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Sino-Saudi relations are evolving far beyond oil. For the Gulf Kingdom, China's rapid industrialization led by central planning is an example to borrow

Immagine del redattore: Gabriele IuvinaleGabriele Iuvinale

Economic cooperation between China and Saudi Arabia is rapidly expanding from traditional oil trade to broader areas, particularly investment in clean energy technologies, with Beijing becoming one of the largest sources of greenfield foreign investment in the Kingdom's clean energy sector. All this signals a major shift as China has overtaken the United States and France, Saudi Arabia's traditional investment partners



Chinese exports and investment are increasingly flowing into Saudi Arabia as the kingdom's appetite for green technology increases, strengthening a relationship that was once dominated by oil sales.



For years, trade between China and Saudi Arabia has focused almost entirely on Chinese purchases of Saudi oil. However, according to Chinese data, Chinese exports to Saudi Arabia are expected to reach a record $40.2 billion in the first ten months of this year, up from $34.9 billion in the same period last year.



In addition, China has become the main source of greenfield foreign direct investment (FDI) for Saudi Arabia. According to fDi Markets, Chinese investments in Saudi Arabia totaled $21.6 billion from 2021 to October 2024, about one-third of which involved clean technologies such as batteries, solar and wind power. The United States, the second largest investor, contributed $12.5 billion during that period.



Saudi investment in China's oil and gas industry, along with Chinese investment

Chinese in the renewable energy sector, are driving the expansion of bilateral trade.


Ken Liu, Chinese head of renewable energy, utilities and energy research at UBS, predicts that energy trade between the Middle East and China could increase by $432 billion annually by 2030.

Last September, Saudi Aramco expanded cooperation with China's two largest petrochemical groups, Rongsheng and Hengli, to strengthen its refining and chemicals business. The company also announced a partnership with China National Building Materials Group to build a clean technology production plant in Saudi Arabia.



These figures represent a major shift as China has surpassed the United States and France, Saudi Arabia's traditional investment partners.



Notably, many Chinese investments have not yet appeared in official Saudi statistics, indicating that capital is still being deployed.


Camille Lons, Middle East and China expert at the European Council on Foreign Relations, described this development as a “significant change.” She said, “Saudi Arabia is increasingly positioning itself as a 'middle power' on the world stage. By strengthening ties with China, they aim to reduce their dependence on the United States.”

Lons also added that the growing relationship between Saudi Arabia and China could complicate the prospects for future U.S.-Saudi relations, particularly with the future Trump administration. “If the United States fails to meet Saudi demands for security guarantees and technical cooperation, the Saudis could use their ties strengthened ties with China as leverage to signal that they have other options.”




Analysts believe that the deepening of economic ties is the result of high-level political and diplomatic initiatives. These include President Xi Jinping's visit to Riyadh in late 2022, talks with Crown Prince Salman Jr. and China's role in promoting the restoration of diplomatic relations between Saudi Arabia and Iran in March 2023.



“The 2022 summit between the two leaders marked a turning point, triggering a series of subsequent meetings,” said Charles Chang, head of corporate ratings for Greater China at S&P Global Ratings. “Since that meeting, relations between China and Saudi Arabia have intensified and diversified rapidly.

For China, strengthening trade ties with Saudi Arabia is strategically important as Beijing seeks to expand its influence beyond the United States and Europe, which face growing risks from the appliocation of sanctions and tariffs.



Analysts say China's focus on trade and investment also signals a shift of focus from debt-driven infrastructure projects under the previous Belt and Road Initiative.


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.

Despite growing cooperation, Saudi Arabia remains cautious in its relations with the

United States, its main military partner, and continues to limit cooperation with China in

sensitive areas such as defense and artificial intelligence, according to Saudi officials.


In addition to the sensitive military and artificial intelligence aspects, China and Saudi Arabia have made rapid progress in trade and capital exchanges.



In mid-October, Access Capital, backed by the Saudi sovereign wealth fund Saudi Public Investment Fund (PIF), announced a $2 billion plan to develop a special economic zone

Sino-Saudi at Riyadh's King Salman International Airport. The plan aims to encourage

more Chinese companies to establish local manufacturing operations in Arabia

Saudi Arabia.


Efforts to strengthen financial ties between the two countries are also increasing. In June, China approved an Exchange Traded Fund (ETF) that replicates the FTSE Saudi index, offering Chinese Chinese investors the opportunity to invest in major Saudi stocks such as Aramco and the Saudi Arabia National Bank. In return, the Saudi Capital Markets Authority allowed the kingdom to launch its first ETF, which replicates Chinese stocks listed in Hong Kong.



In August, the Saudi PIF fund signed memoranda of understanding (MOUs) worth a total of $50 billion with China's six largest state-owned banks. Then, in November, Saudi Arabia was chosen as the site for China's first sale of dollar-denominated government bonds.


Beijing also aims to use its growing relationship with Saudi Arabia to encourage wider global use of the yuan. While Saudi Arabia, like many other producers of oil, has historically been reluctant to accept payments in yuan because of limited access limited to foreign exchange proceeds, China is working to change that.


S&P analysts note that while large-scale oil transactions denominated in the yuan between the two countries may still be decades away, broader cooperation economy between Saudi Arabia and China could gradually pave the way for what is commonly known as the “petro-yuan” flat road.



Ultimately, as Charles Chang of Standard & Poor notes, the relationship is evolving well

beyond oil. “Saudi Arabia is looking at countries that have industrialized rapidly through central planning, of which China is the most prominent example,” he said. “This method of joint development is in line with their long-term interests.”


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