Wide-reaching partnership sees both countries entering a new era of win-win economic development
A customer goes shopping at Huawei's flagship outlet in Riyadh, capital of Saudi Arabia, on Feb 2. (WANG HAIZHOU / XINHUA)
Closer China-Saudi Arabia business cooperation will strongly motivate companies to deploy financial resources, talent and technology solutions in each other's markets in the long run, as well as adding fresh growth momentum to the regional and global economy, said business leaders and analysts.
While deepening mutual political trust, complementing trade and expanding the convergence of interests, China and Saudi Arabia are leveraging their comparative strengths and widening market access to each other, they said.
China has been keen to assist the Middle East country in charting a new path of economic diversification and synergize the Belt and Road Initiative, after the Saudi government unveiled the Saudi Vision 2030 in 2016. The Arab country's strategic framework aims to cut dependence on oil and transform the kingdom into a leading industrial powerhouse and global trading and logistics hub, said Xu Hongcai, deputy director of the economic policy commission with the China Association of Policy Science in Beijing.
For instance, King Abdulaziz Port in Dammam, Saudi Arabia, was included in the Gulf China Service in December of 2021, which is a weekly service connecting central and southern China to the Gulf region — launched by Singapore's Pacific International Lines — in November last year.
The move, aimed at enhancing the competitiveness of the port and increasing trade between the two countries, has effectively shored up maritime links, and generated more investment and cooperative opportunities with other economies related to the BRI, Xu noted.
With both China and Saudi Arabia entering a new era of innovation and green growth, China's Kunlun Digital Technology and eWTP Arabia Capital signed a memorandum of understanding in Riyadh to promote the digital transformation of the energy industry in the Middle East and North Africa in early November. Under the agreement, their first project will be launched in Saudi Arabia.
Affiliated with State-owned China National Petroleum, Kunlun Digital is an information technology solution provider with more than 20 years of experience in the petroleum and gas industry.
The eWTPA is a venture fund backed by the sovereign wealth fund of Saudi Arabia — the Public Investment Fund.
Based on Kunlun Digital and eWTPA's industrial expertise and comprehensive research on the region, the joint venture is expected to grow its revenue to $2 billion within the next decade.
The joint venture will utilize both Kunlun Digital's technological capabilities and eWTPA's resourceful network in the Middle East and North Africa to import and localize cutting-edge technical solutions and enable technological upgrading in Saudi Arabia's energy industry and production process in its oilfields.
In another sign of broadening strategic relations, the Saudi Digital Academy signed an MoU with Shenzhen, Guangdong province-based tech group Huawei Technologies in February. The consent is intended to sponsor and develop 8,000 local technology talents and will contribute to Riyadh's digital transformation under the Saudi Vision 2030. The Chinese company would also cultivate 100 Saudi trainers on technologies including artificial intelligence, cloud computing, cybersecurity and 5G communications to boost the country's competitiveness.
Eager to further compete with their global rivals, Chinese phone maker Vivo also unveiled two 5G smartphones in Riyadh in September.
At its first offline launch of new products in the kingdom, Vivo presented the latest additions to its 5G smartphones — V25 and V25 Pro, which feature better photographic capabilities.
Simon Hu, general manager of Vivo in Saudi Arabia, said over the past three years, Vivo has expanded into nine regional markets, including Saudi Arabia, the United Arab Emirates and Qatar, becoming the fastest growing smartphone brand in the region.
By the end of 2021, the Chinese smartphone manufacturer saw a year-on-year sales growth of 272 percent in Saudi Arabia, he added.
As the complex and changing international situation has created many destabilizing factors for the oil market, China and Saudi Arabia, as the world's major energy consumer and producer, should further strengthen energy cooperation, maintain international oil market stability and jointly cope with risks and challenges, said Zhao Ping, deputy head of the Academy of China Council for the Promotion of International Trade in Beijing.
Saudi Arabian Oil, also known as Aramco, a Dhahran, Saudi Arabia-based multinational petroleum and natural gas company, said that its major integrated refinery and petrochemical complex in Northeast China through a joint venture will further expand its market presence in China.
The project, located in Panjin, Liaoning province, presents an opportunity for Aramco to supply up to 210,000 barrels of crude oil feedstock per day to the complex after it begins operation in 2024, the company announced in a statement in March.
It will combine a 300,000 barrels-per-day refinery capacity and an ethylene-based steam cracker, it said.
This is the latest major move by Aramco to expand its presence in China, after it announced in March an MoU with China Petroleum and Chemical Corp, or Sinopec, the world's largest refiner by volume, for potential downstream collaboration in the country.
The two sides will also support the Fujian Refining and Petrochemical in conducting a feasibility study into the optimization and expansion of capacity, said the statement.
Zhang Yongjun, a researcher at Beijing-based China Center for International Economic Exchanges, said it is practical for oil majors across the world to strengthen cooperation and extend their business chain to jointly cope with potential risks given the backdrop of surging oil prices and increasing financial pressure.
The cooperation of global oil companies in both upstream and downstream sectors will better prepare them against such risks, said Luo Zuoxian, head of intelligence and research at the Sinopec Economics and Development Research Institute.
Market fluctuations will lead to more cooperation between countries that are rich in resources and big energy consumers, he said. The cooperation is mutually beneficial in refining and engineering services as well as science and technology research and development, he added.
"China is a cornerstone of our downstream expansion strategy in Asia and an increasingly significant driver of global chemical demand," said Mohammed Al Qahtani, Aramco senior vice-president of downstream products.
Apart from developing oil energy-related projects in Saudi Arabia and the Middle East region, China Energy Engineering Group, the Beijing-headquartered State-owned enterprise, started to build facilitating facilities of the 2.6-gigawatt Al Shuaibah photovoltaic project in Saudi Arabia in mid-November.
Located in the Al Shuaibah region of Jeddah, Mecca province, the project will be equipped with advanced PV modules. It is expected to be the largest individual PV project in the Middle East and North Africa. It is able to provide 3,000 jobs for residents of the area.