Why China is a natural partner for Saudi Arabia in its quest to become a tech innovation leader
Xi Jinping’s Saudi visit is expected to result in new strategic partnerships worth $29 billion
Plans are underway to harmonize Saudi Vision 2030 with China’s Belt and Road Initiative
Updated 08 December 2022
RIYADH: Saudi Arabia and China have both embraced technological innovation and digital transformation as a means of broadening their economies, creating new ways of doing business, and competing globally in what has been termed the fourth industrial revolution.
As an emerging tech giant, China has made immense strides in robotics, artificial intelligence, and space science, as well as internet and 5G connectivity, construction and engineering, and green renewable technologies, particularly solar.
Although several developed and emerging economies have made similar bounds in science, engineering, computing, and technology, few have matched the pace and the extent of change seen in China over the past decade alone.
China today has the world’s largest internet infrastructure, with the number of users increasing from 564 million to 1.032 billion over the past decade, and a robust digital economy, which has increased in value from 11 trillion yuan ($1.6 trillion) to 45.5 trillion yuan.
China’s success is a reflection of its clearly set societal goals, which include attaining and sustaining economic growth, implementing a mass campaign of domestic poverty alleviation, and promoting technological innovation.
Utilizing technology and embracing digital transformation are widely viewed as effective means with which to accelerate economic and social development in an inclusive, dynamic, and cybersecure fashion.
Saudi Arabia has adopted this model, shifting several government and private-sector functions online with a view to providing seamless service delivery, improve end-user experiences, and to foster innovation.
Similarly, after four decades of technological and digital advancement, Chinese consumers have become a hyper-adaptive and hyper-adoptive community, making China one of the world’s most competitive markets on the digital frontier.
In Saudi Arabia, the government has developed a series of five-year plans to replace traditional processes with secure, efficient, and accountable digital platforms to provide high-quality public services, from licensing and permits to welfare and charitable donations.
Saudi Arabia’s projected spending on technology is valued at around $24.7 billion by 2025, the highest in the world, accounting for 21.7 percent of national spending, according to the Digital Government Authority.
This year, China spent 2.44 percent of its gross domestic product, approximately $441 billion, on research and development, and is aiming for 10 percent of its GDP to come from the digital economy by 2025 — up from 7.8 percent in 2020.
In its own race to become a regional tech hub and global leader in innovation, Saudi Arabia was also set to add nearly $16 billion to its GDP by 2040 through its research and development program.
In September, speaking at the G20 Digital Economy Ministers’ Meeting in Bali, Indonesia, Abdullah Al-Swaha, the Saudi minister of communications and information technology, said investment in these areas was crucial to sustainable economic development.
One of the Kingdom’s goals, outlined in its social reform and economic diversification agenda, Vision 2030, was to become one of the world’s top 10 countries in the Global Competitive Index by the end of the decade, rising from its current position of 24th.
Although China was already Saudi Arabia’s largest trading partner, this week’s visit by President Xi Jinping was expected to see a flurry of new deals and strategic partnerships worth $29 billion and a plan to harmonize Vision 2030 with China’s Belt and Road Initiative.
The Digital Silk Road is the technological arm of the Belt and Road Initiative, which has been forecast to add $255 billion to regional GDP and create 600,000 technology-related jobs across the Gulf Cooperation Council area.
Earlier this year, China issued its 14th five-year plan for the development of the digital economy, setting out proposals to actively engage with the EU, the Association of Southeast Asian Nations, African countries, and Belt and Road countries on digital economy policy.
Analysts consider the Middle East and North Africa region a critical commercial link to European and African markets, making Saudi Arabia and its GCC neighbors vital strategic partners for China’s digital expansion.
ISLAMABAD: Former ambassadors to Beijing and international experts said on Wednesday Chinese President Xi Jinping’s visit to Saudi Arabia this week was likely to bring in more investment into the China-Pakistan Economic Corridor (CPEC) project.
Xi arrived in Riyadh on Wednesday for a three-day visit that China has hailed as its largest ever diplomatic foray into the Arab world. The visit comes at a time when Riyadh is seeking to expand global alliances beyond its longstanding partnership with the West.
During the visit, Xi is scheduled to meet Crown Prince Mohammed bin Salman and other heads of states from Gulf Arab states. Saudi Arabia and China are expected to sign over 20 agreements worth more than $29.3 billion and will discuss a plan to harmonize the implementation of Saudi’s Vision 2030 and China’s Belt and Road Initiative (BRI), Xi’s signature infrastructure investment initiative that includes CPEC.
Under the CPEC project, China has pledged over $60 billion in energy, infrastructure, agriculture, IT and various other schemes in Pakistan. At the heart of the project is a Chinese-funded deep-water port in Pakistan’s southwestern town of Gwadar in Balochistan province.
The CPEC project, Pakistani experts hope, would figure in Xi’s meetings with the Saudi crown prince. In 2018, after then Prime Minister Imran Khan’s visit to Riyadh and meetings with the crown prince, the premier’s ruling party had announced Riyadh’s willingness to be a part of CPEC as a “third strategic partner.”
“Saudi Arabia is interested in becoming part of CPEC by investing heavily in it and is also interested in BRI,” Pakistan’s former ambassador to China, Naghmana Hashmi, told Arab News.
“This visit will improve things in this regard as China is the main initiator of both mega projects.”
“The growing friendship between China and Saudi Arabia will benefit Pakistan as the country has very good relations with both, and both are pillars of strength for us,” Hashmi added.
International relations expert Zafar Jaspal told Arab News the visit would have a “constructive and positive impact” on CPEC.
“[The visit] will open the way for Saudi investment in Gwadar and other parts of the [CPEC] project, especially in the petro industry as the kingdom’s leadership has expressed in the past,” Jaspal said.
International affairs expert Dr. Huma Baqai said an improved relationship between China and Saudi Arabia would help Pakistan “sustain Western pressure.”
“If inroads are made by China into Saudi Arabia, this will help Pakistan in every aspect as the country is squeezed by Western powers and their institutions and this squeeze will ease if there is a better relationship between two friends of Pakistan,” she told Arab News.
CPEC, Baqai said, could be a “great convergence point” between the three countries and “give the requisite push and momentum to intended Saudi investment in the flagship project of the BRI.”
Former ambassador Javed Hafeez, experienced in Middle East affairs, said Saudi Arabia was diversifying its international relations and trying to improve relations with all powers, including China, Russia, the US and other Western countries.
“This policy is exactly the same as Pakistan is following,” he said, “so it is good for us as well and the prospects of expansion of CPEC will also increase.”
President Xi’s 3-day visit aims to boost Saudi-Chinese diplomatic, trade ties
Saudi-Chinese Summit, Riyadh Gulf-China Summit and Riyadh Arab-China Summit to take place during visit
More than 20 initial agreements between the two countries worth over $29.3 billion to be signed during visit
Updated 07 December 2022
RIYADH: Chinese President Xi Jinping is due to arrive in the Kingdom on Wednesday for a three-day visit during which he will meet Saudi and Arab leaders.
Three summits will take place during his trip: the Saudi-Chinese Summit, the Riyadh Gulf-China Summit for Cooperation and Development, and the Riyadh Arab-China Summit for Cooperation and Development. The participants will include more than 30 leaders and officials from the two countries and international organizations, highlighting the importance of the gatherings and their high regional and international profile, the Saudi Press Agency reported.
Xi’s visit reflects the desire of the leaderships of Saudi Arabia and China to strengthen the bilateral relationship, enhance their strategic partnership and realize the political and economic potential it offers to serve their common interests, the SPA added.
More than 20 initial agreements between the two countries, worth more than SR110 billion ($29.3 billion), will be signed during the presidential visit, along with a strategic partnership deal, and a plan to harmonize the implementation of Saudi Arabia’s Vision 2030 development and diversification project with China’s Belt and Road Initiative, the agency said.
Saudi Arabia aims to build a strong strategic partnership with China to support trade and investment. The Kingdom was the biggest recipient of Chinese investment in the Arab World between 2005 and 2020, accounting for more than 20.3 percent of the total regional investment, worth $196.9 billion.
The two countries are preparing to launch the SABIC-Fujian Petrochemical Industrial Group, a joint venture worth an estimated SR22.5 billion, in which SABIC has a 51 percent stake, that includes a high-capacity plant for the production of petrochemical products.
Beyond trade and investment, relations between the two countries have also continued to expand and develop more broadly in recent years, particularly in terms of cultural exchanges.
In 2019, for example, the Saudi Ministry of Culture announced the establishment of the Prince Mohammed bin Salman Award for Cultural Cooperation between Saudi Arabia and China, which will be officially launched during President Xi’s visit. It aims to promote the Arabic language, along with Arab arts, mutual understanding and cultural exchanges, reflecting the Kingdom’s desire to further enhance the cultural aspects of relations.
A number of Saudi universities and schools offer classes in the Chinese language, while Arabic is taught in 44 Chinese universities.
Factbox: Saudi-China energy, trade and investment ties
Chinese delegation is expected to sign dozens of agreements with Saudi Arabia and other Arab states
China is Saudi Arabia’s largest trading partner, with bilateral trade worth $87.3 billion in 2021
Updated 07 December 2022
Saudi Arabia will host a China-Arab summit on Dec. 9 attended by Chinese President Xi Jinping, with the leaders of the two countries expected to discuss trade ties and regional security.
Xi’s visit comes at a time when US-Saudi ties are at a nadir, uncertainty weighs on global energy markets with the West imposing a price cap on Russian oil and as Washington warily eyes China’s growing influence in the Middle East.
The Chinese delegation is expected to sign dozens of agreements with Saudi Arabia and other Arab states covering energy, security and investments, diplomats have told Reuters.
Below are some details about oil, trade and security relations between China and Saudi Arabia.
China is Saudi Arabia’s largest trading partner, with bilateral trade worth $87.3 billion in 2021. Chinese exports to Saudi Arabia reached $30.3 billion, while China’s imports from the kingdom totalled $57 billion.
Saudi Arabia is China’s top oil supplier, making up 18 percent of China’s total crude oil purchases, with imports totalling 73.54 million tons (1.77 million barrels a day) in the first 10 months of 2022, worth $55.5 billion, Chinese customs data shows.
Oil imports last year amounted to 87.56 million tons, worth $43.9 billion, making up 77 percent of China’s total merchandise imports from Saudi Arabia.
State-run Saudi Aramco has annual supply deals with half a dozen Chinese refiners including Sinopec, CNPC, CNOOC, Sinochem, Norinco as well as private refiner Zhejiang Petrochemical Corp.
Aramco in early 2022 made a final investment decision to build a $10 billion refinery, petrochemical complex in northeast China, marking its single largest investment in China.
Named Huajin Aramco Petrochemical Company, the joint venture groups Aramco, Huajin Chemical Industries Group Corporation (000059.SZ) — a unit of defense conglomerate Norinco-- and Panjin Xincheng Industrial Group.
The project, expected to be operational in 2024, combines a 300,000-bpd refinery and 1.5 million tons per year ethylene plant, with Aramco set to supply up to 210,000 bpd crude oil.
Aramco’s only other similar investment in China is a 25 percent stake in Refining and Petrochemical Company Ltd. in Fujian province controlled by state refining giant Sinopec Corp. , which began in 2008 operating a 280,000 bpd refinery and a 1.1 million ton per year (tpy) ethylene complex.
Aramco in October of 2018 signed a memorandum of understanding with Zhejiang provincial government to invest 9 percent in Zhejiang Petrochemical Corp. that operates China’s single-largest refinery of 800,000 bpd. No further progress has been announced since.
Similarly, Sinopec owns 37.5 percent in Yanbu Aramco Sinopec Refining Co. (YASREF), a JV with Aramco that operates a 400,000-bpd refinery in Yanbu on the Red Sea coast.
China’s state-owned Silk Road Fund is part of a consortium led by US-based EIG Global Energy Partners that in mid-2021 closed a deal to buy 49 percent of Saudi Aramco’s oil pipelines business for $12.4 billion.
Silk Road is also part of a consortium led by BlackRock Real Assets and Hassana Investment Company that announced in February completion of a 49 percent stake acquisition in Aramco Gas Pipelines Company for $15.5 billion.
Saudi utility developer ACWA Power, partly owned by the Saudi sovereign wealth fund, said in September that it agreed with Silk Road Fund to jointly invest in a 1.5 gigawatt (GW) gas-fueled power plant in Uzbekistan for $1 billion, part of Beijing’s One Belt One Road initiative.
State-run China Energy Engineering Corp. (CEEC) is building a 2.6-GW solar power station in Al Shuaiba in Saudi Arabia, also owned by ACWA Power, the Middle East’s largest solar project.
Saudi Advanced Communications and Electronics Systems Co. (ACES) signed a deal with China Electronics Technology Group to manufacture unmanned aerial vehicle payload systems in the kingdom, Saudi English-language newspapers Arab News and Saudi Gazette reported in March.
The UAE in February said it plans to order 12 L-15 light attack planes from China with the option of purchasing 36 more.
China's Xi visiting Saudi Arabia for three days amid bid to boost economy
China's economic growth has been on a decline and was dealt a major blow by rolling lockdowns due to COVID-19
Xi will attend the inaugural China-Arab States Summit and a meeting with leaders of the Gulf Cooperation Council
Updated 07 December 2022
BEIJING: Chinese leader Xi Jinping is attending a pair of regional summits in Saudi Arabia this week amid efforts to kick-start economic growth weighed down by strict anti-COVID-19 measures.
The Foreign Ministry said Wednesday that Xi will attend the inaugural China-Arab States Summit and a meeting with leaders of the six nations that make up the Gulf Cooperation Council in the Saudi capital of Riyadh. His state visit to Saudi Arabia will end on Saturday.
China is the world’s second largest economy and a major source of outward investment. To fuel massive demand, it imports half its oil, of which half of those imports come from Saudi Arabia, amounting to tens of billions of dollars annually.
China's economic growth had been on a steady decline for years and was dealt a major blow by rolling lockdowns imposed across the country as a response to the COVID-19 pandemic.
Chinese economic growth rebounded to 3.9% over a year earlier in the three months ending in September, up from the first half of the year's 2.2%, but still well short of the government target.
China’s COVID-19 infection numbers are lower than those of the United States and other major countries. But the ruling party is sticking to “zero-COVID,” which calls for isolating every case, while other governments are relaxing travel and other controls and trying to live with the virus.
China's ruling Communist Party shares many of the authoritarian tendencies of Saudi Arabia and other Gulf states, shielding Beijing from criticism over its harsh policies toward Uyghurs and other Muslim minorities. More than a million have been sent to detention centers where they report being forced to denounce Islam and swear fealty to Xi and the party.
Beijing denies the charges, saying they have been providing job training and ridding Muslims of extremist, separatist and terroristic tendencies.
The trip to Saudi Arabia marks a further move by Xi to restore his global profile after spending most of the pandemic inside China. Xi was granted a third five-year term in October, but street protests against “zero-COVID” policies last month saw the most significant public challenge to his rule and may have prompted a relaxation of some measures.