China and Saudi Arabia Sign Economic Contracts Worth $65 Billion

On Wednesday, during the first day of King Salman’s visit to Beijing, China and Saudi Arabia signed contracts worth $65 billion. According to Reuters, one of these contracts is a memorandum of understanding between Aramco, the Saudi state oil company, and the Chinese company Norinco to explore the construction of a refinery and chemical industries in China. The Saudi Basic Industries Corporation and the Chinese company Sinopec, which currently jointly operate a chemical complex, also reached an agreement on developing petrochemical projects in China and Saudi Arabia. The 81-year-old King of Saudi Arabia, who oversees the beginning of an ambitious economic reform plan in the country, has been on a lengthy visit to Asian countries since last month. This trip to countries that are among the growing importers of Saudi oil aims to promote investment in Saudi Arabia and sell shares of Aramco. After losing part of its market share in China to Russian oil exports, Saudi Arabia is trying to restore its previous position in collaboration with three major state-owned oil companies in China. Chinese President Xi Jinping, speaking at the Great Hall of the People in Beijing, told King Salman that China is a reliable and stable oil importer and that the two countries should expand their cooperation. He added, "For a long time, China and Islamic countries have respected each other, and the results of their cooperation have been beneficial for both sides, creating a model of peaceful coexistence of different cultures." In response, King Salman stated that China could play a larger role in the Middle East. He added, "Saudi Arabia is ready to cooperate with China to develop stability, peace, and security at the regional and global levels." According to Reuters, the Chinese Deputy Foreign Minister stated that the set of memorandums of understanding and the initial text of contracts signed between the two parties is valued at $65 billion. This official added, "President Xi Jinping and King Salman are old friends. Practical cooperation between the two countries has achieved numerous successes and has significant potential." The contracts also include e-commerce and renewable energy production in addition to the oil and petrochemical industries. For Aramco, expanding activities in the refinery and petrochemical sectors to other countries is one of the main axes of diversifying income sources and ensuring long-term financial resources from the country’s oil revenues. On the other hand, it seems that China has somewhat reduced the absolute control of state oil companies over the energy sector, allowing private investments, including foreign investments such as Aramco, to invest in its oil and energy sector. Despite its reliance on regional oil reserves, China does not play an active diplomatic role in the Middle East. Recently, it has tried to take a more active role in ending the Syrian civil war, although it has opposed most resolutions of the Security Council against Bashar al-Assad's regime. The Saudi government is strongly opposed to Bashar al-Assad's regime and supports the rebels. Last year, China declared its support for the Yemeni government, which is fighting the Houthi Shiites with the support of the Saudi-led Arab coalition. The Chinese Foreign Ministry stated that the meetings between the two leaders also discussed the civil wars in Syria and Yemen.