China powering up Saudi plans

Oil giant's bid to diversify economy can gain from tech cooperation, experts say

China is expected to play an important role in Saudi Arabia's quest for quality investments and economic diversification, analysts say.

Apart from being Saudi Arabia's biggest trading partner, China can offer its technical and technological capacities, which will contribute greatly to Riyadh's industrial powerhouse ambitions and supply chain infrastructure, they said.

One of the shared agenda items of both countries is the sustainability of economic development, and having a thriving economy is one of the key goals of Saudi Arabia's policy of economic diversification, said Gokhan Ereli, Gulf Studies coordinator at the Center for Middle Eastern Studies, in Turkiye.

"China will be crucial in this regard for Saudi Arabia since China and Saudi Arabia both see their key goals for the future as growing and building commercial partnerships in a fully integrated manner with the global economic system," Ereli told China Daily.

Last month, Saudi Arabian Crown Prince Mohammed bin Salman Al Saud, who was appointed prime minister in September, launched the National Industry Strategy that aims to turn the kingdom into a leading industrial power with $226 billion in investment opportunities. He highlighted the nation's potential to achieve a competitive and sustainable industrial economy, including its talented young people, geographic location, natural resources and national pioneer companies.

His launching of the Global Supply Chain Resilience Initiative on Oct 23 is aimed at pushing Saudi Arabia to become a top 15 global economy by 2030.

And Riyadh is banking on leading global industrial companies to turn these aspirations into reality.

According to data from CEIC, which analyzes economic, industry and financial data, Saudi exports to China reached $6.27 billion in August, compared with $5.92 billion the previous month.

The figure hit an all-time high of $6.558 billion in March this year and a record low of $1.732 billion in March 2020, in the early stages of the pandemic.

"Saudi leaders have the flexibility to engage with China more pragmatically and less ideologically than they would with the United States in this situation, due to the fact that Saudi-Chinese relations, which are not based on 'security for oil', may be built on cooperation for the sustainability of economic development and mutual increases in investments, making both countries more powerful both locally and internationally," said Ereli.

Three pillars

Mohammad Salami, an associate researcher at the International Institute for Global Strategic Analysis in Pakistan, said the Saudi government's industrial powerhouse initiatives are based on three pillars: oil and gas, petrochemicals and plastics, and extraction of metals and minerals.

"In this way, oil and petrochemical industries will play the biggest role in Saudi Arabia's industrialization process, despite pressures to reduce production due to their role in global warming," said Salami.

"Riyadh needs the investment and technical assistance of foreign countries such as China in the oil and gas industries" due to the need for skills and high-tech expertise, Salami said.

Apart from a robust oil sector, Saudi Arabia's non-oil sector has also reported some progress. According to the country's General Authority for Statistics, this sector expanded by 8.2 percent in the second quarter of this year, exceeding the agency's initial estimate of 5.4 percent.

"Saudi Arabia is preparing for the post-oil ecosystem," said Deniz Istikbal, an economic researcher at the Foundation for Political, Economic and Social Research, a think tank in Ankara, Turkiye.

"The technology capacity of China is also among the needs of the Saudis. As a result, China can contribute greatly to Saudi Arabia's economic transformation. Both parties will benefit from this transformation politically, economically and socially."

Xinhua contributed to this story.