If evidence was needed of just how rapidly economic ties are
growing between China and Saudi Arabia, you only have to look at two events
that took place last month.
اضافة اعلان
The first was the China-Arab Business Conference held in
Riyadh. More than
30 agreements worth at least $10 billion were reached during the
gathering.
The second was the World Economic Forum event held last week
in the Chinese city of Tianjin, known as the “Summer Davos.” The level of
importance Saudi Arabia placed on the event was reflected by the unprecedented
number of senior-level figures attending. The kingdom sent a
delegation of 24 officials, including the economy and planning minister and the
communications and information technology minister. While no major deals were
announced, it was clear that both countries wanted to use the event to explore
deep economic cooperation.
For decades, economic ties between China and Saudi Arabia
focused on the kingdom’s crude oil exports. However, in recent years, the
relationship has rapidly diversified, reflecting a desire from both countries
to advance economic relations beyond the traditional focus on energy resources.
For China, the approach has gone from being purely transactional to far more
multifaceted and intertwined in the economic and political futures of Saudi
Arabia and other countries in the region.
The Chinese buy-in acts as the most convincing guarantee for
regional powers of Beijing’s commitment to engage and stay in the region. This
is in stark contrast to the perceived lack of commitment from the US and
presents an enormous challenge to Washington’s efforts to maintain its
influence in the Middle East.
The challenge for Washington is tremendous. With a conscious strategy from Beijing to deepen Middle East ties, it will be even more difficult for the US to juggle among its different geopolitical priorities, which include Ukraine, the Indo-Pacific and China.
Economic ties between Beijing and Riyadh were already
strong. Saudi Arabia has for years been the
largest crude oil exporter to China. The kingdom has also been Beijing’s
largest trading partner in the Middle East for more than two decades. In
comparison, China has been Saudi Arabia’s largest trading partner since 2013.
The clearest milestone that the relationship was
transitioning to something deeper came during President
Xi Jinping’s visit to Saudi Arabia in December. The two governments
identified a broad spectrum of future cooperation, including on energy, cars,
supply chains, communications, transportation, mining, and the financial
sector.
Beijing and Riyadh have strived to find overlap between
China’s Belt and Road Initiative and Saudi Arabia’s Vision 2030 reform program,
leading to cooperation on new energy resources including solar, wind and hydropower;
and on digital economy, such as a
5G network.
These areas of cooperation were again on display during the
China-Arab Business Conference last month. A
$5.6 billion agreement signed between the Saudi investment ministry and
Chinese car-maker Human Horizon will focus on developing and manufacturing
electric vehicles. And a
$500 million deal between Saudi ASK Group and China National Geological
& Mining Cooperation will enable the Chinese company to develop copper
mines in the kingdom.
Another field for future cooperation is tourism, which has
been referred to as the “
new oil”
of Saudi Arabia. Since easing restrictions for visitors, the kingdom views
tourism as a key area for economic growth and has vowed to invest more than
$800 million in its development. During the China-Arab Business
Conference,
26 agreements were
signed between Saudi Arabia and Chinese travel agencies.
The range and scale of the dealmaking all points to an
evolution from China’s merely transactional relationship with Middle East
countries. Previously, what China wanted from the region — energy
resources — could be acquired through commercial trade, without the need for
long-term strategic investment. The transactional nature of the relationships
meant China could maintain good relations with often opposing camps and actors
in the region. The approach may have given Beijing flexibility, but it was
criticized for lacking strategic engagement or long-term vision.
Beijing and Riyadh have strived to find overlap between China’s Belt and Road Initiative and Saudi Arabia’s Vision 2030 reform program, leading to cooperation on new energy resources including solar, wind and hydropower; and on digital economy, such as a 5G network.
In the past decade, China’s strategy has become more mindful
and intentional. The diversification of economic ties with Saudi Arabia is one
such example. Beijing is no longer content with being just a main customer of
the region’s crude oil. Instead, it wants to maximize the region’s potential as
a market for Chinese goods, labor, and technologies; and embed itself in the
economic futures of the countries in the region through investment and
long-term collaboration. Instead of being purely transactional, China is
developing a regional strategy that combines shared visions on domestic
governance and connected economic future.
This commitment has effectively boosted China’s credibility
in the region as an economic partner and as a diplomatic player. This is in
stark contrast to the constant questioning about whether the US is fully
committed to the region and Washington’s shifting geopolitical focus. Beijing’s
economic buy-in, consistent investment and bilateral relationships are perhaps
the most effective instruments in its competition with the US for influence in
the region.
The challenge for Washington is tremendous. With a conscious
strategy from Beijing to deepen Middle East ties, it will be even more
difficult for the US to juggle among its different geopolitical priorities,
which include Ukraine, the Indo-Pacific and China. Beijing does not need to
achieve the maximum within its capacity. It only needs to show it is doing more
and better than the US to gain the hearts and minds of the leaders in the
region.
China’s deepening strategic engagement also offers Middle
East countries more room for maneuver and more bargaining power with the US.
The availability of options and alternatives is always a powerful reminder for
Washington that the region does not have to follow American principles and
guidelines. That inconvenient truth is reflected in the upcoming
trip to China by the Israeli Prime Minister Benjamin Netanyahu. In the meantime,
Saudi Arabia’s deepening and diversifying economic ties with Beijing will
continue.
Yun Sun is director of the China program and
co-director of the East Asia program at the Stimson Center in
Washington.
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