China-Gulf Relations: 'More Than Just Oil'

Saudi Crown Prince Mohammed bin Salman and Chinese President Xi Jinping jointly chair the “Riyadh Gulf-Chinese Summit for Cooperation and Development” in December (SPA)
Saudi Crown Prince Mohammed bin Salman and Chinese President Xi Jinping jointly chair the “Riyadh Gulf-Chinese Summit for Cooperation and Development” in December (SPA)
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China-Gulf Relations: 'More Than Just Oil'

Saudi Crown Prince Mohammed bin Salman and Chinese President Xi Jinping jointly chair the “Riyadh Gulf-Chinese Summit for Cooperation and Development” in December (SPA)
Saudi Crown Prince Mohammed bin Salman and Chinese President Xi Jinping jointly chair the “Riyadh Gulf-Chinese Summit for Cooperation and Development” in December (SPA)

A recent report by the World Economic Forum (WEF) noted that the economic relations between the GCC countries and China go beyond oil and trade, but constitute a large proportion of the global GDP, which opens up great prospects for promising aspirations and opportunities.

According to the report, China and the Gulf countries together generate about 22 percent of the world’s GDP. This makes them two major drivers of global growth, especially in light of the deepening economic relations between them amid major geopolitical shifts.

The report stressed that technology, industries and electronic games represent great opportunities for future cooperation.

According to the report, major relations began with the rapid economic growth of China, which led to a significant increase in the demand for energy. Meanwhile, the Gulf’s imports of consumer goods from China have surged.

Total trade between China and the whole of the Middle East and North Africa reached $505 billion in 2022 – increasing 76% over 10 years. Total trade between China and the Gulf countries alone increased three times in the same period, the report underlined.

However, the report, which was prepared in cooperation with Oliver Wyman, confirmed at the same time that the economic ties between the two regions are “much more than just trade”.

Business leaders from Greater China and the GCC convened at the World Economic Forum’s Annual Meeting of the New Champions in Tianjin in June 2023 to explore how to enhance understanding of each other’s markets and build partnerships, the report said, pointing to three major takeaways from their discussions:

In addition to energy, technology, manufacturing and electronic games are priority sectors for both regions, providing great cooperation opportunities.

Following Chinese President Xi Jinping’s visit to Saudi Arabia in December 2022, the Kingdom signed 35 memorandums of understanding with Chinese firms, the majority of which with private companies. The report pointed to an agreement with Chinese technology giant Huawei, covering cloud computing and building high-tech complexes in Saudi cities.

In manufacturing, the WEF report stated that ongoing global shifts in manufacturing hubs and “friend shoring” initiatives offer opportunities to reshape supply chains. Enovate, a Chinese electric vehicle (EV) start-up, is illustrative of the shift towards new economy sectors with a planned $500 million investment in EV production in Saudi Arabia alongside a local partner.

On the third axis, the gaming sector is a great cross-border opportunity that reflects common preferences and consumer habits in both regions. This can be evidenced by the acquisition of a $265 million stake in Chinese e-gaming company VSPO earlier this year by Saudi Arabia’s public investment fund.

Finally, the report confirms that energy partnerships are about more than just oil and gas. Both regions are highly vulnerable to the impacts of climate change, and their shared challenges provide opportunities for transformative collaboration.

In this regard, the report pointed to a partnership between Dubai-based Mensha Ventures and Chinese partners to invest up to a $1 billion in clean technologies.

All these factors come at a time of increasing mutual trust between the two sides.

“Institutions for dialogue and trust-building are essential to build sustained commercial ties,” said Alexandre Raffoul, the World Economic Forum’s Head of Business Engagement for the Middle East and Africa and moderator of the Tianjin discussion.

In the end, the close ties between China and the Middle East - sometimes referred to as the “New Silk Road” - are about more than just oil and consumer goods... Maybe even more important are the flow of technologies, people, ideas and capital.

There are good signs of moving forward in this context, the report said, noting that an increasing number of Middle Eastern students are learning Mandarin, as are their peers in China who are studying Arabic.



Saudi Giga-project Diriyah Agrees Deals Worth $1 bln with European Firms, Says CEO

Jerry Inzerillo, Group CEO of the Diriyah Gate Authority reacts during the World Economic Forum (WEF) in Riyadh, Saudi Arabia, April 28, 2024. REUTERS/Hamad I Mohammed/File Photo
Jerry Inzerillo, Group CEO of the Diriyah Gate Authority reacts during the World Economic Forum (WEF) in Riyadh, Saudi Arabia, April 28, 2024. REUTERS/Hamad I Mohammed/File Photo
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Saudi Giga-project Diriyah Agrees Deals Worth $1 bln with European Firms, Says CEO

Jerry Inzerillo, Group CEO of the Diriyah Gate Authority reacts during the World Economic Forum (WEF) in Riyadh, Saudi Arabia, April 28, 2024. REUTERS/Hamad I Mohammed/File Photo
Jerry Inzerillo, Group CEO of the Diriyah Gate Authority reacts during the World Economic Forum (WEF) in Riyadh, Saudi Arabia, April 28, 2024. REUTERS/Hamad I Mohammed/File Photo

Diriyah, one of Saudi Arabia's giga-projects, has agreed deals worth nearly $1 billion with European firms and is in talks to attract more foreign capital, its CEO said.

Diriyah, located at a UNESCO World Heritage site outside the capital Riyadh, has been backed by PIF investments worth a total of around 20 billion riyals ($5.33 billion) in 2023 and 2024, and should get 12 billion riyals more next year, its CEO said.

It has recently agreed deals worth nearly $1 billion in total with an Italian developer and a French company and is in talks with several foreign investors looking to buy equity stakes in hotels and other real estate developments, Jerry Inzerillo told Reuters in New York this week.

"There's a lot of interest from America, a lot of interest from every country," he said. "We'll work with any country that can deliver quality and stay on time."

Foreign investors have already bought stakes in several projects in Diriyah, said Inzerillo, with more to come.

"A lot of people can see that it's built, it's doable; it's no longer renderings, no longer 'you wait and see' ... So now we're seeing a big spike in interest in foreign investment".

Inzerillo said investment priorities have changed because of upcoming events such as the Expo 2030 world fair, which Riyadh last year won the right to host. But the pace and scope of the Saudi giga-projects have not been scaled back, he said.

"It's a realignment, a re-prioritization ... not a reduction," he added.