Skip to main content

China’s diplomatic courting of Saudi Arabia as a trade partner has produced several groundbreaking energy deals for the two countries, including direct cooperation between each nation’s sprawling solar industries and a multi-billion dollar Saudi stake in a major Chinese refiner. An ambitious bid from China’s state-owned nuclear company now threatens to undercut US-based firms’ position as the builder of Saudi Arabia’s first nuclear plant, which could have massive ramifications for the nuclear proliferation of the Kingdom.

Saudi Arabia recently joined the BRICS coalition, which includes China as a member state. China and several other BRICS nations are increasingly focused on de-Dollarizing cross-border trade and supplanting the USD with local currencies. China’s diplomacy drive in the middle east is likely part of its strategy to eventually implement Petroyuan contracts among major oil producing nations like Saudi Arabia, countering the ongoing dominance of the Petrodollar.

Related ETFs: iShares MSCI Saudi Arabia ETF (KSA), iShares MSCI Emerging Markets ETF (EEM)

Though China continues to struggle with reviving its equity markets and domestic economic growth, that hasn’t slowed Beijing’s diplomatic onslaught in the middle east, which has focused heavily on expanding its international commerce with the Kingdom of Saudi Arabia. New initiatives aimed at expanding foreign investment in each nation have focused on energy ventures and the reach of the countries’ financial institutions.

Earlier this year, MRP detailed a Chinese-brokered settlement between Iran and Saudi Arabia, in which both countries – each major suppliers of energy products to the Chinese market – agreed to re-establish formal relations and end seven years of severed ties and political disassociation. That followed a Riyadh summit attended by the Crown Prince and Prime Minister of Saudi Arabia, Mohammed bin Salman, and Chinese President Xi Jinping in late 2022, which heralded the signing of 30 investment agreements between Saudi and Chinese companies worth roughly $50 billion.

China is already Saudi Arabia’s largest trading partner and further economic integration could…

To read the complete Intelligence Briefing, current All-Access clients, SIGN IN

All-Access clients receive the full-spectrum of MRP’s research, including daily investment insights and unlimited use of our online research archive. For a free trial of MRP’s All-Access membership, or to save 50% on your first year by signing up now, CLICK HERE