Sign in
Fast-warming ties between China and both Saudi and the UAE have been making global headlines as western leaders worry about rising Chinese influence around the globe. Chinese companies are taking pieces of big infrastructure and energy projects in the Kingdom. Chinese investors are flocking to Tadawul ETFs. Banks are mining the two-way trade corridor between China and the GCC, with a particular emphasis on Saudi and the UAE. And Chinese renewable energy players will set up component manufacturing operations here.
China remains our biggest trade partner — and it’s increasingly a destination for Saudi investors. A unit of Aramco has just invested in a Chinese rival to OpenAI. Aramco units are making petrochemical and refining investments there, and Sabic is building a world-scale USD 6.4 bn petchem complex. PIF’s advanced technology platform Alat has bought a USD 2 bn convertible note from PC-maker Lenovo. Investment in China by Mideast sovereign funds is soaring, with PIF in the lead, and we’re nibbling at the edges of more defense cooperation, too. Meanwhile, it’s never been easier to get a flight between Saudi and major Chinese cities.
(** Tap or click the headline above to read this story with all of the links to our background and outside sources.)
The western press is catching on: “The Middle East is one region which is agnostic between the East and West,” Bloomberg quotes Saurabh Dinakar, Morgan Stanley’s co-head of Asia Pacific global capital markets, as saying.
How to make sense of it all as policymakers in the west raise their eyebrows? Our friend Mohamed Abu Basha, head of macroeconomic analysis at EFG Hermes Research (bio), walked Bloomberg TV through it yesterday (watch, runtime: 5:57).
Fundamentally, it’s a win-win situation: Gulf countries are eager for access to advanced technology and “hungry for investment along the journey of their [economic] transformation plans. They need a lot of capital and technology to be attracted to help them with this transformation plan,” Abu Basha said. China, on the other hand, is looking to find new markets for surplus capital and capacity — and to reduce its reliance on traditional markets like the United States and the European Union.
The relationship with Beijing is among the keys to Saudi’s Vision 2030 objectives. The country’s ambitious transformation plan requires substantial investments in energy — both conventional and renewable — as well as advancements in manufacturing and infrastructure. “The biggest structural transformation in the Gulf is happening primarily in Saudi Arabia, due to the size of its economy, and its population. So it is the economy that needs the most investments, within the Gulf,” he said.
China plays a pivotal role, especially with its expertise in areas like EV battery production and large-scale infrastructure projects, he added. Abu Basha highlighted that while inward investment to the GCC from China is increasing, it still lags behind US foreign direct investment into the region, suggesting there’s plenty of room for the partnership to keep growing.
Oil prices buoyed by geopolitical tensions + production cuts: He addressed the possibility of the Kingdom pricing its oil in RMB, which he says is unlikely in the immediate future.
