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Oil export dip fails to dent Saudi trade with China

The Saudi Arabia market event draws visitors in Shanghai. The kingdom is targeting Chinese visitors in its tourism push Oriental Image via Reuters Connect
The Saudi Arabia market event draws visitors in Shanghai. The kingdom is targeting Chinese visitors in its tourism push
  • China remains top Saudi trade partner
  • Oil prices cut from July
  • China targeted for tourism

China is holding up as Saudi Arabia’s main trading partner – even after a fall in crude oil exports in the first half of the year that led to an Aramco price cut, which takes effect this month. 

The latest international trade bulletin from the General Authority for Statistics says China accounted for 16.6 percent of exports in April 2024, ahead of Japan with 9.2 percent and India with 8.1 percent. 

The number – up from 14.9 percent in the first quarter of this year – shows China maintaining its status as Saudi Arabia’s main market, despite the fall-off in crude oil exports in recent months. However, the figure was at a high of 19 percent in 2021.

China was also the number one importer into Saudi Arabia, accounting for 22.4 percent of imports, ahead of the US at 8.3 percent and India at 6.6 percent. 

Saudi Arabia has had concerns that a Gulf-China free trade deal could bring a flood of low-cost Chinese imports – impacting its favourable trade balance with China. 

Oil impact

Saudi Arabia set its flagship Arab Light crude oil official selling price to Asia for July with a 50 cent per barrel cut, the first cut in five months, in an attempt to hold up its market share. 

The Opec+ group led by Saudi Arabia and Russia agreed earlier this month to extend oil output cuts into 2025 as it seeks to shore up the market in the face of slowing demand and high US production, although it agreed to start easing more oil into the market from the fourth quarter.

Bill Farren-Price, senior researcher at the Oxford Institute for Energy Studies, said Saudi Arabia would act to maintain its China position. 

“The recent Opec+ decision suggests that Gulf producers, particularly Saudi Arabia, are not content to see their market share squeezed with no end in sight. Maintaining market position is particularly important with strategic growth customers like China,” he said.

Saudi Arabia sees further potential for China to help fund its giga-projects and boost its tourism numbers. 

In April Neom kicked off the China leg of its global tour, meeting 500 business leaders and officials in Beijing and Shanghai. The government is targeting 5 million Chinese tourists per year by 2030.

Saudi Defence Minister Khalid bin Salman was in Beijing this week for talks on defence cooperation with Chinese military officials in another sign of a Saudi hedging strategy that aims to maintain ties with both the US and China. 

Saudi investment company Alat recently signalled that Saudi Arabia is prepared to sever technology ties with China under US pressure.  

But Aramco’s venture capital fund Prosperity7 has still joined a $400 million investment round for Chinese generative AI startup Zhipu AI. 

“As China’s economy slows down, Chinese investors are increasingly looking to Arab markets as a potential source of growth,” senior policy analyst Hasan Alhasan wrote for the International Institute for Strategic Studies

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