An article by: Vladimir Sapozhnikov

The trade and economic axis between China and Saudi Arabia gains strength. In June 2023, more than $10 billion worth of new deals were closed.

Saudi Arabia and China summed up the Arabic-Chinese international trade and economic conference that took place in Riyadh on June 11 and 12. The results are overly impressive: in the fields ranging from high-tech to renewable energy sources, from agriculture to construction, geological exploration, extraction of raw minerals, logistics, healthcare, and tourism, a total of 30 commercial contracts and investment agreements were signed worth more than 10 billion dollars in total.

The top spot was taken by an astronomical $5.6-billion deal that the Ministry of Investments of Saudi Arabia signed with the Chinese electric vehicle manufacturer Human Horizons. According to the Saudi state information agency Arab News, “the goal of the maxi-agreement is cooperation in the field of development, production, and sale of innovative automobiles.”

Up until now, the energy sector was the one dominating in the relations between Saudi Arabia, the world’s leading oil exporter, and China. But in 2023, both Beijing and Riyadh declared the policy of “diversification” in order to boost investments in the non-oil sector. One of the goals of the agreement with Human Horizons “is developing the manufacturing of rechargeable batteries in Saudi Arabia.” The Chinese company Human Horizons manufactures electric vehicles under the brand HiPhi; back in March it declared that in 2023, it will produce vehicles of the HiPhi Premium series for certain European markets.

Tremendous investments by China in the Arabian world became an unalienable part of Beijing’s global agenda that, in addition to the Middle East, also includes Latin America. On June 29, the Chinese company Citic Guoan signed a $857-million agreement with the Bolivian government on lithium production in this South American country, while the Chinese consortium Catl Brunp & Cmoc (Cbc) guaranteed a one billion-dollar investment in building two factories in Bolivia that will also produce lithium batteries for the Human Horizons vehicles.

In 2021, direct foreign investments by China in the Arabian markets totaled $23 billion, of which $3.5 billion went to Saudi Arabia. In total, from 2005 to 2022, China invested $273 billion in Arabian countries. The deal between Saudi Arabia and Human Horizons accounted for more than a half of over $10 billion worth of investments signed on the margins of the Arabian-Chinese trade conference in Riyadh. The Saudi Arabian railroad company Sabataco signed a $250-million agreement with the Chinese company CRRC on constructing a train carriage and wheel factory in the Saudi Kingdom. A Hong Kong Chinese IT company Android Hibobi Technology closed a $266 million deal on the development of complicated applications for computers and smartphones aimed at advancing tourism in Saudi Arabia.

As part of the Riyadh conference, a $533-million agreement was signed between the Saudi company Amar Al-Oula and the Chinese company Zhonghuan International Group (Hong Kong) on building a metallurgical plant for manufacturing iron pellets for foundries in Saudi Arabia. Finally, the Saudi Ask Group and the Chinese National Geological and Mining Company signed a $500-million agreement on copper mining at the Arabian Peninsula copper deposits.

“A strong synergy exists between our two countries. The program of economic and social development of Saudi Arabia until the year 2030 corresponds to the Chinese initiative ‘One Belt, One Path’,” said Abdulaziz bin Salman, Minister of Energy of Saudi Arabia. In the meantime, Russia supported the request by Saudi Arabia to join the BRICS group (Brazil, Russia, India, China, South Africa). Last month, Riyadh also applied for partnership in the New Development Bank (NDB), BRICS’s credit institution based in Shanghai, China.

Vladimir Sapozhnikov