Analysis
Trade

Saudi Arabia courts China’s Shandong province

March 14, 2024

People accept gifts from a man dressed as the Chinese God of Wealth during Spring festival in Zaozhuang, Shandong Province. The region is vital to China's economy

Kingdom hosts delegation of over 200
Shandong’s 2023 GDP close to $1.3trn
More investment needed for Vision 2030

Saudi Arabia is targeting more investment from the Chinese province of Shandong after hosting a delegation of more than 200 private sector and government officials.

The Economic Cities and Special Zones Authority (ECZA), in collaboration with Invest Saudi, entertained the visitors last week with the aim of cultivating investment prospects for Chinese enterprises considering expansion into the Saudi market.

The delegation comprised industry leaders specialising in energy, construction, agricultural and food processing. Last year, Saudi Investment Minister Khalid Al-Falih visited a number of cities across China.

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China-Saudi trade stood at $106 billion in 2022, an increase of about 30 percent from 2021 and nearly double the figure recorded in 2010, according to Asia House.

Official figures show bilateral trade reached $90 billion in the first 11 months of last year.

Asia House said Xi Jinping’s visit to Saudi Arabia in December 2022 was a “watershed” in the development of Saudi-China ties.

“It magnified China’s commercial interests in Saudi Arabia and could encourage Chinese firms to grant the kingdom and wider region greater attention,” the think tank said.

Saudi Arabia has ambitious goals to become a global investment powerhouse. Inward investment is a main component of its Vision 2030 objectives, underpinned by its National Investment Strategy.

Officials also see Vision 2030 and China’s Belt and Road Initiative as complementary, signifying a shared commitment to strengthening infrastructure and boosting global connectivity and trade.

China’s Shandong is an obvious target with its GDP close to $1.3 trillion last year, making it one of the most important contributors to China’s economy.

This year, the eastern China province, which has a population of more than 101 million according to the 2020 census, is aiming to increase GDP by 5 percent and create over a million new jobs.

In 2023, Shandong accelerated the green transformation of traditional industries. Investments in high-tech industries grew by more than a third.

Official figures show that exports of electric passenger vehicles, lithium-ion batteries and solar cells increased by more than 47 percent.

The province is also a major agricultural production centre and output reached $170 billion, with a historic high in grain production.

In October, Saudi Aramco signed an agreement to facilitate discussions about buying a 10% interest in Shandong Yulong Petrochemical Co.

Shandong Yulong is in the process of completing the construction of a complex in Longkou, Yantai City to process around 400,000 barrels per day of crude oil and produce a large volume of petrochemicals and derivatives.

Mohammed Y Al Qahtani, Aramco downstream president, said Aramco values Shandong for its “current strength and future prospects”.

“With Aramco’s long track record as a reliable supplier of energy to China, and the expertise and commitment of Shandong Province, we envision a prosperous future together,” he added.