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Saudi Arabia first choice for China’s BRI investment

A construction site in Riyadh. Developing the real estate sector is a priority for the Saudi government Reuters/Ahmed Yosri
A construction site in Riyadh. Developing the real estate sector is a priority for the Saudi government
  • Construction worth $3.8bn from Belt and Road Initiative
  • Saudi Arabia’s energy sector gets $1.6bn
  • Aramco to push ahead with China expansion

Saudi Arabia remains one of China’s strongest global trade partners, leading Chinese engagement in the construction sector during the first half of 2023, according to the latest Belt and Road Initiative investment report issued by a leading think tank. 

Of 45 countries receiving Chinese financing and investment in the first six months of 2023, Saudi Arabia had the highest construction volume at $3.8 billion, followed by Tanzania with $2.8 billion and the UAE at $1.2 billion, the report by the Green Finance & Development Center at Fudan University in Shanghai showed. 

In the energy sector, Saudi engagement was also the highest at $1.5 billion, followed by Qatar at $1.4 billion.

Saudi Arabia was the third highest investment recipient at $1.6 billion, after Indonesia at $5.6 billion and Peru at $2.9 billion. 

“2023 has been the year with the highest six-month Chinese engagement in Saudi Arabia,” said Christoph Nedopil Wang, director of the Green Finance and Development Center and author of the report, pointing to strong political ties between the two countries. 

“Further engagement can be expected in those sectors with significant economic upsides, such as energy and other infrastructure, despite the Chinese and global economic challenges,” Wang added. 

Ten years into the project to place China at the centre of a vast global trade network, the figures suggest that China’s BRI commitment is still robust in the face of concerns about faltering economic growth – though it was not clear how the report derived its conclusions. 

The report said China’s total investment has now breached the $1 trillion mark at $1.014 trillion, up from $962 billion at the end of 2022, including around $596 billion in construction contracts and $418 billion in non-financial investments. 

The Saudi economy is also cooling, after a spike in crude prices last year following the Russian invasion of Ukraine.

The IMF downgraded the Saudi growth forecast to 1.9 percent from 3.2 percent in July.

But Saudi state energy major Aramco has said it will push ahead with expansion in China, where it has invested heavily in refineries. 

Aramco CEO Amin Nasser speaks in Beijing in March. The company has invested heavily in refineries in ChinaReuters/Jing Xu
Aramco CEO Amin Nasser speaks in Beijing in March. The company has invested heavily in refineries in China

Energy analyst Matt Stanley of Kpler said Saudi Arabia would fight to maintain its Chinese market share in energy. 

“Saudi Arabia likely views China as one of its most critical energy end-user partners,” Stanley said.

“I anticipate that this relationship will remain a priority and will be diligently protected.” He noted that Aramco had maintained and increased market share.

The BRI was launched by Chinese president Xi Jinping in October 2013 as a global infrastructure development strategy to invest in more than 150 countries and international organisations across Asia, Africa and Latin America. 

In the Middle East, China established full strategic partnerships with Algeria, Egypt, Saudi Arabia, the UAE and Iran.

Engagement has since expanded well beyond that to include heavy investment in other countries such as Iraq, as well as diplomatic mediation including the rapprochement between Iran and Saudi Arabia earlier this year. 

A recent survey suggests that Arab youth now have a more positive view of China than the United States, with 80 percent saying China was “a strong ally or somewhat of an ally” compared to 72 percent for the United States, according to the UAE-based communications agency Asda’a Bcw which conducts an annual review.

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