Cape Argus E-dition

Gulf states to reinforce ties with China

TRADE and investment ties between China and Gulf Arab states are expected to feature prominently in President Xi Jinping’s visit to Saudi Arabia this week as the region increasingly looks East to drive economic transformation at home for a post-oil era.

China, the world’s biggest energy consumer, is a major trade partner of Gulf oil and gas producers, and while economic ties remain anchored by energy interests, bilateral relations have expanded under the region’s infrastructure and technology push.

Saudi Arabia is China’s top oil supplier, making up 18% of China’s total crude oil purchases, and state-run Saudi Aramco has annual supply deals with half a dozen Chinese refiners.

Riyadh has said that strengthening trade ties and regional security would be priorities during Xi’s visit, during which the kingdom will host a China-Gulf summit and a China-Arab summit that diplomats say will involve dozens of agreements.

Outside energy, Gulf Co-operation Council (GCC) states provide markets for Chinese goods, construction contracts and investment opportunities in infrastructure, manufacturing and digital economies that fit Beijing’s Belt and Road Initiative.

“The GCC wants FDI (foreign direct investment) which not only caters to local demand but also allows these economies to integrate into global supply chains,” said Fareed Mohamedi, managing director at SIA Energy International. “The Chinese companies will help do that, first on an Asia regional level, then beyond.”

Saudi Arabia, the world’s top crude exporter and largest Arab economy, aims to reduce reliance on oil by creating new industries that can generate jobs for Saudis, with the government driving projects as FDI lags.

It is vying with regional commercial centre the UAE to become a transport and logistics hub, including by developing sea ports to capitalise on the region’s strategic position between Asia, Africa and Europe.

Saudi Arabia and the UAE are also investing in future technologies as a pillar of economic diversification, which has gained impetus in a global transition away from fossil fuels.

Chinese tech giant Huawei – which has participated in building 5G networks in most Gulf states despite US concerns – is finalising a location for a new data centre in Saudi that would be the region’s second after Abu Dhabi, a senior regional executive told local media in August. Online giant Alibaba has partnered with STC Group for cloud services in Saudi Arabia.

Chinese firms are looking at constuction in Saudi mega projects like the $500 billion (about R8.6 trillion) NEOM zone, and opportunities in mining and manufacturing as the kingdom moves to build local content, including in nascent defence and automotive industries.

How Saudi Arabia and other Gulf states handle both Chinese and Western supply chains in sensitive areas like critical national infrastructure is likely to remain a point of friction with key security partner the US, analysts say.

Gulf Arab officials have said while Washington remains a key strategic partner, it is important for the region’s national economic and security interests to deepen ties with other partners, like China and Russia.

WORLD

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2022-12-07T08:00:00.0000000Z

2022-12-07T08:00:00.0000000Z

http://capeargus.pressreader.com/article/281728388550247

African News Agency