Strengthening economic partnership in new era

Bilateral trade surges and key projects set to boost supply chain development

An exhibitor introduces a book on China's geography at the Riyadh International Book Fair in 2021. (WANG HAIZHOU / XINHUA)

Saudi Arabia and China will see reinforced economic cooperation and stronger trade ties in the years ahead, according to market watchers and business leaders from both countries.

The optimistic outlook is supported by two countries' shared economic interests and their efforts to enhance synergy between the Belt and Road Initiative and Saudi Vision 2030.

We have seen many Chinese companies bring practical technology solutions to Saudi Arabia and the Middle East region by localizing their know-how to better align with the markets. There are already numerous win-win results in different sectors between China and Saudi Arabia and there will be many more in the future.

Mohammed Alajlan, chairman of the Riyadh and Shanghai-based Saudi-Chinese Business Council

Saudi Vision 2030 is a unique transformative economic and social reform blueprint that is opening Saudi Arabia up to the world. It plans to boost the country' communication and coordination in regional and international affairs.

While the oil trade lies at the heart of business ties between China and Saudi Arabia, the Middle East country's desire to upgrade its infrastructure, service and manufacturing facilities such as roads, airports, oil tankers, new energy-related projects, offshore engineering equipment and container ports, has brought more opportunities for Chinese project contractors and manufacturers, said Zhang Yuxin, a researcher at the Institute of Industrial Economics at the Beijing-based Chinese Academy of Social Sciences.

Zhang said Saudi companies also want to jointly explore third-party markets with China to reinforce their commercial connection with many countries and regions via greater development and BRI cooperation.

Thanks to their complementary trade structure and close economic ties, the two countries saw their trade soar 37.4 percent year-on-year to $97.26 billion between January and October 2022, data from China's General Administration of Customs show.

China mainly ships construction machinery, vessels, manufacturing equipment, steel, textiles, furniture, computers, smartphones, garments and household appliances to Saudi Arabia. Chinese-made electric passenger vehicles have also become popular in the country.

In addition to crude oil, petrochemicals, fertilizer and other products, Saudi Arabian exports to China include a variety of goods such as metallic ore, aquatic products, marble, olive oil, sesame and dairy products.

The potential for trade cooperation between China and countries involved in the BRI is being continually unleashed, serving as a new engine that propels China's development of foreign trade and outbound direct investment, especially in areas such as 5G, autonomous driving, new energy vehicle production and smart city development, according to Sun Fuquan, vice-president of the Chinese Academy of Science and Technology for Development in Beijing.

These technologies are developing quickly and reaching their maturity in China, Sun said, adding that China's technology solutions and related service projects will greatly contribute to the Arab country's industrial powerhouse ambitions and supply chain development.

To reach their goals for both economic and sustainable growth, Saudi Arabia and many oil and natural gas-rich Middle East countries need the investment and technical assistance of foreign countries such as China and the United States in the oil and gas industries.

The foreign investment is needed due to strong demand for skills and high-tech expertise, said Lin Boqiang, head of the China Institute for Studies in Energy Policy at Xiamen University in Fujian province.

Mohammed Alajlan, chairman of the Riyadh and Shanghai-based Saudi-Chinese Business Council, said that since Saudi Vision 2030 was presented by Saudi Arabian Crown Prince Mohammed bin Salman Al Saud in 2016, the country's economy has significantly diversified. Local manufacturing, tourism, finance, mining, education, healthcare and other sectors are embracing new development opportunities.

To attract more global capital, the Saudi government has introduced a series of favorable policies and measures, improved its investment environment, and added investment in infrastructure.

Besides building new roads, expanding airports and upgrading port facilities, it has streamlined electrical connections and installation projects.

Geographic information systems have been adopted to meet the new demands for power connection, increasing the accessibility of electric power, according to the information released by the council.

"China has advanced technologies, services and products in emerging fields such as AI, big data, biotech, fintech and automation," he said. "We have seen many Chinese companies bring practical technology solutions to Saudi Arabia and the Middle East region by localizing their knowhow to better align with the markets. There are already numerous win-win results in different sectors between China and Saudi Arabia and there will be many more in the future."

Alajlan, who is also vice-chairman of Ajlan & Bros Holding Group, or ABHG, a Saudi Arabia-based conglomerate, said the company's business in China has expanded from exporting garments and textiles from China to cooperating with Chinese companies for growth opportunities in a wide range of sectors, including financial services, healthcare, high-end consumer goods manufacturing, technology, education, logistics and tourism.

Since its establishment, ABHG has doubled the size of its investment team in China and set up a number of branches in cities across the country, including Beijing, Shanghai and Shenzhen.

While building big-ticket projects such as roads, bridges and railways to improve the lives of people in Saudi Arabia, China Harbour Engineering, or CHEC, a marine engineering project specialist and a subsidiary of State-owned China Communications Construction, is paying careful attention to protecting the natural environment in the country's Red Sea Project.

As a major project announced by the Saudi government in 2017, the Red Sea Project is a new tourism hub being developed on the western coast of the country. It's aimed at making cities such as Umluj global tourism destinations.

Upon its proposed completion in 2030, the Red Sea island destination will include up to 8,000 hotel rooms across 22 islands and six inland sites, according to information released by project developer Red Sea Development Co.

CHEC has taken part in the project, including being engaged in island environmental improvement, piling and foundation projects for hotels, and channel dredging.

"CHEC adheres to the new development concept, and deeply cultivates in every employee the idea of promoting the construction of ecological civilization and harmonious coexistence between humans and nature," said Yang Zhiyuan, general manager of the CHEC Middle East Regional Management Center.

CHEC regards implementing environmental protection measures and protecting the unique marine ecosystem of the Red Sea as an important task, Yang said, adding the Red Sea is home to diverse and dense coral reefs. About 70 coral species are known to be within the construction area of the project, providing habitats for tens of thousands of fish and invertebrates that are essential for maintaining biodiversity.

The CHEC team there has set up two protective curtains around the construction islands to minimize the environmental effects, Yang said. The area within 10 meters of the coral reef has been set aside as a coral buffer reserve. No-navigation and no-anchoring zones have been set up in areas where there are coral reefs to prevent direct damage to the seabed and the ocean.