The Kingdom of Saudi Arabia is well-positioned to take advantage of the opportunities offered by China’s continued pursuit of an international investment strategy. With China’s CIC, the country’s sovereign wealth fund, seeking to diversify its portfolio and invest in foreign assets, Saudi Arabia is an attractive option.
As the world’s largest crude oil supplier to China, Saudi Arabia is in a unique position to offer energy security and assist the Chinese government to meet their growing energy requirements. Additionally, Saudi Arabia’s economic reforms have been designed to foster growth and attract foreign investment, making it an attractive option for Chinese businesses and investors.
The Saudi government is committed to developing the country’s infrastructure and has made significant investments in transportation and logistics. This will make it easier for Chinese businesses to access the Saudi market and set up operations in the Kingdom. KSA also has a large and rapidly growing economy, with a population of over 32 million people.
China & Saudi Trade Relations
The 2019 Aramco IPO was seen as a key part of the Kingdom’s economic diversification program in its efforts to attract foreign investment. Earlier this year, Saudi Aramco initiated a joint venture with China to develop a new refinery and petrochemical complex in the northeast of the country. Saudi Arabia will supply the new Huajin Aramco Petrochemical Company (HAPCO) with 210,000 barrels a day of crude oil feedstock.
This move represents a tightening of economic ties between the two nations and provides a significant boost to Saudi Arabia’s downstream sector. It also reflects China’s continued interest in Saudi Arabia as an investment partner and will strengthen Chinese-Saudi relationships.
In 2020, Chinese imports into Saudi Arabia increased by 17.8 per cent to $28.1 billion. Bilateral trade between the two nations continues to grow at a steady pace and is expected to continue to do so in the years ahead. Political commentator Zaid M. Belbagi told Arab News last year that China increasingly saw relations with the Arab world as “central” to its geostrategic ambitions. In 2017, King Salman visited the country during a six-country Asia tour, which set in motion a “comprehensive strategic partnership” between the two nations. With its strategic location, vast natural resources, and favourable economic climate, Saudi Arabia is ideally suited to assist China in achieving its economic goals in the Arab world.
The Future of Chinese Investment in Saudi Arabia
Looking to the future, it’s clear that there are significant investment opportunities in Saudi Arabia for Chinese businesses and investors. In 2020, the annual flow of foreign direct investments (FDI) from China to Saudi reached approximately $390 million. Rumours that Saudi would start accepting the Yuan during oil sales were quashed earlier this year by Aramco CEO Amin Nasser, but it’s undeniable that China sees Saudi Arabia as a key strategic and economic partner in the region.
For Chinese businesses and investors looking for opportunities in the turbulent global economy, Saudi Arabia remains an attractive and promising option. Chinese business leaders should keep a close eye on the Kingdom in the coming years as it looks to attract more foreign investment and continue its economic reforms.