Over the past 20 years, China’s investment in Saudi Arabia has exceeded $106.5 billion, above the United States, and is expected to double in the next 5 years following President Xi Jinping’s visit. Investments from the People’s Republic are followed by Kuwait (97.6 billion dollars) and the United Arab Emirates/UAE (46 billion dollars).
The distinctive feature of North American investments is that practically all (more than 90%) were made in the oil industry, led by its 5 large multinationals, primarily Chevron (which is the former Standard Oil founded by John D. Rockefeller ), while that of the People’s Republic is remarkably diversifiedand also includes industrial activity and high-tech telecommunications.
During President Xi Jinping’s recent trip to Riyadh, the an investment agreement in the automotive sectorin which the main electric car manufacturer of the People’s Republic “Enovate Motors” will build a very modern plant capable of producing more than 100,000 vehicles a year, with an initial investment of 15,000 million dollars, which will come into operation in 2024.
To this must be added the agreement with Huawei – the largest high-tech equipment company in the People’s Republic and world leader in the 5-G system – which will provide a mobile Internet network which will be implemented in the “cloud” or “cloud computing” and which will cover the entire Saudi territory.
Huawei’s mobile Internet system will be ultra-fast (10Gbps or more) and equipped with cutting-edge technology, which will be fully operational in the next 5 years.
China has no oil investments in the Saudi Kingdom, but it is the main market for its crude oil exports ($33.4 billion in 2020); and in this way has become its main business partner in the last 10 years.
Historically Saudi Arabia was from the Second World War until the international financial crisis of 2008/2009 the main supplier of oil to both Europe and the United States; and this condition was subsequently joined by the other oil-producing countries of the Gulf, led by Kuwait, the United Arab Emirates and Bahrain.
The United States paid 4 dollars for each barrel of Saudi oil – the Kingdom’s crude is the cheapest in the world -; and as consideration gave absolute securityboth internally and internationally, to Saudi Arabia.
Over the past 10 years, Saudi oil, exploited primarily by the state-owned Aramco, the world’s largest oil company, has turned to Asia, with its axis in China, in a trend that is increasing more and moreand which reveals the new axis of global geopolitical equilibrium.
President Xi Jinping and Crown Prince Mohammed bin Salman signed a strategic cooperation agreement between the two countries, in which they undertake to constantly review world politics, with six-monthly talks between the two leaders, one in Riyadh, the other in Beijing.
The Chinese leader’s trip to Riyadh included a state visit to the Saudi Kingdom, as well as a meeting with all members of the Cooperation Council for the Arab States of the Gulf: Bahrain, Kuwait, Oman, Qatar, the United Arab Emirates and Saudi Arabia Arabia.
This is implied by the presence of the leader of the People’s Republic in Riyadh the emergence of a new global order caused by the Ukrainian war was anticipated; and this new order necessarily has a multilateral character, the axis of which is necessarily placed in Asia, and mainly in China.
What’s happening is an irreversible and systemic change in international politicswhich sees China and Saudi Arabia as key players in what is to come.
Xi Jinping and Prince bin Salman have described their long-term strategic agreement as a “dialogue of civilizations” and have placed the starting point of this meeting on the “Silk Road” inaugurated in 1200 by Marco Polo.
It is clear that the Ukrainian war has greatly strengthened Saudi Arabia as a major oil country, and this strength is linked to a recovery of its tTotal strategic autonomy vis-à-vis the United States.
The Saudi Kingdom has a fiscal surplus of $27,000 million this year, which has increased by 8.5% annually over the past 3 years; and this happens when its revenues from its oil exports exceeded 300,000 million US dollars in 2022, due to the record price of energy caused by the combined effect of the Ukrainian war and the sanctions imposed on Russia by the US and European Union (EU).
The top priority set by Prince Mohammed bin Salmán in 2020 consists of diversify the Saudi economyaway from the mono-dependence of oil production; and for this the strategic agreement with China is essential.
“Politics is nothing more than guiding the inevitable”, said General De Gaulle, the great French strategist specialized in turning points that change the history of the worldlike the one that arose last week from the meeting between Xi Jinping and Prince bin Salman.
Charles Arterburn is a seasoned business journalist for News Rebeat, where he provides comprehensive coverage of the latest trends and developments in the world of finance and economics.