China and Gulf nations come closer over oil, US ruffled

Xi arrived at Al Yamama Palace in Riyadh and was greeted by Crown Prince Mohammed bin Salman, King Salman's assertive son who stands ready to rule the oil-rich kingdom in the decades to come. Xi shook hands with the prince as an honor guard on horseback carried Saudi and Chinese flags. (Image: AP)

The Chinese footprint in west Asia and north Africa got significantly larger this week when the countries in the region, ignoring America’s advice to limit engagement with China, met in Saudi Arabia to deepen their strategic ties with Beijing.

The move signalled the region’s desire to forge global alliances beyond the United States in a highly polarised world to pursue their self-interest and future goals.

In October, Saudi Arabia and its Gulf allies had defied US pressure to break with fellow OPEC+ oil producer Russia over its invasion of Ukraine, and decided to cut oil production by two million barrels per day — a move that adversely affected the US on the eve of its mid-term elections.

China’s growing influence in the region has unnerved the US.

The series of engagements that Chinese President Xi Jinping had with the Saudi leadership during his three-day visit starting November 7, and subsequent summits with the Gulf and African League nations, reflected the country's keenness to build options and maintain an independent foreign policy.

Saudi Arabia also signed a memorandum of understanding (MoU) with the Chinese tech giant Huawei on cloud computing and building high-tech complexes in Saudi cities.

Huawei has been involved in building 5G networks in the Gulf states despite being blacklisted by the US due to security concerns.

Until recently, most of these Gulf countries were close allies of the US and were willing to do its bidding. But Washington’s tendency to frequently shift its focus away from the region, without making any meaningful investments, has raised serious questions about its credibility and reliability as a partner.

Saudi Crown Prince Mohammed Bin Salman, who hosted the powwows with Xi, said they heralded a “historic new phase of relations with China.”

Two-way trade between China and the GCC exceeded $230 billion in 2021, and China’s imports of crude oil from the GCC countries have topped 200 million tonnes, according to the Chinese news agency Xinhua.

The Chinese President said Beijing would continue to buy large quantities of oil from the Gulf Arab countries and expand imports of liquefied natural gas (LNG). He said the countries were natural partners who would cooperate further in upstream oil and gas development.

But Xi also told the Gulf Arab leaders that China would want to buy oil and gas in Yuan — a move seen as an attempt to establish the Chinese currency internationally and weaken the USD’s grip on world trade.

Relations between Washington and Riyadh — the largest oil producer and the most important Arab country — have been strained over a range of issues, including Biden’s criticism of the Crown Prince in relation to the killing of journalist Jamal Khashoggi.

The Chinese President’s visit came when bilateral relations between Saudi Arabia and the United States are not only at an all-time low but when there are also wide speculations about America’s fading clout and influence in the region.

President Xi received a grand and warm welcome with a 21-gun salute, a guard of honour, and an honorary doctorate in management from the King Saud University.

He held separate meetings with King Salman and the kingdom’s de facto ruler, Crown Prince Salman, on deepening and strengthening bilateral relations.

The warmth and pageantry with which the Chinese President was received contrasted sharply with the lacklustre reception given to American President Joe Biden when he visited the country in July.

When Biden met the Saudi Crown Prince, the two exchanged a fist bump instead of a handshake and they even refused to smile.

During Xi’s visit, King Salman and the Chinese President agreed to enhance the Comprehensive Strategic Partnership that the two countries had signed in 2016 to include a bi-annual meeting between the two heads of state.

In a joint declaration, the two sides pledged to further expand cooperation to areas such as technology, security, and Iran.

China and Saudi Arabia signed 34 energy and investment agreements worth over $30 billion. They also agreed to establish a regional centre for Chinese factories to further boost the energy supply chain.

The significance of the joint declaration lies in the mention of Iran, Riyadh’s long-time rival and a strategic partner of Beijing.

The two sides agreed to work together to guarantee the “peaceful nature” of Iran’s nuclear programme and called on Iran to maintain a “non-proliferation regime” while also emphasising “respect” for the principles of “good neighbourliness.”

In an article in the local Al Riyadh newspaper, Xi wrote, “China will take this visit as an opportunity to strengthen its Comprehensive Strategic Partnership with Saudi Arabia.

“We will continue to give each other understanding and support, and jointly advocate independence and oppose external interference,” he added.

China has been Saudi Arabia’s largest trading partner since 2013, while Riyadh has been Beijing's biggest oil supplier.

Saudi Arabia accounted for over 18 percent of China’s total oil imports this year, while the Middle East has been the main beneficiary of China’s Belt and Road Initiative  (BRI) investment in the first half of 2022.

Over the past decade, China and Saudi Arabia have cooperated in areas ranging from the massive Red Sea infrastructure project, to 5G, to exploring the moon.

Xi said China would further synergise its BRI with Saudi Arabia’s Vision 2030 — which aims to reduce the country’s dependence on oil and diversify the economy in areas like infrastructure and tourism.

Experts point out that the Biden administration had frequently taken a binary view of the international order as a “competition of democracies and autocracies.”

This has led several US partners to avoid choosing sides altogether and maintain relations with all the great powers at once.

Having to choose one over the other would be costly for many medium-sized countries like Saudi Arabia. Therefore, they have decided to maintain relations with all parties.

According to experts, while many countries chose to be non-aligned during the Cold War to maintain their neutrality, the new polarised world has led them to become “omni-aligned.”

This means that rather than being aloof and neutral they continue to maintain ties with all the big powers and benefit from those relationships.

Saudi Foreign Minister Prince Faisal bin Farhan Al Saud said, “We don’t see this as a zero-sum game.”

He added, “We don’t believe in polarisation or taking sides.”