Economy /
Saudi Arabia Boosts China Relationship with Economic Package
Saudi Arabia’s Crown Prince Mohammed bin Salman spent a few weeks last month touring Asian countries and striking economic deals with Pakistan, India, and China. He pledged to commit $20 billion of investment to Pakistan and set a goal of pouring $100 billion into India. Neither of these should come as much of a surprise, but the Chinese deal, worth $28 billion, is more intriguing.
Notably, Mohammed bin Salman worked to connect the Saudi Vision 2030 with Chinese President Xi Jinping’s Belt and Road Initiative. With each of their nations implementing radical economic programs, the meeting and partnership between the two comes at a critical moment. The two countries already have strong economic and even growing military ties.
“In the hundreds, even thousands, of years, the interactions between the sides have been friendly. Over such a long period of exchanges with China, we have never experienced any problems with China,” Crown Prince Mohammed bin Salman said.
A majority of the kingdom’s trade is with China and it even finalized a contract with Huawei last year to build 5G networks at a time when most of Saudi Arabia’s western allies are boycotting Huawei.
Two years ago, Saudi Arabia took the unusual step of allowing a Chinese company to establish an armed drone factory in its borders. The deal came after King Salman visited China and also included $65 billion worth of energy, culture, education, and technology incentives. The factory is the first of its kind in the region for China, one of several expansions the country has made to project its power further. Chinese drones have a steady stream of buyers as the U.S. turns away countries such as Jordan. When they can’t order American UAVs, China is the next best option, often even coming in at a cheaper cost.
The U.S. government signaled that it would relax its policies and restrictions on drone exports, but the market for Chinese equipment continues to grow.
“The Chinese are definitely a threat,” Gerard Robottom, international market area director at California-based UAV manufacturer AeroVironment.
Middle Eastern states are spending record levels on military and defense contracts and with China often being the easiest option, Washington and U.S. companies are eager to see more friendly policies. Even when U.S. drones are available, they often aren’t armed variations and only designed for surveillance.
Encroaching on U.S. arms customers is only one aspect of China’s playbook to stake out more territory for its international influence. The overarching goal of Jinping’s government is to erode the influence of traditional world powers, namely the U.S. and Russia. Saudi Arabia is only the latest front by which Beijing can expand its reach.
For Saudi Arabia, increased ties with China will help provide it with an alternative should its U.S. relationship wither. Following the murder of Washington Post journalist Jamal Khashoggi, the U.S. Congress has taken a more tepid view on its longtime Arab partner, even introducing a War Powers Resolution to curb American involvement in the Yemen civil war. Understandably, Mohammed bin Salman seeks options for other alliances.
It’s also a matter of economics for Riyadh. The world is moving away from fossil fuels and oil prices continue to plummet. With the kingdom’s revenue so dependent on one source, it must diversify its trading partners. State-owned Saudi Aramco agreed to purchase a 9 percent stake in Zhejiang Petrochemical and also to form a partnership with Chinese defense company Norinco for creating a refinery complex in Panjin.
The partnership between the two nations will undoubtably spur trade to increase after the crown prince’s tour. Just last year it was up 32 percent. With the growing collaboration between them, it’s natural to begin preparing the younger Saudi generation for a possibly revamped future, one that sees the East as its dominant ally, not the West. To that end, Saudi schools and universities will begin adding Chinese to their curriculums.
“The introduction of Chinese to the curriculum is an important step toward the opening of new horizons for students,” the Saudi Arabia government stated.
Each country stands to benefit economically as the flow of goods between them quickens. China has the added benefit of greater access to the Middle East while Saudi Arabia fosters its ties with a potential ally. China continues to develop its footholds in the region while the U.S. works to downscale its involvement. The recent economic agreements signed between Riyadh and Beijing should signal to the U.S. that it isn’t the only superpower vying for regional dominance. It will have to make policy changes and be more flexible if it wishes to stymie Chinese expansion.
