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Chinese President Xi Jinping’s trip to Saudi Arabia involved outreach to the entire bloc of Arab states, adding momentum to growing ties. The trip showcases Beijing’s growing ties with the kingdom, a longtime American ally that is seeking greater self-reliance. President Xi said that China would work to buy oil and gas in yuan, a move that would support Beijing’s goal to establish its currency internationally and weaken the U.S. dollar’s grip on world trade. China’s growing influence in the Gulf has unnerved the United States. Deepening economic ties were touted during Xi’s visit, where he was greeted with pomp and ceremony and also met with Gulf states and attended a wider summit with leaders of Arab League countries spanning the Gulf, Levant, and Africa. Relations between Saudi Arabia and China have witnessed remarkable progress during the past decade, while the cooperative areas between the two sides are strongly expanded and widened beyond their traditional supplier-customer relationship regarding Saudi oil. Top oil exporter Saudi Arabia and economic giant China both sent strong messages during Xi’s visit on non-interference at a time when Riyadh’s relationship with Washington has been tested over human rights, energy policy, and Russia. Any move by Saudi Arabia to ditch the dollar in its oil trade would be a seismic political move, which Riyadh had previously threatened in the face of possible U.S. legislation exposing OPEC members to antitrust lawsuits. When China’s Belt and Road Initiative met Saudi Arabia’s “2030 Vision,” the friendship between China and Saudi Arabia was further deepened. In his visit to Saudi Arabia and meetings with Arab leaders last week, Xi opened a new chapter in the friendship between China and Arab states. New mechanisms were established to enhance political ties between China and Arab states. During his visit, Xi met with leaders from Saudi Arabia, Kuwait, Palestine, Egypt, Sudan, Iraq, Morocco, Algeria, Lebanon, and other Arab states. In these meetings, China reiterated its support for these Arab partners’ independent development paths, and both China and Arab states share their strong confidence toward international multilateralism. Both China and Saudi Arabia agreed to upgrade their bilateral relations into a Comprehensive Strategic Cooperative Partnership. During Xi’s visit to Saudi Arabia, China signed dozens of cooperative agreements covering energy, infrastructure, finance, education, technology, and other important fields with Arab leaders.
Saudi and China both sent strong messages during Xi’s visit on non-interference at a time when US-Saudi relationship has been tested over human rights, energy policy and Russia. Any move to ditch the dollar in the oil trade would be a seismic political move.
Although distant neighbors, China and Arab Gulf states have an ancient relationship that could be traced back around 2,000 years. During the last decade, in particular, relations between China and the Arab states have witnessed substantial progress, with cooperation expanding into various fields. With Chinese President Xi Jinping’s recent state visit to Saudi Arabia – and attendance at the China-Arab Summit and China-Gulf Cooperation Council Summit – relations between China and Arab states will become even closer. As the leader of the Arab world, Saudi Arabia’s closer ties with China suggest greater prospects for China-Arab relations in the future. Given China’s growing market demands and economy, the geographic importance of Arab states is more critical for Beijing. Of the four main shipping chokepoints impacting Chinese trade – namely Gibraltar, Malacca, Hormuz, and Ball Mandab – two are in the Arab world. Nearly half of China’s oil and gas imports transit through the Strait of Hormuz, while Babel Mandab is an important channel for China’s exports to the Middle East, Africa, and Europe and oil imports from Algeria, Libya, and Sudan. Since the founding of the People’s Republic of China, the friendship between China and Arab states has been constructed upon a shared campaign against imperialism and colonialism. Slowly but steadily, during the past four decades, China accelerated its development policy and has become the world’s second-largest economy. With its rapidly growing industrial capabilities and expanding market, China attracts more Arab businessmen to seek cooperation. On the one hand, China endorsed Arab people’s rights to choose their own economic and political path. China supported Egypt in 1956 to resist invasions from Britain, France, and Israel and supported Lebanon against interventions from the United States in 1958. China has also been strongly supporting Palestine’s nationhood ever since the 1960s. On the other hand, Arab states supported the PRC claiming China’s permanent seat at the U.N. Security Council in 1971, and many Arab states endorsed normalizations of diplomatic ties with China from the 1950s to 1970s. From the late 1970s, new opportunities emerge for bilateral cooperation between China and Arab nations. During the past two decades, Saudi Arabia has become the leading state in both the Arab world and the Islamic world more broadly. On the one hand, Saudi Arabia’s political influence in the Middle East is increasingly important, and Riyadh’s voice is heard and respected on regional issues, including the Syria crisis, the Israel-Palestine peace process, Yemen civil war, Lebanon’s internal politics, and Iraq’s political crisis. On the other hand, Saudi Arabia keeps positive ties with nearly all Arab states, while Riyadh’s financial support become vital to political stability in Egypt, Sudan, Jordan, and many other Arab states. During the past decade, mainly motivated by the Belt and Road Initiative, new cooperation mechanisms have been established by China and Arab states. At the bilateral level, China established comprehensive strategic partnerships with Arab states under the Belt and Road Initiative in various fields covering energy, investment, trade, finance, infrastructure, and high-tech. At the multilateral level, China and Arab states established the China-Arab States Cooperation Forum in 2004 and the China-Arab States Expo in 2013. In 2018, the Declaration of Action on China-Arab States Cooperation under the Belt and Road Initiative was signed by China and Arab states at the 8th Ministerial Meeting of the China-Arab States Cooperation Forum, which directed the cooperation between China and Arab states. During the past decade, China has become deeply involved in local projects of Arab states. The China-Egypt TEDA Suez Economic and Trade Cooperation Zone, the China-Oman Industrial Park, and the China-UAE Industrial Capacity Cooperation Demonstration Park are major examples. In recent years, China and the Arab states have expanded their cooperation into new fields such as space technology and medical cooperation. China signed cooperative agreements with Egypt, Algeria, Sudan, and Saudi Arabia to co-develop space and satellite technologies.
Meanwhile, the Middle East’s sensitive issues, such as the Iran nuclear issue, the Syrian crisis, the Israel-Palestine peace, and the Iran-UAE islands dispute were also mentioned in the official documents published jointly between China and Arab states. Through these statements and documents, China and Arab states successfully built their consensus toward the future. China’s relationships with Saudi Arabia and Iran are complicated. China’s leadership has to carefully manage its relations with both to maintain its neutrality and protect its own economic, political, and security interests. However, Beijing has worked tirelessly to stay out of the fray of the Gulf rivalry. The challenge, however, is that any advantage provided to one side could be perceived by the other as a disadvantage. To avoid the perception of privileging Tehran or Riyadh, China has actively pursued a policy of equivalency in its diplomatic engagements and military cooperation. China will continue to deepen relations with both Tehran and Riyadh while remaining above the fray in the protracted Iran-Saudi Arabia rivalry. However, its increasing economic engagements with Saudi Arabia, the GCC, and the broader Arab world are putting pressure on Iran. From Tehran’s point of view, the strengthening of Sino-Saudi ties provides Saudi Arabia with a net advantage, while disadvantaging Iran’s pursuit of international legitimacy. This has the potential to affect China’s own interests in the Gulf if it does not restore its diplomatic balance. The cooperative areas between China and Arab states will be expanded. In 2013, China put forward the Belt and Road Initiative, which is welcomed by Arab states. In June 2014, Xi outlined the framework for China-Arab cooperation under the BRI, which takes energy cooperation as the core, infrastructure construction and trade and investment facilitation as the two wings, and three high-tech and new-tech fields of nuclear energy, space satellites, and new energy as the three breakthroughs. This has become the fundamental guideline for China to develop cooperation with the Arab states.
However, The Chinese and Saudi governments will also be looking to support their national champions and other private-sector actors to move forward with trade and investment deals. There will be more cooperation on the tech side of things too, prompting familiar concerns from Washington. Saudi Arabia agreed with a memorandum of understanding with Huawei this week on cloud computing and building high-tech complexes in Saudi cities. The Chinese tech giant has participated in building 5G networks in Gulf states despite U.S. concerns over a possible security risk in using its technology. Saudi Arabia and its Gulf allies have defied U.S. pressure to limit dealings with China and break with fellow OPEC+ oil producer Russia, as they try to navigate a polarised world order with an eye on national economic and security interests. Riyadh is a top oil supplier to China and the two countries reaffirmed in a joint statement the importance of global market stability and energy collaboration while striving to boost non-oil trade and enhance cooperation in peaceful nuclear power. Beijing would continue to import large quantities of oil from Gulf Arab countries and expand imports of liquefied natural gas, adding that their countries were natural partners who would cooperate further in upstream oil and gas development. Both the Chinese and the Arab nations proudly claim descent from splendid civilizations, and both have experienced setbacks and humiliations in the changing modern times. Therefore, national rejuvenation has become the goal of both the Chinese and Arabian peoples. China and Arab nations under the cooperative direction of the New Silk Road are seeking to realize both the Chinese dream and Arab revitalization.