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Opinion | How China is helping Middle East economies pivot away from Gulf oil
- China’s tech and trade offers dovetail nicely with Gulf ambitions to deepen ties with Asia in search of a cleaner, greener future
- The shared interest in building partnerships outside America’s orbit could see the SCO expand and the birth of a China-GCC free trade pact
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President Xi Jinping wrapped up his trip to Saudi Arabia on Saturday, having met several leaders from the region as he took part in the first China-Arab States Summit and the China-Gulf Cooperation Council summit.
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As well as marking a continuation of China’s diplomatic re-engagement with the world after a flurry of meetings around the G20 last month, Xi’s visit underscored how ties between China and the Gulf Cooperation Council (GCC) are deepening and diversifying as both sides seek to secure their economic futures. China and Saudi Arabia vowed to upgrade their partnership and announced a raft of deals covering sectors such as energy, information technology, cloud services, logistics and construction.
Of course, fossil fuels remain central to this rapidly growing relationship. China is the world’s largest importer of oil and Saudi Arabia is the world’s largest exporter. In October, the kingdom produced 10.9 million barrels of crude oil per day, with the United Arab Emirates and Kuwait adding another 3.5 and 2.8 million barrels respectively.
But finite supplies, mounting climate change concerns and the shift to cleaner fuels have cast a shadow over long-term oil revenues, even if the war in Ukraine and the resulting energy crisis have shifted power back to the petrostates for now. To deal with this long-term challenge, Gulf states are undertaking an economic pivot away from relying on oil exports to the West.
The first component of this pivot is a turn towards fast-growing Asian economies. At current growth rates, trade between the the GCC and emerging Asia – a group that includes China, India and most members of the Association of Southeast Asian Nations – is set to reach around US$578 billion by 2030, surpassing trade with advanced economies, according to projections by Asia House.
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China plays an outsize role in the Gulf’s reorientation. Its trade with the GCC has doubled since 2010 and last year marked a milestone: GCC’s trade with China exceeded the council’s trade with the United States and euro zone for the first time. Meanwhile, China’s trade with Saudi Arabia hit US$81.7 billion, surpassing Riyadh’s combined trade with the US, euro zone and United Kingdom.
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