China, the Arabs’ preferred partner?

Mr. Xi goes to Riyadh

In retrospect Chinese President Xi Jinping’s visit to Saudi Arabia sent several messages in the broader context of the triangular relationship between the Gulf states, China and the United States. The most distinctive message was that the countries of the region are taking a more independent line toward Beijing than the Americans would like, even if there are limits to how far they are willing to go against Washington’s preferences.

Xi’s visit was his first venture beyond East and Central Asia in three years, his third overseas state visit since the COVID-19 pandemic and his first visit to Saudi Arabia since 2016. It represented an unprecedented diplomatic success, which Chinese state media touted as “China’s largest and highest-level diplomatic action with the Arab world since the founding of the People’s Republic of China”.

During his stay, Xi held bilateral meetings with nearly 20 Arab leaders. His warm welcome contrasted with the more reserved reception extended to President Joe Biden last July. During his visit, the Chinese president attended three summits – the Saudi-Chinese Summit, the first Gulf Cooperation Council (GCC)-Chinese Summit, and the first Arab-Chinese Summit. The visit attracted much attention, given the changing dynamics in global, regional and energy geopolitics.

Economic centre of gravity moving eastwards

With respect to shifting global geopolitics, the timing of Xi’s visit and the fanfare surrounding it were significant. In its National Security Strategy released in October 2022, the Biden administration stated that the greatest challenge to U.S interests came from a rising China, so that Washington’s primary focus was on sustaining and strengthening U.S. deterrence against China.

Reflecting a shift in geopolitics: Xi’s visit to Saudi Arabia aimed to cement existing relations while building on China’s popularity in the Arab countries. Beijing has also reiterated its support for these Arab partners’ independent development paths. China and Arab countries signed multiple multi-sector agreements covering energy, infrastructure, finance, education, technology and other important fields with Arab leaders during Xi’s visit

The United States is concerned about China’s growing connections with U.S allies in the Gulf and the Middle East, who were informed that their deepening ties with Beijing could hamper cooperation with Washington, their chief strategic ally and security partner.

Saudi Arabia and some other regional countries are interested in joining China-led multilateral frameworks, such as the Shanghai Cooperation Organization (SCO) and “BRICS plus”, proposed in 2017. Egypt, Saudi Arabia and Qatar have become new dialogue partners of the SCO, while Bahrain, Kuwait and the United Arab Emirates (UAE) are to follow suit.

Xi’s visit to Riyadh also came at a time when U.S.-Saudi relations have been strained over several issues, including human rights, the war in Yemen, the decision of OPEC+ to cut oil production and a range of other foreign policy matters. It is a testament to the shifting stakes in the global economic order that China is gaining greater prominence.

Most indications are that the centre of economic gravity is moving eastward toward Asia, which is on track to account for 50 percent of global GDP and 40 percent of global consumption by 2040. China reportedly relies on Gulf energy exports for about 30 percent of its annual energy needs. It is the world’s largest buyer of oil, while Saudi Arabia, the world’s largest oil exporter, has become China’s biggest trading partner and crude oil supplier. China imports around 18 percent of its oil needs from the kingdom.

While Beijing’s interests in the Middle East may have been initially driven by energy needs, the relationship is now diversifying. Over the past 20 years, China has become increasingly a significant partner for GCC states in several fields such as infrastructure, investment, trade in goods and services, digital technology, and defence.

Saudi Arabia is at the centre of such trends. Trade between China and Saudi Arabia was worth over $80 billion in 2021, and Chinese companies have earned more than $36 billion in contracting revenues in Saudi Arabia since 2005. China’s crude oil imports from Saudi Arabia stood at almost $44 billion in 2021, accounting for 77 percent of the total value of its imports from the kingdom.

China has also emerged in recent decades as a significant trading partner for many other GCC states. Most GCC governments depend on energy to support the diversification of their economies, while China needs Gulf hydrocarbons to power its economy. The coming of age of young and ambitious leaders in the Gulf and their economic diversification plans have encouraged them to look toward China as a model for future development.