Saudi Arabia strikes $10bn China deal

Multibillion-dollar deal caps Saudi crown prince’s Asian tour, aimed at expanding Riyadh’s trade ties in the East.

Saudi Crown Prince Mohammad Bin Salman visits China
Saudi Arabia signed 35 economic cooperation agreements with China worth a total of $28bn at a joint investment forum during the visit, according to Saudi Arabia's SPA state news agency SPA [Reuters]

Shenzhen, China – Saudi Arabia‘s Crown Prince Mohammed bin Salman (MBS) got a tour of The Great Wall and China got a great deal as Saudi Aramco signed off on a $10bn refinery and petrochemical project hours before meeting with President Xi Jinping to wrap up his two-day visit culminating on Friday.

The deal caps a three country-tour largely seen as an effort by the crown prince to reach out to the East, and particularly to China after the recent falling out with old partners internationally over the killing of Saudi journalist Jamal Khashoggi in Turkey last year.

While the refinery deal pales to the $65bn in deals signed between Beijing and Saudi Arabia’s King Salman two years earlier, it will be a welcome one considering Riyadh’s efforts to diversify beyond the kingdom.

“It’s part of a recent strategy of Saudi national oil company Aramco to expand outside of the kingdom,” James Dorsey, senior fellow at S Rajaratnam School of International Studies in Singapore, told Al Jazeera.

The refinery project will be located in the coastal area near Panjin in China’s northeast rustbelt province of Liaoning, a province that has lagged behind growth rates in most other provinces in recent years and an area for which Beijing is eager to attracting investment.

Belt and Road cooperation

Earlier on Friday, the crown prince met Vice Premier Han Zheng where the two sides agreed to expand cooperation on both China’s grand one-trillion-dollar infrastructure programme, the Belt and Road Initiative (BRI) and on Saudi Vision 2030, an effort by Riyadh to diversify the economy beyond oil and grow modern service and hi-tech industries.

“[The] Saudi crown prince’s visit aimed primarily at the economy, strengthening cooperation between China and Saudi Arabia in investment, energy and trade, and cooperation between the 2030 Vision and BRI,” Zou Zhiqiang, an assistant professor at the Middle East Studies Institute at Shanghai International Studies University told Al Jazeera.

China is Saudi Arabia’s largest trading partner, with bilateral trade in goods totalling $63.3bn last year.

“[The visit] also reflects Saudi Arabia’s policy of looking east, hoping to strengthen cooperation with the countries in Asia-Pacific, to expand market space and seek help for the country’s economic transformation,” Zou said.

Vice Premier Han also pushed for further cooperation on counterterrorism, law enforcement and other security cooperation.

China’s Foreign Ministry spokesperson Geng Shuang urged both Pakistan and India – which MBS visited prior to arriving in China – to “exercise restraint” and engage in further dialogue following tensions over a major suicide attack in Indian-administered Kashmir.

Beijing’s balancing act over Iran

Earlier in the week, the crown prince pledged $10bn in investments for a refinery and petrochemical complex at Gwadar in Pakistan, which lies at the heart of the China-Pakistan Economic Corridor, and at the centre of the Beijing-Islamabad BRI relationship.


China has also tried to balance the relationship it has with Iran, with President Xi telling Iranian Parliament Speaker Ali Larijani on Wednesday that “no matter how the international and regional situation changes, China’s resolve to develop a comprehensive strategic partnership with Iran will remain unchanged,” according to a statement released by the foreign ministry on the day of the arrival of the Saudi delegation.

“The [refinery] announcement also distracts from the fact that there were no new major projects in the kingdom and the Chinese effort on the eve of the crown prince’s visit to balance Beijing’s relations with Iran,” Dorsey said.

Iran, Saudi Arabia’s foe, has close ties with Beijing. 

“I think there is no need to attach more attention [or] to interpret this visit politically and strategically, although it is inevitable that the visit has political connotations,” Zou said.

The Saudi delegation also signed a memorandum of understanding with China’s major infrastructure planning agency, the National Development and Reform Commission, on jointly developing key projects and investments related to energy and mineral resources, though no further specifics were given.

China’s top diplomat, State Councillor Wang Yi also met Saudi Foreign Minister Adel al-Jubeir on Thursday, signalling that China wants to increase hi-tech cooperation on what Yi said was “enormous potential” of the Saudi economy, the foreign ministry said in a statement on Friday.

Source: Al Jazeera