China courts Islamic world in ‘oil-for-yuan’ push
China’s overtures to the Muslim world coincide with America’s exit and could soon create a China-Saudi-Pakistan strategic triangle
PESHAWAR – China is bidding to deepen its ties with the Islamic world as part of an apparent new strategy to develop “oil-for-yuan” partnerships and push forward Chinese President Xi Jinping’s signature Belt and Road Initiative (BRI) infrastructure-building scheme.
Analysts believe Beijing seeks to build a broad community of shared interests to shadow and supplant the United States’ influence in Middle East, Africa and Asia-Pacific countries at a time while Washington is engaged with the Russia-Ukraine war.
Some believe the recent improvement in China’s trade relations with Saudi Arabia is in line with Beijing’s strategic planning to weaken America’s monetary edge by introducing a yuan-based global exchange market to replace the dollar’s domination.
Saudi relations with the US declined after US President Joe Biden, in his first foreign policy speech, announced Washington would no longer support the Saudi-led war in Yemen and would halt arms sales to the kingdom, reversing Donald Trump’s policy of providing logistical assistance and advanced weaponry to Saudi Arabia.
Riyadh has been leading a coalition supporting the Yemen government against Iran-backed Houthi rebels since 2015, a war that created the worst humanitarian crisis in the region’s history.
The “strategic triangle” between Pakistan, China and Saudi Arabia, analysts say, is working to remove hurdles in hammering out a strategic alliance between China and the Muslim world.
The participation of Chinese Foreign Minister Wang Yi at the 48th meeting of the Organization of Islamic Cooperation’s (OIC) Council of Foreign Ministers in Islamabad on March 21-22 was in line with growing diplomatic relations between China and Saudi Arabia.
Wang, who flew to Islamabad on March 21 to attend the OIC, told Muslim delegates that Beijing shared the OIC’s concerns on the Kashmir and Palestine issues. He said Beijing supported a just and comprehensive settlement of the issues and wanted a partnership with Muslim countries to promote unity and cooperation for mutual benefits.
“China is investing over US$400 billion in nearly 600 projects across the Muslim world under the Belt and Road Initiative. We are ready to work with Islamic countries to promote a multi-polar world, bring democratic norms in international relations, diversify human civilizations and build a community with a shared future for mankind,” the Chinese foreign minister said at a news briefing in Islamabad on March 22.
“In the context of changing geopolitics, China is emerging as a key player in the Muslim world and this role is gradually increasing due to Beijing’s growing ties with Pakistan and Saudi Arabia,” Senator Mushahid Hussain Syed, chairman of the Senate Defense Committee and a leader of the Pakistan Muslim League-Nawaz, told Asia Times.
He lauded the strategic shift in Saudi Arabia’s domestic and foreign policies, as well as the liberalization in Saudi society, economy, culture, religion and outlook, which made it possible to forge closer cooperation with China.
At the same time as OIC members were lashing out at India for what they said were atrocities in the disputed territory of Jammu and Kashmir, India was holding an investment conference in the Himalayan state.
Interestingly, Saudi Arabia and the United Arab Emirates (UAE) – two key players in the OIC – sent more than 30 delegates to take part in the three-day investment meeting in a region the OIC was at the same time focusing on for human rights violations.
In a move out of step with global condemnation of Kabul’s recent restrictions on girls’ education, Wang paid a surprise visit to Afghanistan on March 24 to tell the Taliban that Beijing welcomed Afghanistan’s push for the China-Pakistan Economic Corridor (CPEC) – a component of the BRI.
Wang, who met acting Afghan Foreign Minister Amir Khan Muttaqi in Kabul, discussed the possibility of resuming investment in Afghanistan’s mining sector and the role Kabul could play to extend the scope of the CPEC to and beyond Afghanistan into Central Asia.
Mining and exploration in Afghanistan have faced a lack of infrastructure, technology and come with security issues. Photo: AFP / Shah MaraiChina expressed the hope that Kabul would be willing to make the CPEC a bridge for regional connectivity.
Analysts claim Beijing also has an eye on Afghanistan’s rare earth and lithium deposits, an important element in manufacturing high-tech chips and large-capacity batteries. The US Defense Department once described Afghanistan as the “Saudi Arabia of lithium.”
Afghanistan is believed to be sitting on mineral deposits worth $1 trillion or more, including what may be the world’s largest lithium reserves.
China has only about 7% of global lithium reserves and its excavation companies are already involved in the mining sector in Afghanistan. For instance, the Metallurgical Corporation of China paid $3 billion in 2007 for a 30-year lease to mine copper in Afghanistan’s Mes Aynak area.
This huge foreign investment, however, became snowed under in political instability and the conflict between the Taliban and the former Afghan government.
Media reports say Chinese leader Xi is expected to visit Saudi Arabia next month to sign an agreement with Saudi authorities which will allow Beijing to pay its oil bill in yuan instead of US dollars.
Reports have claimed the world’s largest oil producer extended a formal invitation to the Chinese leader. Saudi Arabia sells one-third of its oil exports to China, overtaking Russia, which used to be the major oil source for Beijing before the Ukrainian issue morphed into a war.
Amid the geopolitical tensions surrounding Russia’s ongoing invasion of Ukraine, and the world’s polarization over the conflict, this news has sparked certain concerns that Saudi Arabia may be migrating to Russia’s side.
Some believe Beijing’s global strategy is to create a “parallel system for international payments” to make the Chinese yuan compatible with the US dollar in global transactions.
The Chinese yuan is climbing into the top ranks of global currencies. Photo: AFP / Nicolas AsfouriThis, they say, would help Russia sidestep global sanctions by using the Chinese yuan for its international trade, including oil transactions. The Saudi leadership’s announcement has mostly been seen as a way of putting pressure on Riyadh’s traditional Western allies.
“The emergence of a ‘strategic triangle’ between Pakistan, China and Saudi Arabia can play a pivotal role in strengthening unity, economic development and connectivity in the Muslim world,” Pakistan Senator Mushahid said.
“Due to a shift in the Saudi policy under the leadership of Crown Prince Mohammad bin Salman, Saudi Arabia and China are now contemplating selling oil in the Chinese currency, instead of the US dollar,” he noted.
Mushahid welcomed the close coordination between Pakistan and Saudi Arabia, which he said helped China attend the OIC in recognition of Beijing’s longstanding relationship and support to the Muslim World.
He said Pakistan and Saudi Arabia’s close collaboration was reminiscent of the brotherly bond between the two sides that enabled the first successful OIC summit held in Lahore, Pakistan, in 1974.
“China’s participation in the OIC is a ‘historic first,’ as China’s entry into the Muslim world coincides with America’s exit. The US retrenchment is being already witnessed from Southwest Asia and the Middle East,” he added.