Sino-Saudi Cooperation

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BY ALVIN CHENG-HIN LIM
King Salman’s Visit Deepens Sino-Saudi Cooperation

King Salman bin Abdulaziz Al Saud, the absolute monarch of Saudi Arabia, has just concluded his tour of Asia with a major state visit to China. The king, who ascended to power in 2015, had spent the past month visiting Malaysia, Indonesia, Japan, and China. These countries are “some of world’s biggest importers of Saudi oil,” and the Saudi monarch’s visit was partly aimed at promoting “investment opportunities in the kingdom, including the sale of a stake in national oil company Saudi Aramco.” In addition, King Salman’s visits to Malaysia and Indonesia boosted Saudi military cooperation with these Muslim-majority nations, which are “members of a Saudi-led Islamic Military Alliance formed just over a year ago” (“King Salman ends,” 2017).

During King Salman’s visit to Beijing, a major Sino-Saudi investment agreement was signed covering 35 projects worth an estimated USD 65 billion, in sectors ranging from “investment, energy, space … culture, education, and technology,” including “a plan for the kingdom to participate in China’s Chang’e-4 moon mission and a partnership agreement for manufacturing drones.” Chinese President Xi Jinping noted that China has been a “stable export market” for Saudi oil, and highlighted that China welcomes the kingdom as a “global partner” in its “One Belt One Road” (OBOR) global infrastructure investment initiative (Wong, 2017; “China, Saudi Arabia sign,” 2017).

Saudi Arabia had in fact lost market share to Russia in 2016, falling from the largest to the second-largest supplier of oil to China. The kingdom is currently trying to recapture the lost market share by working to “boost oil sales … with China’s top three state oil firms.” Despite this loss of market share, the kingdom remains an important economic partner of China’s. China became Saudi Arabia’s largest trading partner in 2015, and their bilateral trade reached USD 42.4 billion in 2016. Chinese exports to the kingdom include “passenger vehicles and trucks” as well as “construction machinery, manufacturing equipment, steel, electronics, textiles, garments and household appliances,” while Saudi exports to China include “crude oil, petrochemicals and fertilizer,” as well as “marble, olive oil and sesame seed products.” In terms of investment, “more than 100 Chinese companies from both State-owned enterprises and private sectors are currently involved in energy, rail, port and telecommunication projects in Saudi Arabia” (“China, Saudi Arabia eye,” 2017; “Saudi Arabia looks,” 2017).

King Salman’s visit also saw the signing of 21 business deals between Saudi and Chinese corporate leaders, “ranging from exploring investments in oil and petrochemical plants to ecommerce and co-operating in renewable energy markets.” One such agreement was signed with the Chinese state-owned enterprise Norinco on “refining and chemical projects in China,” including two proposed projects in Panjin in Liaoning province — the construction of “a greenfield refinery and chemical plant” and the upgrading of an “existing refinery and petrochemical facility.” Another corporate deal was signed between Saudi Basic Industries Corporation and China’s Sinopec. Both oil companies, which already jointly operate “a refinery in Tianjin,” have agreed to “develop petrochemical projects in China and Saudi Arabia” (“China, Saudi Arabia eye,” 2017).
 
In key ways King Salman’s state visit to China continues cooperation projects initiated during President Xi’s state visit to Saudi Arabia last year. For example, one major agreement signed during President Xi’s 2016 visit to the kingdom was “for China Nuclear Engineering Group Corporation (CNEC) to conduct research on high-temperature gas-cooled (HTGR) nuclear reactor technology with the Saudi government, which has plans to construct 16 nuclear power plants by 2032. This R&D agreement is expected to lead to CNEC’s export of HTGR nuclear technology to the kingdom.” This nuclear cooperation was expanded during King Salman’s 2017 visit when the king and President Xi witnessed the signing of an agreement between CNEC president Jun Gu and Hashim bin Abdullah Yamani, the president of the King Abdullah City for Atomic and Renewable Energy, on a feasibility study for the construction of HTGR nuclear power plants in the kingdom. This agreement includes “the development of system solutions for the investment and construction of HTGRs,” as well as “cooperation in intellectual property and the development of a domestic industrial supply chain for HTGRs built in Saudi Arabia.” These will lay the groundwork for the possible installation by CNEC of a HTGR nuclear power plant in Saudi Arabia, including the “site selection for the project, building a regulatory system, training personnel and other aspects of the project” (Lim, 2016; “Feasibility study,” 2017).

Ahmed Al-Rajihi, the chairman of the board of the Riyadh Chamber of Commerce and Industry, observes that King Salman’s visit has opened “a new chapter in Saudi-Chinese strategic relations,” with the bilateral agreements constituting a “supportive step to the Kingdom’s plans re-build its national economy in a manner that will lessen dependence on oil as a sole income source.” Long Guoqiang, the vice-president of the Development Research Center of China’s State Council, notes that China’s OBOR initiative can “help Saudi Arabia realize its growth plan, as it can efficiently boost regional infrastructure connectivity, people-to-people exchanges, investment and trade activities on an effective multilateral cooperative platform” (“King’s visit,” 2017; “Saudi Arabia looks,” 2017).

China’s OBOR initiative is complementary to the Saudi government’s Vision 2030 growth strategy, which includes “privatizing some State-owned companies and finding more new market growth points from non-oil related sectors.” Under Vision 2030, the kingdom aims to “raise non-oil government revenue from 163 billion riyals to 1 trillion riyals ($266.6 billion) by 2030 … The increase will come from investments; developing ‘assets that have not been exploited;’ and structural reforms.” In turn, the kingdom’s “surging demand for infrastructure improvements — such as next-generation oil refineries, roads, airports and oil tanker and container ports — will provide opportunities for Chinese project contractors and manufacturers.” As Gu Xuebin, the vice-president of the Chinese Academy of International Trade and Economic Cooperation, points out, “Saudi Arabia is an important transportation and financial hub connecting Asia, Africa and Europe, which makes the country an ideal partner for the Belt and Road Initiative.” The synergies between OBOR and Vision 2030 hence create significant opportunities for win-win practical cooperation between China and Saudi Arabia (Fattah, Nereim, Almashabi, and Khraiche, 2016; “Saudi Arabia looks,” 2017).

Apart from issues of practical cooperation, King Salman and President Xi also discussed the Syrian and Yemeni crises in the Middle East, which “both leaders agreed … must be resolved politically via talks.” Observers have noted that as China “lacks the historical baggage of the Americans or the Europeans,” it is well-suited to serve “the role of ‘honest broker’ in the Middle East.” In the case of Yemen, China supports the Yemeni government, which is “backed by a Saudi-led Gulf Arab coalition in a war against the Iranian-aligned Houthi movement that controls much of the country.” In the case of Syria, “Beijing’s recent decision to side with Russia in vetoing a UN resolution on Syria sanctions has put the spotlight on Beijing’s role in trying to end Syria’s six years of civil war, where Saudi Arabia has been supporting rebel groups that are fighting Syrian President Bashar al-Assad” (Wong, 2017; “China, Saudi Arabia eye,” 2017).

Interestingly, in the same week as King Salman’s visit to China, the Saudi Deputy Crown Prince Mohammad bin Salman Al Saud visited Washington D. and met with US President Donald Trump to discuss security and economic cooperation between Saudi Arabia and the US, a meeting which the kingdom sees as a “historical turning point” in Saudi-US relations, and as having “restored issues to their right path,” especially “political, military, security and economic issues.” Concerning the Trump administration’s controversial travel ban on citizens from Iran, Libya, Syria, Somalia, Sudan, and Yemen, the Deputy Crown Prince made it a point to stress that “Saudi Arabia does not believe that this measure is targeting Muslim countries or the religion of Islam.” (Indeed, it should be noted that the travel ban does not involve the citizens of key Muslim and Muslim-majority countries like Saudi Arabia, the United Arab Emirates, Qatar, Pakistan, Malaysia, and Indonesia.) The Deputy Crown Prince further elaborated that the travel ban should be correctly recognized as “a sovereign decision aimed at preventing terrorists from entering the United States of America” (Bayoumy, 2017; “Saudi Prince Sees,” 2017).

References

Bayoumy, Y. (2017, March 14). Saudi deputy crown prince, Trump meeting a ‘turning point’: Saudi adviser.Reuters. Retrieved from http://www.reuters.com/article/us-saudi-usa-advisor-idUSKBN16M099

China, Saudi Arabia eye $65 billion in deals as king visits. (2017, March 16). Reuters. Retrieved from http://www.cnbc.com/2017/03/16/china-saudi-arabia-eye-65-bln-in-deals-as-king-visits.html

China, Saudi Arabia sign $65 billion in cooperation deals. (2017, March 17). AP. Retrieved from http://www.usatoday.com/story/money/2017/03/17/china-saudi-arabia-sign-65-billion-cooperation-deals/99295228/

Fattah, Z., Nereim, V., Almashabi, D., and Khraiche, D. (2016, April 25). What’s in Saudi Arabia’s blueprint for life after oil? Bloomberg. Retrieved from https://www.bloomberg.com/news/articles/2016-04-25/key-elements-of-saudi-arabia-s-blueprint-for-life-post-oil

Feasibility study for Saudi Arabian HTGR project. (2017, March 17). World Nuclear News. Retrieved from http://world-nuclear-news.org/NN-Feasibility-study-for-Saudi-Arabian-HTGR-project-1703174.html

King Salman ends Asia tour, returns to Saudi Arabia: agency. (2017, March 18). Reuters. Retrieved from http://www.reuters.com/article/us-saudi-asia-idUSKBN16P051

King’s visit to China reflects Saudi Arabia’s position globally, experts say. (2017, March 19). Arab News. Retrieved from http://www.arabnews.com/node/1070531/saudi-arabia

Lim, A. C. H. (2016, January 30). Middle East and China’s ‘Belt and Road’: Xi Jinping’s 2016 State Visits To Saudi Arabia, Egypt And Iran. Eurasia Review. Retrieved from http://www.eurasiareview.com/30012016-middle-east-and-chinas-belt-and-road-xi-jinpings-2016-state-visits-to-saudi-arabia-egypt-and-iran-analysis/

Saudi Arabia looks beyond oil for future opportunities. (2017, March 20). China Daily. Retrieved from http://www.china.org.cn/business/2017-03/20/content_40474547.htm

Saudi Prince sees Trump as ‘true friend' to Muslims (Full Text). (2017, March 15). Bloomberg. Retrieved from https://www.bloomberg.com/news/articles/2017-03-15/saudi-prince-sees-trump-as-true-friend-to-muslims-full-text

Wong, C. (2017, March 16). China, Saudi Arabia sign US$65 billion in deals as King Salman starts Beijing visit.South China Morning Post. Retrieved from http://www.scmp.com/news/china/policies-politics/article/2079528/china-saudi-arabia-sign-us65-billion-deals-king-salman

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