Today, when the 10th anniversary of the Belt and Road Initiative is celebrated, China is creating new balances with its steps within the scope of the initiative. Beijing, which has been increasing its closeness with Saudi Arabia for a while and accelerating bilateral relations, is on the path of a strong partnership with Riyadh.
The two countries launched a large green and low-carbon initiative in the petrochemical sector on 29 March 2023 under the Belt and Road Initiative. In this context, a fine chemicals and raw material project worth 12.2 billion dollars has come to the fore in Panjin, a province of China’s Liaoning Province. It is known that the project will include a refinery with a capacity of 300,000 barrels per day and a 1.6 million tons steam cracker. It is also planned to establish 32 sets of oil processing and refining facilities. The annual sales revenue of the project, which is expected to be completed and operational by 2025, is expected to exceed 100 billion yuan after commissioning. [1]
In the venture, which will be developed by Huajin Aramco Petrochemical Company, Saudi Aramco has 30%, Norinco Group 51% and Panjin Xincheng Industrial Group 19%. Aramco will supply 210,000 barrels of crude oil per day to the new project. Mohammed Yahya Al-Qahtani, Vice President of Saudi Aramco Refinery, Chemicals and Marketing, also emphasized the importance of the project with the following words:[2]
“This important project will support China’s increasing demand for fuel and chemical products. It also represents an important milestone in our strategy of continued expansion in China and the region at large, an increasingly important driver of global demand for petrochemicals.”
The cooperation between China and Saudi Arabia has been developing within the scope of the petrochemical sector recently. We are witnessing a harmonious progress between the parties within the framework of the Belt and Road Initiative and the Saudi Vision 2030. However, both actors play an important role in promoting new economic regions.
While Saudi Arabia is expanding its cooperation portfolio; It is also interested in the growth of China’s domestic petrochemical market. Joint projects developed with Chinese manufacturers have been effective in the rapprochement between the parties. Thus, an agreement was signed on an integrated petrochemical refinery using imported Saudi crude oil as the first project..[3] The investment, which started operating a 280,000 barrels per day refinery and 1.1 million tons of ethylene complex per year in 2008, sets an example in this regard. In 2018, Aramco signed a memorandum of understanding with the Zheijang Provincial Government to invest 9% in Zheijan Petrochemical Company, which operates China’s largest single refinery at 800,000 barrels per day.[4]
The cooperation between Riyadh and Beijing has significantly increased China’s market share in the global petrochemical industry. The market share, which was around 10% in the 2000s, increased to 35% in 2019; Thus, China has become the world’s largest chemical producer.[5]
It is known that relations between the two countries have developed with the partnership established in 2016. It is seen that relations have developed rapidly since the process that started with the Russia-Ukraine War. The China-Arab Summit held in December 2022 also brought the relations between Beijing and Riyadh to the top. The aforementioned summit and the previous visit by Chinese President Xi Jinping revealed the closeness between the parties and the importance they attach to each other. As a matter of fact, the two countries that signed a strategic partnership agreement during the visit also gave signs that they would continue their cooperation initiatives.
In terms of economic and commercial ties, it can be said that the relations between the parties have reached their peak. Currently, Beijing is Riyadh’s largest trading partner. In 2021, bilateral trade amounted to 87.3 billion dollars. At the same time, Saudi Arabia is China’s largest oil supplier..[6] However, there are partnerships and common interests in other areas as well. It can be said that Beijing is of great importance for Riyadh, with its role as a mediator between Iran and Saudi Arabia and the re-establishment of diplomatic relations. Not only with cooperation in the field of energy; It is tried to establish a harmony and balance between the parties through international policy steps.
Saudi Arabia and China are also making moves to strengthen cooperation on the basis of institutional partnership. In Saudi Arabia, which has established close ties with the Shanghai Cooperation Organization, the cabinet approved a memorandum on 28 March 2023 granting Riyadh the status of dialogue partner in the Shanghai Cooperation Organization (SCO).[7] The enlargement of the SCO, of which Iran is also a full member, in the future and the issue of Riyadh’s membership can be considered among the possible scenarios.
In addition to the development of the Riyadh-Beijing partnership, the strengthening of the ties between the two countries points to a reality at the regional level. In this sense, it can be said that the influence of the United States in the Gulf has decreased and China’s regional influence has intensified. In addition, considering that China has signed strong partnerships throughout the Middle East, it can be argued that its influence is not and will not be limited to the Gulf. Therefore, it can be said that China has consolidated its presence in the region.
As a result, the Sino-Saudi Arabian partnership is developing as an energy-based relationship; but it is not limited to this. It can be foreseen that the cooperation carried over to institutional mechanisms will deepen and intensify in different sectors. As a matter of fact, Riyadh’s interest in Asian geography is increasing. It can be said that Saudi Arabia, which is trying to evaluate investment opportunities in various countries, will play a much more active role in Asia.
[1] “الصين والسعودية تنطلقان في تنفيذ مشروع تعاون ضخم منخفض الكربون في مجال البتروكيماويات”, CGTN, https://arabic.cgtn.com/news/2023-03-29/1640983485387894785/index.html, (Date of Accession: 30.03.2023).
[2] “أرامكو السعودية تتفق على بناء مجمع للبتروكيماويات في الصين”, Sky News, https://www.skynewsarabia.com/business/1608093-أرامكو-السعودية-تتفق-بناء-مجمع-للبتروكيماويات-الصين, (Date of Accession: 30.03.2023).
[3] “كيف لاقتصاد الصين أن يؤثر على قطاع البتروكيماويات بالسعودية؟”, Maal, https://maaal.com/2023/02/كيف-لاقتصاد-الصين-أن-يؤثر-على-قطاع-البت/, (Date of Accession: 30.03.2023).
[4] “Factbox: Saudi-China Energy, Trade and Investment Ties”, Reuters, https://www.reuters.com/world/saudi-china-energy-trade-investment-ties-2022-12-09/, (Date of Accession:30.03.2023).
[5] “كيف لاقتصاد الصين أن يؤثر على قطاع البتروكيماويات بالسعودية؟”, a.g.m.
[6] “Factbox: Saudi-China…”, a.g.m.
[7] “Saudi Arabia Takes Step to Join China-led Security Bloc, as Ties with Beijing Strengthen”, CNBC, https://www.cnbc.com/2023/03/29/saudi-arabia-takes-step-to-join-china-led-security-bloc-as-ties-with-beijing-strengthen.html, (Date of Accession: 30.03.2023).