New Saudi Arabia-China SEZ to Boost Cross-Border Trade, Light Industries

Located within King Salman International Airport, the Saudi Arabia-China Special Economic Zone will feature three key areas: a logistics and light industrial park to bolster local supply chains, an international trade hub for streamlined business services, and a residential zone with quality facilities for employees and families.

By Estelle Xiao

During the inaugural Global Logistics Forum in Riyadh on October 13, Saudi Arabia’s Minister of Transport and Logistics Services, Saleh bin Nasser AIJasser, announced the establishment of the Saudi-China Special Economic Zone. This ambitious project will be developed in collaboration with King Salman International Airport and EWPartners, backed by the Public Investment Fund (PIF). The zone aims to bolster key sectors such as manufacturing, logistics, and trade and is set to position Saudi Arabia as a regional logistics hub, enhancing cross-border trade with China and other Asian markets.

Saudi Arabia-China Special Economic Zone: Key features

The Saudi-China Special Economic Zone will be located within King Salman International Airport, which is expected to become one of the largest airports globally by 2030. Covering 4 square kilometers, the zone will have three distinct functional areas: a logistics and light industrial park designed to strengthen local supply chains and industrial capacity; an international trade hub offering streamlined, one-stop services for businesses, reducing operational costs, and facilitating trade activities; and a residential area providing high-quality living facilities and services for employees and their families. This integrated approach creates a competitive, efficient, and business-friendly environment, which should prove an attractive proposition for global investors.

This development is part of Saudi Arabia’s broader strategy to transform the kingdom into a global logistics hub, supported by a planned US$266 billion investment in infrastructure improvements and emissions reduction initiatives. Expected to attract over 3,000 wholesalers and retailers along with more than 200 light industrial manufacturers from China and Asia, the Saudi-China Special Economic Zone presents significant potential for foreign investors. It aims to deliver state-of-the-art logistics infrastructure, optimize operational efficiency, and unlock new economic growth opportunities for Saudi Arabia and the broader region.

China is becoming Saudi Arabia’s biggest trade partner

In December 2023, China and Saudi Arabia established a “comprehensive strategic partnership,” signaling deeper cooperation between the two nations. This partnership aligns China’s Belt and Road Initiative (BRI) with Saudi Arabia’s Vision 2030, a plan aimed at diversifying the Saudi economy and reducing its reliance on crude oil. By 2022, bilateral trade between China and Saudi Arabia reached US$116.04 billion, making Saudi Arabia China’s top trade partner in the West Asia and North Africa (WANA) region. Currently, over 150 Chinese companies operate in Saudi Arabia, engaged across sectors like manufacturing, infrastructure, trade logistics, telecommunications, among others.

One successful example of this cooperation is Jazan Economic City, located on Saudi Arabia’s southern coast along the Red Sea. With significant Chinese investment, Jazan has become a hub for projects aligned with China’s BRI, promoting trade and connectivity between Asia and Africa. Its strategic position on the Red Sea makes it a vital player in regional logistics and economic development.

The Jazan City for Primary and Downstream Industries (JCPDI) has attracted more than US$21.3 billion in Chinese investment, connecting China’s Silk Road network with over 100 local supply chains. The zone currently has 470 active construction projects and is recognized by China’s National Development and Reform Commission as one of 20 major global industrial parks vital for international capacity cooperation. It is also one of nine Chinese industrial parks established in Arab countries, highlighting the scale of China’s involvement in the region. JCPDI’s port was constructed by China Harbour Engineering. As the third-largest port in Saudi Arabia, it plays a key role in facilitating trade and supporting the economic growth of the zone. This deepening investment and cooperation reflect broader economic interests, offering significant opportunities for companies from both countries to engage in mutually beneficial ventures.

Summary

China views Saudi Arabia as a critical partner in the Middle East / WANA region, while Saudi Arabia recognizes China as a key driver of future economic opportunities. The announcement of the Saudi-China Special Economic Zone marks a significant milestone in Saudi Arabia’s ongoing economic transformation. Poised to drive logistics and industrial growth, the zone will enhance cross-border trade, strengthen supply chains, and offer attractive opportunities for investors. As China and Saudi Arabia expand their comprehensive strategic partnership, this project aligns with global trade trends and provides foreign businesses access to emerging markets, further reinforcing Saudi Arabia’s role as a regional logistics hub.

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