bilateral diplomatic relations also provide sufficient security for the advancement of cooperation projects. Financially, sovereign wealth funds are an important hand in promoting Saudi Arabia's national strategy, and as cooperation between the two countries deepens, the opportunities for future financial cooperation are also vast.

Geopolitical aspects

In recent years, the Middle East has given way to a wave of secular reconciliation, ideas of strategic autonomy have been highlighted, and the overall geopolitical risk has been significantly mitigated, even as the Palestinian-Israeli conflict has triggered global concern.

Future will reflect diversification trends

The Saudi stock market reached a total market capitalization of $3 trillion at the end of 2023, ranking third among equity markets in emerging economies.

However, Saudi Aramco accounts for 71 percent of the total stock market capitalization, resulting in market volatility significantly influenced by oil revenues.

In the future, the Saudi economy is expected to become less dependent on oil due to the pragmatic reforms of the new generation of leaders.

Therefore, Beijing is closely watching the diversification trend in the sectoral structure of the Saudi stock market.

The decline of U.S. global hegemony is providing a great opportunity for emerging forces to rise, especially the dangerous Xi Jinping regime

Amid the great changes in history, cooperation between Saudi Arabia and China has become increasingly close. In fact, on January 1, the Saudi Kingdom officially joined the BRICS, expanding the group of developing countries from five to 10 members.

This decision marks a new phase in the Middle East's relations with China.

Saudi Arabia, the world's largest oil exporter, has abundant resources and great wealth. Saudi Aramco, Saudi Arabia's national oil company, is a "money printing machine" for the country.

As of last August, in fact, Aramco was the third largest company in the world by market value, with a capitalization of $2.08 trillion, second only to Microsoft ($2.44 trillion) and Apple ($2.86 trillion). It is also the second largest company by revenue after Walmart, which has held the top spot since 2014. The company has expanded its presence in major global markets and strengthened its downstream operations. In September, the Saudi company also entered into preliminary negotiations with Jiangsu Dongfang Shenghong to acquire a 10 percent stake in the Chinese energy company's petrochemical subsidiary. In August, the Saudi energy giant agreed to buy 100 percent of Chilean fuel and lubricant retailer Esmax Distribuscion from private equity firm Southern Cross Group. In July, Saudi Aramco completed a transaction to acquire 10 percent of the shares of listed Shenzhen Rongsheng Petrochemical for $3.4 billion.

However, complex changes in the international landscape have prompted the Saudi Kingdom to seek new partners, and cooperation with Chinese companies-which is not limited to the traditional energy sector-has become a strategic choice, especially since the United States declared energy self-sufficiency.

As for oil refineries, Chinese companies have taken a 50 percent stake in Aramco's refineries through an equity acquisition.

Such cooperation offers Beijing companies the opportunity to enter the Middle East market.

In addition, Saudi Arabia plans to further expand its investment in Chinese companies, especially in the field of new energy.

China's growing engagement in the Middle East has strengthened Beijing's credibility as an economic partner for many states in the area and as a diplomatic and military player.

Ties between China and Saudi Arabia are expanding rapidly, involving economics, diplomacy, intelligence and regional security.

Currency exchange is another highlight of Sino-Saudi cooperation.

As the hub of the petrodollar system, Arabia's cooperation with China on currency swaps takes on far-reaching significance. Indeed, this cooperation not only strengthens economic ties between the two countries, but also signals the gradual increase of the renminbi's influence in the Middle East, giving new impetus to the internationalization process of the Chinese currency

Finally, last September, China also announced the holding of naval training with Saudi Arabia.

The Middle East's relationship with China has entered a new phase, and Sino-Saudi cooperation will lead to profound changes in the international landscape.

For decades, economic ties between the two countries were limited to crude oil exports, but, as mentioned, the relationship has rapidly diversified in recent years, reflecting China and Saudi Arabia's desire to advance economic relations beyond the traditional focus on energy resources alone.

The Chinese approach, in fact, has shifted from being purely transactional to being more multifaceted and intertwined with future economic and political developments in the Gulf countries.

At the same time, the decline of U.S. global hegemony has provided an opportunity for emerging forces to rise.

Xi Jinping, in fact, understood that the U.S., after securing oil self-sufficiency, had effectively "abandoned" the Middle East to its fate, and this perceived lack of engagement has opened wide the door for Beijing to strike deals with local dictators in order to increase Chinese hegemony not only economically, but also diplomatically and militarily.

Beijing wants to surrogate the United States as a regional player of geoeconomic and strategic influence.

"China, as a representative of one, is actively strengthening cooperation with several countries, including Saudi Arabia, to jointly address global challenges. At this critical historical moment, China should seize the opportunity to strengthen cooperation with Saudi Arabia and other countries to jointly address global challenges," several Chinese experts said.

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