Sino-Saudi relations deepen
Chinese exports and investment are pouring into Saudi Arabia as the kingdom’s demand for green tech deepens a relationship once defined by oil sales and challenges business ties with its traditional western partners. Bilateral trade has for many years been almost totally dominated by Chinese purchases of Saudi oil. But now, Chinese exports to Saudi Arabia are tracking towards a record high, at $40.2bn in the first 10 months of the year, up from $34.9bn for the same period last year, according to Chinese government data. China has also become the kingdom’s largest source of greenfield foreign direct investment, with investments from 2021 to October this year totalling $21.6bn, about a third of which were in clean technologies such as batteries, solar and wind, according to investments tracked by fDi Markets. This compares with $12.5bn from the US, the next highest. The figures herald a sea change, with China eclipsing the kingdom’s traditional investment partners, the US and France. Many of the Chinese deals have yet to show up in official Saudi figures, indicating the capital has yet to be deployed
Saudi investment in China’s oil and gas industry as well as Chinese investment in the Saudi renewable energy sector is powering the expansion of trade. Ken Liu, head of China renewables, utilities and energy research at UBS, forecasts $432bn in additional energy-related annual trade between the Middle East and China by 2030. There has been a flurry of new deals in recent months highlighting the deepening ties. Backed by Saudi investment, ageing Chinese oil refineries are diversifying towards more downstream petrochemical products including diesel, methanol and ammonia. Saudi Aramco in September expanded its Chinese refinery and chemical partnerships with Rongsheng and Hengli, two of China’s biggest petrochemical groups. Saudi Aramco also announced a plan with China National Building Material Group to build clean tech manufacturing facilities in Saudi Arabia. Investment group EWPartners, which is backed by the kingdom’s sovereign wealth fund PIF, in mid-October announced a $2bn plan for a so-called KSA-Sino special economic zone at Riyadh’s King Salman International Airport and for more Chinese companies to localise manufacturing there.
Source: Financial Times