China-Saudi Arabia Ties: Trade, Investment, and Opportunities

Following high-level political and diplomatic efforts, China-Saudi economic ties are also deepening. Chinese exports and investments are pouring into Saudi Arabia as the kingdom’s demand for green technology strengthens the relationship. Additionally, Saudi Arabia’s Public Investment Fund (PIF) is investing heavily in China’s energy sector.

By Qian Zhou 

The diplomatic relations between China and Saudi Arabia, established on July 21, 1990, have seen remarkable growth over the years. The relationship reached new heights in January 2016, when President Xi Jinping’s state visit to Saudi Arabia resulted in the establishment of a comprehensive strategic partnership. In December 2022, President Xi participated in the inaugural China-Arab States Summit and the China-Gulf Cooperation Council Summit in Riyadh, during which both nations signed a Comprehensive Strategic Partnership Agreement and announced significant collaborations under the Belt and Road Initiative and Saudi Arabia’s Vision 2030. These developments underscore the robust and expanding ties between the two countries.

A flourishing China-Saudi trade relationship

Supported by high-level political and diplomatic efforts, China and Saudi Arabia’s economic partnership has also grown rapidly. Since 2001, Saudi Arabia has consistently been China’s largest trading partner in the Middle East, while China has been Saudi Arabia’s top trading partner since 2013. In 2023, bilateral trade reached US$107.23 billion, with China exporting US$42.86 billion worth of goods to Saudi Arabia and importing US$64.37 billion. Key Chinese exports included machinery, metals, vehicles, textiles, and electronics, while imports from Saudi Arabia primarily comprised crude oil and petrochemical products.

Trade figures from January to August 2024 further highlight this upward trend, with bilateral trade totaling US$70.87 billion, including US$31.79 billion in Chinese exports and US$39.08 billion in imports. Machinery, vehicles, and steel accounted for nearly half of China’s exports to Saudi Arabia, while mineral fuels and chemical products dominated imports. Saudi Arabia has long been China’s largest supplier of crude oil. In 2023, China imported 85.96 million tons of crude oil from Saudi Arabia, with an additional 52.09 million tons imported from January to August 2024.

Source: General Administration of Customs, China 

China-Saudi investment and economic diversification

China has become Saudi Arabia’s leading source of greenfield foreign direct investment (FDI), with investments totaling US$21.6 billion from 2021 to October 2024. Approximately one-third of these investments are focused on clean technologies such as solar, wind, and batteries. In comparison, the United States, the second-largest investor, contributed US$12.5 billion during the same period.

Chinese companies are making significant inroads into Saudi Arabia’s engineering and energy sectors. Notable projects include Envision’s involvement in the NEOM project, where the company supplied wind turbines for the world’s largest green hydrogen initiative. In the photovoltaic sector, Chinese firms dominate global production, providing essential support for Saudi Arabia’s ambitious renewable energy goals under Vision 2030.

Chinese enterprises are also actively expanding their presence in sectors like trade,  finance, logistics, and e-commerce, aligning with Saudi Arabia’s vision for economic diversification.

High-profile collaborations

Recent months have witnessed a flurry of strategic agreements underscoring the deepening bilateral relationship. Notable deals include:

• Saudi Aramco’s expanded partnerships with Chinese petrochemical giants Rongsheng and Hengli.
• Plans to build clean technology manufacturing facilities in Saudi Arabia in collaboration with China National Building Material Group.
• The establishment of a Sino-Saudi special economic zone at Riyadh’s King Salman International Airport, spearheaded by EWPartners and backed by Saudi Arabia’s Public Investment Fund (PIF).
• Mutual financial integration, highlighted by the launch of exchange-traded funds (ETFs) tracking top-tier stocks in both nations.

In November 2023, China selected Saudi Arabia for its first US dollar sovereign bond sale in three years, while Saudi Arabia signed memorandums of understanding with Chinese state-owned banks for projects worth US$50 billion.

A shared vision for green development

Saudi Arabia’s energy transition aligns with China’s global leadership in green technologies. Under Vision 2030, Saudi Arabia aims to add 20 GW of renewable energy annually, targeting 130 GW of installed capacity by 2030. Chinese firms, with their competitive edge in photovoltaics, wind energy, and green hydrogen, are pivotal in realizing these ambitions.

As Saudi Arabia’s Finance Minister Mohammed Al-Jadaan stated in a recent interview, the kingdom is eager to learn from China’s expertise in green development and deepen cooperation in renewable energy. The collaboration between the two nations is expected to inject continuous “green momentum” into Saudi Arabia’s energy transition.

Conclusion

China and Saudi Arabia’s strong economic complementarities, coupled with their shared commitment to sustainable development, have created a robust foundation for further collaboration. As both nations navigate the opportunities and challenges of global economic and energy transitions, their partnership is poised to grow, fostering mutual prosperity and shaping the future of bilateral cooperation.

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