University of world economy and diplomacy international relations faculty department of international relations

Chapter II. China and Saudi Arabia in modern international relations

2.1. Stages in the development of China-Saudi relations

In this period of political history, relations between China and the countries of the Middle East are of particular interest for study. These regions have long attracted the attention of scientists, and the interest in them is undoubtedly due to many factors. Among them are a rich history, a distinctive culture, rapid economic development, which over the past decades has turned the People's Republic of China and part of the countries of the Middle East into actors of not only regional but also global significance, and, finally, the historically established close relationship of partnership between Russia and these countries, which is reflected in the most diverse areas of public life. At the same time, it should be noted that the problem under study practically did not receive coverage in the domestic literature. The relationship between two regions so important to us undoubtedly requires close attention and deep understanding - which determines the scientific relevance of our work.
Let us consider in more detail the history of the development of relations between the PRC and Saudi Arabia (SA). Before the establishment of diplomatic relations in 1990, unofficial contacts existed between the SA and the PRC. So, in 1981, the Minister of Defense and Aviation of the SA officially recognized that there are business ties between the two countries. According to some reports, one of the Saudi princes made an "unofficial visit" to Beijing, who, according to some researchers, sought to enlist strong support from the PRC for the Saudi plan for a Middle East settlement. In the same year, at the talks in Cancun, the General Secretary of the CPC Central Committee Zhao Ziyang met with Crown Prince Fahd
Thus, the intensification of relations between Beijing and Riyadh began in the 1980s with military cooperation, when China supplied the CA with a batch of CSS-2 (DF-3) medium-range ballistic missiles. In the same period, the strengthening of energy cooperation begins. It should be noted that military cooperation continues to occupy a significant place in bilateral cooperation, which, however, is gradually acquiring an increasingly multifaceted character. Since 1985, China has sold about 36 CSS-2 missiles to the SA. At the same time, in the southern part of Riyadh, the Chinese side built 2 bases for the maintenance of missile equipment by the Chinese military. Experts also note other contacts in the military sphere.
The expansion of contacts in the military sphere contributed to the intensification of civilizational interaction in general. For example, the increased interest of the PRC in the SA is also evidenced by the fact that since 1981 the pilgrimage to Mecca and Medina was restored (then only 20 people annually), hadiths and the Koran began to be published, and funds were allocated for the reconstruction of mosques. Since 1985, with the approval of the State Council of the People's Republic of China, the All-China Muslim Association began to create conditions for organizing the travel of Muslim citizens to Saudi Arabia. It should be noted that the incentive for this was not only the desire of the authorities to stabilize the situation in the multinational state, but also the receipt of funds from oil-producing countries. It is significant that according to Chinese official statistics, in 2010, 13 thousand Chinese Muslims performed the hajj.
In 1982, the SA remained the only country in the Arab East that refrained from establishing diplomatic relations with China. SA Foreign Minister Prince Saud al-Faisal as part of the delegation
The Committee of Seven was in Beijing in December and held talks with its counterpart in China. He became the first Saudi statesman to be officially accepted by the PRC. In the same period, China's interest in the supply of energy resources begins to grow.
In November 1988, a memorandum of understanding was signed with Saudi Arabia. In Riyadh and Beijing, it was decided to open Chinese and Saudi trade missions, ensuring permanent contacts between the two countries in the absence of diplomatic relations. Diplomatic relations at the consular level were established only in 1990. In June 1993, the First Vice Premier of the State Council of the People's Republic of China Li Lanqing met with entrepreneurs from the CA to discuss specific economic projects of the PRC proposed by the CA for investment. From that moment to the present, this issue will occupy a significant place in the Beijing-Riyadh dialogue.
It should be especially noted that the formation in 1996 of the Saudi-Chinese joint commission on economic, trade and technical cooperation contributed to the further growth of interstate relations, and the creation in 1997 in each of the countries of the Friendship Society significantly expanded bilateral cooperation in education, culture and information.
In the late 90s. increased political contacts between Beijing and Riyadh. At the beginning of the first stage of relations, a high-level meeting took place. In November 1999, negotiations were held in Riyadh between President of the People's Republic of China Jiang Zemin, King Fahd and Crown Prince Abdullah. The Chinese leader also took part in the final meeting of the Saudi-Saudi Cooperation Commission.
Let us dwell on the results of this visit in more detail.
First, within its framework, an agreement was concluded in the amount of $ 1.5 billion on the construction of a joint Chinese-Saudi oil refinery and the supply of Saudi oil to China in the amount of 10 million tons annually over the next 50 years. Second, the establishment of a "strategic cooperation relationship" between the two countries in the field of energy was proclaimed. In continuation of the military line of cooperation, the Chinese side also offered to supply the SA, this time with intercontinental missiles with a range of up to 5.5 thousand km. However, under US pressure, Riyadh was forced to abandon this deal. In the same year, at a meeting with representatives of business circles, the leader of the PRC again called on Arabian businessmen to visit China and study the issue of the possibility of investing their capital in the country's economy.
In 2004, after Hu Jintao came to power, Beijing not only continued, but also strengthened its previous course of strengthening cooperation with the SA.
An important step towards the development of relations with the countries of the Persian Gulf was the signing of the Agreement on Trade and Economic Cooperation and Free Trade between the PRC and the Cooperation Council for the Arab States of the Gulf (GCC). The document was supposed, first of all, to guarantee the uninterrupted purchases of oil by China in this strategically important region, reduce tariffs and simplify the circulation of goods and investments. Mention should be made of the joint projects of Sinopec and Saudi Aramco on oil production in SA, a tender for a gas project in the northwestern part of the Rub al-Khali desert, in which a Chinese company came out and signed at the end of April 2005 by a Saudi The General Committee for Investment Affairs with the Chinese Western Industrial Development Company (WWIDC) an agreement to build the largest "industrial city" in the Saudi province of Jizan (southwest of the kingdom).
In 2006, a new powerful impetus was given for the development of relations.
It was the state visit of King Abdullah, who came to the throne in 2005.
Three months later, during the return visit of the President of the People's Republic of China Hu Jintao to the SA, a number of agreements were signed in the field of healthcare, oil production, security, as well as a contract on "defense systems."
Hu Jintao proposed to the negotiating partners to create a strategic liquid fuel reserve in Southeast China in the future, which would be formed at the expense of additional Saudi supplies. The economic justification of the project and the forms of cooperation in it between both parties were discussed. There is reason to believe that this proposal is connected not only with the concerns of the Chinese side about the stability of supplies due to the default of suppliers, but also with the difficulties caused by the sea transportation route.
During the same visit, negotiations were held with the participation of Saudi firms to build a large oil refinery and petrochemical plant in Dalian worth $ 5.2 billion, the expansion of an oil refinery under construction in Fujian province and the construction of another plant in Qingdao.
According to the head of the investment company Jadwa Investment (Riyadh) In 2006, Chinese goods accounted for 11.3% of the total imported goods into CA, including textiles and machinery. For comparison, in 2004 the same indicator was 6.6%. At the same time, the same indicator for the export of Saudi products to China was 11.2%, compared with 4.8%. Of course, the main share was made up of oil sales. According to Chinese official statistics, in just 10 months of 2010 alone, the CA delivered 36.7 million tons of crude oil to China, which accounted for 19% of China's total foreign trade turnover. The second and third places were taken by Angola and Iran, respectively.
At the same time, it is necessary to note the large contracts for investments in the infrastructure of the SA (3 850 billion dollars), such as the construction of high-speed and railways, included in the five-year plan of the SA since 2009.
Undoubtedly, the successes in this area were largely the result of the Saudi-Saudi Symposium on Trade and Economic Issues (June 2008). The Symposium was organized by the China Council for the Promotion of International Trade and the Saudi Chamber of Commerce and Industry. It was attended by high-ranking officials and about 400 representatives of the business circles of the two countries. The interests of Chinese companies in obtaining contracts in the CA were touched upon. Riyadh announced that in the next five years it is ready to spend about $ 120 billion on infrastructure projects. As a result, Chinese companies were awarded construction contracts for CA. Including for the construction of a railway worth $ 1.8 billion between the holy cities of Mecca and Medina. The construction work is carried out by a consortium led by the Chinese China Railway Engineering. At the same time, it is not surprising that, according to the data published by the Chinese side during the Shanghai Expo 2010, the Saudi pavilion ranked second in terms of attendance.
As you know, for obvious reasons, it is traditional for the SA to attract workers from Muslim regions. Indeed, the construction work in Muslim-holy cities by representatives of a different faith caused some protests.
Soon, a number of Internet news resources published information about the adoption of Islam by employees of the construction company. This problem is very relevant for other countries in the Middle East where Chinese workers are present. In particular, unrest on a similar occasion was noted in Algeria and in other states of the region. At the same time, the flexibility of the leadership of Chinese companies, in similar situations, turns out to be a very useful factor, which often cannot be used by other partners of the CA.
On the other hand, Saudi investments in China are less active. Currently, the world's largest oil company Saudi Aramco has two refineries in Shandong Province (Qingdao), which is wholly owned by CA, and in Fujian Province, which it owns jointly with Sinopec and ExxonMobil. In addition, later, in the course of cooperation, two giant companies (the Saudi industrial company Sabic and the Chinese Shihua) established a joint oil refinery in Tianjin. The plant was put into operation in 2010. According to calculations, the annual production capacity will amount to 3.2 million tons of ethylene. One of the main reasons for the expansion of investments in China, the President of the Saudi company, Mohammed al-Madi, calls the low cost of labor.
At the same time, the policy of the PRC authorities to reduce the growth of foreign direct investment (FDI) in the country may become an obstacle in the way of Middle Eastern capital. The government believes that in this way it will be easier to deal with the overheating of the national economy. Beijing seeks to impose special restrictions on construction and the financial sector, where the greatest influx of speculative capital goes.
Investments from the countries of the Persian Gulf are very attractive for the PRC. According to some Russian analysts, Beijing is only verbally restricting capital inflows. For example, we can talk about a slight decrease in the growth rate of FDI, which will not affect the plans of Middle Eastern companies. As the Head of the Russian-Chinese Center for Trade and Economic Cooperation Sergei Sanakoev notes: “China will never give up its policy of increasing investment attractiveness. Only some restrictions are possible in strategically important industries and on the size of controlling stakes for foreigners ”.
The development of relations between the two countries is progressing at an ever-increasing pace. According to the International Energy Agency, China consumed more electricity in 2009 than any other country in the world. In the same year, the export of oil from the SA to the PRC reached 100 million barrels per day, which amounted to 20% of the total volume of oil exports from the SA. This figure has practically doubled compared to the previous year.
The past 2010 was the 20th anniversary of the establishment of diplomatic relations between the PRC and the SA. Cooperation in various fields is actively developing. Prospects for cooperation in the field of information exchange were outlined to strengthen interaction in order to counter terrorist threats, in the field of combating drug trafficking and cross-border crime. A document was signed on cooperation in the field of training personnel for security structures. At the same time, the first visit of the ships of the Chinese Navy to the SA took place. It is noteworthy that in March 2011, President Hu Jintao of the People's Republic of China met at the House of People's Assembly in Beijing with the special representative of the King of Saudi Arabia, the king's national security adviser, Prince Bandar bin Sultan. A dialogue took place on the establishment of stability in the Middle East in the light of the current crisis situation.
In conclusion, let's turn to some very revealing statistics. At the time of the establishment of diplomatic relations (according to the Saudi Association of Chambers of Commerce), the volume of trade between the two countries was estimated at $ 290 million. In 1992, Saudi Arabia and China signed agreements on the development of trade and economic relations and mutual encouragement of investment, and in 2002 the trade turnover between the two countries amounted to 5.1 billion US dollars. Back in 2000, according to the Saudi Ministry of Economy and Planning, the PRC entered the list of the ten largest importing countries of Saudi products, ranking seventh after the USA, Japan, Germany, Great Britain, Italy and France. In 2003, the PRC became the sixth exporter of products to the kingdom (after the USA, Japan, South Korea, India and Singapore). Saudi Arabia has been China's largest trading partner in Western Asia for 8 consecutive years. According to the Minister of Commerce Chen Deming at a press conference following the 4th meeting of the Joint Commission on Trade and Economy of China and Saudi Arabia, held on January 11, 2010 in Riyadh, in 2006, a goal was set - an increase by 2010 bilateral trade up to $ 40 billion. This goal was achieved ahead of schedule in 2008, in which the volume of bilateral trade reached $ 41.8 billion. During the meeting, it was also noted that the Chinese side hopes to increase the volume of bilateral trade to 60 billion US dollars in 2015.
Let us consider Sino-Saudi relations in relation to the development of the Persian Gulf region as a whole. As we can see, China's position in this area is strengthening. According to the chairman of the Dubai International Financial Center Omar bin Suleiman, the oil-producing states of the region have recently made huge profits from oil exports and realized the need to diversify their financial assets. China, with its dynamically developing economy, is a very profitable partner, and its trade with the GCC countries is constantly and steadily growing. Other relations between the PRC and the GCC member countries are also actively developing. Consultations between them are carried out within the framework of the China-GCC cooperation mechanism established in 2004. The driving force behind the cooperation is undoubtedly China's imports of oil from the Persian Gulf countries. At the same time, the gradual opening of the PRC's domestic market, primarily the banking and energy sectors, is attracting more and more attention from Middle Eastern corporations and investment funds.
It should be noted that during the crisis, the growth of the Chinese economy continued - in 2010, China's GDP reached 39 trillion. 798 billion 300 million yuan (6.057 trillion dollars), an increase of 10.3 percent over 2009. According to official statistics, in November 2010 oil consumption in the PRC increased by 15.2% compared to November last year, both in terms of production and in terms of purchases from abroad, and amounted to 20.07 million tons. For the first time, China's dependence on crude oil imports exceeded the 50% threshold. According to statistics from the Chinese customs authorities, in 2009 a list of the ten largest oil-exporting countries to China was announced. In first place is Saudi Arabia (41.953 million tons) 2. Against this background, over the past three years, China has doubled its purchases of hydrocarbons in the SA.
Conclusions. China receives a significant part of its energy resources from the Middle East. According to IAEA estimates, by 2017 the share of the Middle East in China's total crude oil imports may increase to 70%. In 2009, according to the newspaper "Al-Watan", the kingdom provided one fifth of all oil products consumed in the PRC.
Because of this, securing a strong position of Chinese companies in the energy production of this region is a special strategic task for China.
It should be noted that Saudi-Chinese cooperation in the field of fuel supplies is acquiring particular relevance in connection with the unstable situation in a number of countries in the Middle East and around Iran's nuclear program. China, adhering to its traditional policy of diversifying its supplies, pays tribute to the reliability of its partnership with the CA.
At the same time, cooperation between the two countries has recently reached a new level, involving the creation of joint petrochemical enterprises in Saudi Arabia and in China.
The CA, in turn, is interested in developing relations with one of the world's largest economies, in creating a kind of counterbalance in the region when cooperating with other partners. It is not surprising that due to the above factors, Saudi-Chinese relations have taken a special place within the framework of the Sino-Arab dialogue. Moreover, as is known,
Riyadh became one of the initiators of the creation in 2004 of the Forum on Sino-Arab Cooperation and the China-GCC Cooperation Council. The analysis allows us to identify the main directions and areas of cooperation that were discussed. In 2010, Hu Jintao, in an official statement, put forward 6 proposals for the development of strategic friendly ties between China and Saudi Arabia: first, maintaining an exchange of visits at the highest level and creating a consultation mechanism between the leaders of the two countries; second, the use of advantages in the field of resources and the market, the development of a comprehensive partnership in the energy sector and further expansion of mutual investments; third, expanding the scale of trade and economic cooperation; fourthly, promoting cooperation in the field of education, sports and tourism; fifth, strengthening contacts on major international and regional issues, as well as maintaining peace and stability in the region; sixth, strengthening interaction within the framework of collective cooperation "China-GCC". A special place is also occupied by construction work in the field of electricity, railways, ports and new energy sources.
China is currently striving to strengthen its position in the Middle East. China's economy, despite all its efforts to diversify suppliers and build strategic reserves, is tied to energy supplies from the Middle East, Iran and Africa. His position on the Iranian issue is extremely indicative. As can be seen from Beijing's foreign policy practice, the party leadership of the PRC does not see any problems with the fact that many of China's Middle East and African partners have undemocratic regimes. Obviously, such a loyal and indifferent approach of Beijing to the internal issues of the Arab countries is intended to guarantee the energy security and sustainable development of the PRC. Moreover, one should agree with the opinion of a number of analysts that soon Beijing will be able to compete with Washington for influence in the Middle East. China's active economic penetration into the region will continue.

2.2. Industrial relations between China and Saudi Arabia

2.3. Foreign trade relations between China and Saudi Arabia during the pandemic

Saudi Arabia delivered more oil to China in 2020 than Russia, and became the largest supplier to the country, according to Reuters, citing data from the General Administration of Customs of China.
Supplies from Saudi Arabia to China in 2020 increased by 1.9% compared to 2019 and amounted to 84.92 million tons (or 1.69 million barrels per day). Russia was in second place, despite an increase in supplies by 7.6%, to 83.57% million tons (or 1.67 barrels per day). Iraq became the third oil importer to China amid a strong decline in supplies from Venezuela due to US sanctions. Oil exports from Iraq to China increased by 16.1% to 60.12 million tons. In fourth place was Brazil, which increased supplies to China by 5.1%, to 42.19 million tons.
In addition, US oil supplies to China tripled in 2020 to 19.76 million tonnes (or 394,000 barrels per day). The US became a net oil exporter for the first time in November 2019.
Saudi Arabia bypassed Russia on oil supplies to China in September 2020. According to the Chinese authorities, then the Saudi supplies reached 7.78 million tons of oil (1.89 million barrels per day), while the Russian - 7.48 million tons (18.6% more than in September 2019 and 32.8% more than in August), At the same time, China reached record volumes of purchases of Russian Urals oil in April amid a sharp drop in energy prices due to the pandemic.