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Saudi Arabia Registers Jump in Foreign Direct Investment Inflows

Attractive investment environment in Saudi Arabia brings foreign capital to the local market. (Asharq Al-Awsat)
Attractive investment environment in Saudi Arabia brings foreign capital to the local market. (Asharq Al-Awsat)
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Saudi Arabia Registers Jump in Foreign Direct Investment Inflows

Attractive investment environment in Saudi Arabia brings foreign capital to the local market. (Asharq Al-Awsat)
Attractive investment environment in Saudi Arabia brings foreign capital to the local market. (Asharq Al-Awsat)

Foreign direct investment flows recorded a growth of 46.5% during the second quarter of this year, compared to the same period of 2021, after excluding the Saudi Aramco deal amounting to 46.5 billion riyals ($12.4 billion).

Last year, Aramco forged a pipeline infrastructure deal worth 46.5 billion riyals ($12.4 billion) with an international consortium that acquired a 49% stake in the recently established crude oil supply company, under a 25-year sale and leaseback agreement.

According to a recent report issued by the Ministry of Investment, the investment licenses issued in the third quarter of this year amounted to around 928, representing an increase of 8.8% on an annual basis, with the exception of licenses issued under the campaign to combat commercial cover-up violations.

The report noted that foreign direct investment flows declined by 84.9% during the second quarter of 2022, on an annual basis, as a result of the increase in the volume of flows last year, because of the Saudi Aramco deal.

The report revealed a real GDP growth of 8.6% in the third quarter of 2022, on an annual basis, as a result of the remarkable rise in oil activities by 14.5%, and the increase in non-oil activities by 5.6%, while government activities recorded a jump of 2.4%.

According to the Ministry of Investment, the unemployment rate for Saudis decreased, in the second quarter of 2022, to 9.7%, compared to 10.1% during the previous quarter. The unemployment rate for male and female citizens decreased to 4.7% and 19.3%, respectively, during the same period.

The report disclosed that the real estate price index increased by 1.5%, during the third quarter of 2022, on an annual basis, driven by a rise in residential real estate prices by 2.5%.

The consumer price index rose by 3.1%, during last September, on an annual basis, due to an increase in food and beverage prices by 4.3%, and housing, water, electricity, gas and other fuels by 3.2%.

According to the report of the Saudi Ministry of Investment, the Purchasing Managers’ Index rose from 56.6 points last September to 57.2 points in October of this year, which indicates an improvement in the performance of the non-oil private sector due to strong demand and high business flows.

The ministry indicated that the average price of Brent crude rose by 21% during last September on an annual basis, bringing the average price of a barrel to $91.

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China Eyes Electric Vehicle Manufacturing Opportunities in Saudi Arabia

Chinese ambassador to Saudi Arabia (Asharq Al-Awsat)
Chinese ambassador to Saudi Arabia (Asharq Al-Awsat)
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China Eyes Electric Vehicle Manufacturing Opportunities in Saudi Arabia

Chinese ambassador to Saudi Arabia (Asharq Al-Awsat)
Chinese ambassador to Saudi Arabia (Asharq Al-Awsat)

China’s ambassador to Saudi Arabia, Chang Hua, expressed Beijing’s hopes to strengthen its partnership with the kingdom, especially in electric vehicle production and other industries.
Speaking to Asharq Al-Awsat, Hua condemned violations of Lebanon’s sovereignty and the targeting of civilians.
He called for immediate action to reduce tensions and prevent further escalation in the region.
“China is deeply shocked by the high civilian casualties from the conflict between Israel and Lebanon,” Hua said, urging the international community to work on calming the situation.
He emphasized that, no matter how things unfold, “China will always stand for justice and remain committed to peace and stability in the Middle East. We are ready to work with all parties to promote peace in the region.”
China’s Economic Growth
Hua highlighted China’s rise from a $30 billion economy to a $17.8 trillion one, making it the world’s second-largest economy and a leader in trade and industry.
He reiterated China’s goal to maintain high-level openness, push for high-quality economic development, and promote a multipolar world with fair global governance and inclusive economic globalization.
Saudi-China Relations
Hua described the partnership between Saudi Arabia and China as entering a new phase of deep development, congratulating Saudi Arabia on its 94th National Day.
He noted that Chinese Premier Li Qiang’s recent visit to Saudi Arabia has boosted bilateral relations and strengthened the comprehensive strategic partnership, driving it towards a more stable and prosperous future.
The ambassador stressed the need to expand trade and investment between the two countries and highlighted the upcoming “Saudi-Chinese Cultural Year 2025” as a key event.
Hua also pointed out that Saudi Crown Prince Mohammed bin Salman values the strong and historic relationship between the two nations.
The Crown Prince looks forward to further aligning Saudi Vision 2030 with China’s Belt and Road Initiative, expanding cooperation in energy, investment, and culture.
Hua noted that China is Saudi Arabia’s largest trading partner, with bilateral trade exceeding $100 billion in the past two years. He also mentioned the recent currency swap agreement between the two countries, which has helped boost trade and investment.
New Developments in Saudi-China Relations
According to Hua, the cooperation between the two nations has grown significantly, particularly in the automotive, renewable energy, and tourism sectors.
In 2023, Saudi imports of Chinese cars reached $4.12 billion, driven by companies like Changan, Geely, MG, Chery, Great Wall, Hongqi, GAC, and BYD, which have opened branches in the kingdom.
Discussions are ongoing about building local manufacturing plants. China exported 4.91 million vehicles in 2023, making it the largest car exporter globally for the first time, including 1.203 million electric vehicles, a 77.6% increase from the previous year.
Hua noted that Saudi Vision 2030 aims for electric vehicles to account for at least 30% of all cars in Riyadh by 2030, and he expressed optimism about enhancing collaboration in automotive manufacturing.
Chinese companies are also increasingly involved in Saudi Arabia’s renewable energy sector. They are working on multiple solar projects, including the Al Shuaibah photovoltaic plant, the largest of its kind in the world, with a capacity of 2.6 gigawatts.
In July 2023, the Renewable Energy Localization Company (RELC), backed by the Saudi Public Investment Fund, signed agreements with three Chinese firms—Envision Technology Group, Jinko Solar, and TCL Zhonghuan—to establish joint ventures for high-efficiency solar cell production in Saudi Arabia.
These projects will focus on producing solar components, helping Saudi Arabia achieve its goal of sourcing 75% of renewable energy project components locally by 2030.
Hua also highlighted the increasing exchange of visits between citizens of both countries. In September 2023, China and Saudi Arabia signed a memorandum of understanding to facilitate group tourism, making the kingdom an official destination for Chinese tour groups.
Several Chinese travel agencies have begun offering packages to Saudi Arabia, and direct flights between the two countries are increasing. Saudi Airlines has expanded its routes, operating numerous weekly flights between Beijing, Shanghai, Shenzhen, Riyadh, and Jeddah.