Sure A Not

If evidence were needed of just how rapidly economic ties are growing between China and Saudi Arabia, you only have to look at two events that took place last month.

The first was the China-Arab Business Conference in Riyadh. More than 30 agreements worth at least US$10 billion were reached during the gathering.

The second was the World Economic Forum event held last week in the Chinese city of Tianjin, known as the “Summer Davos.” The level of importance Saudi Arabia placed on the event was reflected by the unprecedented number of senior-level figures attending.

The kingdom sent a delegation of 24 officials, including the economy and planning minister and the communications and information technology minister. While no major deals were announced, it was clear that both countries wanted to use the event to explore deep economic cooperation.

For decades, economic ties between China and Saudi Arabia focused on the kingdom’s crude-oil exports. However, in recent years, the relationship has rapidly diversified, reflecting a desire by both countries to advance economic relations beyond the traditional focus on energy resources.

For China, the approach has gone from being purely transactional to far more multifaceted and intertwined in the economic and political futures of Saudi Arabia and other countries in the region. 

Consistent commitment

The Chinese buy-in acts as the most convincing guarantee for regional powers of Beijing’s commitment to engage and stay in the region. This is in stark contrast to the perceived lack of commitment by the United States and presents an enormous challenge to Washington’s efforts to maintain its influence in the Middle East. 

Economic ties between Beijing and Riyadh were already strong. Saudi Arabia has for years been the largest exporter of crude oil to China. The kingdom has also been Beijing’s largest trading partner in the Middle East for more than two decades. In comparison, China has been Saudi Arabia’s largest trading partner since 2013.

The clearest milestone that the relationship was transitioning to something deeper came during President Xi Jinping’s visit to Saudi Arabia last December. The two governments identified a broad spectrum of future cooperation, including on energy, cars, supply chains, communications, transportation, mining, and the financial sector. 

Beijing and Riyadh have striven to find overlap between China’s Belt and Road Initiative and Saudi Arabia’s Vision 2030 reform program, leading to cooperation on new energy resources including solar, wind and hydropower, and on digital economy, such as a fifth-generation (5G) telecom network. 

These areas of cooperation were again on display during the China-Arab Business Conference last month. A $5.6 billion agreement signed between the Saudi Investment Ministry and Chinese carmaker Human Horizon will focus on developing and manufacturing electric vehicles.

As well, a $500 million deal between Saudi ASK Group and China National Geological & Mining Corporation will enable the Chinese company to develop copper mines in the kingdom. 

Another field for future cooperation is tourism, which has been referred to as the “new oil” of Saudi Arabia. Since easing restrictions for visitors, the kingdom views tourism as a key area for economic growth and has vowed to invest more than $800 million in its development. During the China-Arab Business Conference, 26 agreements were signed between Saudi Arabia and Chinese travel agencies.

Broad range of business interests

The range and scale of the dealmaking point to an evolution from China’s merely transactional relationship with Middle Eastern countries.

Previously, what China wanted from the region – energy resources – could be acquired through commercial trade, without the need for long-term strategic investment. The transactional nature of the relationships meant China could maintain good relations with often opposing camps and actors in the region. The approach may have given Beijing flexibility, but it was criticized for lacking strategic engagement or long-term vision. 

In the past decade, China’s strategy has become more mindful and intentional. The diversification of economic ties with Saudi Arabia is one such example.

Beijing is no longer content with being just a main customer of the region’s crude oil. Instead, it wants to maximize the region’s potential as a market for Chinese goods, labor and technologies; and embed itself in the economic futures of the countries in the region through investment and long-term collaboration.

Instead of being purely transactional, China is developing a regional strategy that combines shared visions on domestic governance and connected economic future. 

This commitment has effectively boosted China’s credibility in the region as an economic partner and as a diplomatic player. This is in stark contrast to the constant questioning about whether the US is fully committed to the region and Washington’s shifting geopolitical focus.

Beijing’s economic buy-in, consistent investment and bilateral relationships are perhaps the most effective instruments in its competition with the US for influence in the region. 

The challenge for Washington is tremendous. With a conscious strategy by Beijing to deepen Middle East ties, it will be even more difficult for the US to juggle among its different geopolitical priorities, which include Ukraine, the Indo-Pacific region and China.

Beijing does not need to achieve the maximum within its capacity. It only needs to show it is doing more and better than the US to gain the hearts and minds of the leaders in the region. 

China’s deepening strategic engagement also offers Middle Eastern countries more room for maneuver and more bargaining power with the US. The availability of options and alternatives is always a powerful reminder for Washington that the region does not have to follow American principles and guidelines.

In the meantime, Saudi Arabia’s deepening and diversifying economic ties with Beijing will continue.

This article was provided by Syndication Bureau, which holds copyright.

Yun Sun is director of the China program and co-director of the East Asia program at the Stimson Center in Washington.

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A People’s Republic of China (PRC) scholar’s recent commentary on US-China relations is refreshing in its even-handedness and optimism. The author of the July 5 essay, Wu Xinbo, is the dean of the Center for American Studies at Fudan University in Shanghai and has substantial experience exchanging views with US foreign affairs experts.

Nevertheless, Wu oversimplifies the difficulty of repairing this dangerously frayed bilateral relationship. Echoing what PRC officials have recently been saying, Wu argues that the 2022 meeting in Bali between PRC General Secretary Xi Jinping and US President Joe Biden established a useful “foundation” for improved US-China relations. 

Wu summarizes the commitments at the Bali meeting as follows: Xi said “China does not seek to change the existing international order or interfere in the internal affairs of the US, and has no intention to challenge or displace the US.” Wu paraphrases Biden as saying “the US respects China’s system, does not seek to change it and has no intention for a new Cold War.”

In practical terms, however, this foundation is so riven with cracks as to be nearly useless.  From the US standpoint, Beijing’s insistence that Taiwan must become a province of the PRC, whether voluntarily or by military force, is an attempt to change the existing order.

And so are PRC claims to ownership of the South China Sea, PRC encroachment on the Sino-Indian border and PRC designs on Japan’s Ryukyu Islands. China’s attempts to interfere in the domestic politics of the US are well-documented. 

Xi’s denial of an intent to “displace the US” as a global or regional leader similarly lacks credibility. PRC officials and media relentlessly attempt to de-legitimize US leadership by defaming the United States as warlike, declining, hypocritical and pushing allies toward disaster.

Beijing frequently threatens US partners with economic or military harm if they cooperate too closely with the Americans. On July 3, Politburo member and former foreign minister Wang Yi rather bizarrely told Japanese and South Korean diplomats they should side with China against the West because of common Asian racial ancestry.

Nor do Biden’s Bali commitments offer China much to build on.

A statement that the US government “respects China’s system [and] does not seek to change it” is an improvement over the Trump administration’s call for the international community to work toward the overthrow of the Chinese Communist Party (CCP).

But it does not mean Washington will cease publicly criticizing the CCP government for being “authoritarian” and for denying its subjects civil and political rights, criticism that enrages Beijing.

The Chinese might think that if America says it does not want a “new Cold War,” it logically follows that the US government will stop what Beijing alleges is supporting Taiwan’s independence and attempting to build an “Asian NATO.” 

In Washington’s view, however, the way to achieve peace and stability is to strengthen the potential counter-China coalition enough to dissuade Beijing from attempting military adventurism.

In sum, Xi and Biden talked past each other at Bali, which explains why the bilateral relationship did not improve in the months afterward.  

Academic Wu says China and the US should “draw red lines for both sides” and that “each does not pose an existential threat to the other.” The “red lines” idea is similar to the Biden administration’s “guardrails” metaphor.

By adding the additional phrase “existential threat,” however, Wu previews why this idea would fail. 

The strategic flashpoints with the highest risk of US-China military conflict all involve cases of PRC expansionism mingled with irredentism: Taiwan, the South China Sea, the Sino-Indian border and the East China Sea. 

Since the Chinese Communist Party (CCP) government claims all of these areas as rightfully Chinese territory, the “loss” of any of them is by definition an existential threat to China.

Complying with Beijing’s red lines would require the US to abandon Taiwan and the South China Sea to PRC annexation. Washington is clearly unwilling to do that. The most the US side could do is restate that it is not actively encouraging Taiwanese independence, which the PRC side does not believe.

Meanwhile, politicians from both major US parties continue to use support for Taiwan as a means of virtue signaling, undercutting the White House’s assurances to the PRC.

Wu argues that “Washington has stressed too much competition” with China at the expense of cooperation. Instead, he says, “we should sit down to discuss what will be a realistic agenda for cooperation.”

Wu is certainly correct that despite the strategic tensions, there remains a broad array of areas where China and the US can and should cooperate for mutual benefit. There are, however, two problems here.

First, Beijing tends to hold important areas of potential cooperation hostage to unrelated bilateral disputes, requiring that Washington first make concessions before Beijing will agree to talk about making progress on an issue that is also in China’s interest. Examples are confidence-building measures and climate change. So the discussion on a “realistic agenda” would likely begin with some attempted extortion by the PRC delegation. 

A second problem is that economic “de-risking” is not going away. The top “cooperation” priority for the PRC today is to regain the degree of access to US technology that China previously enjoyed. China, however, used that previous access to build up formidable military capabilities and demonstrated alarming intentions toward important US interests.

Now that China is a dangerous potential adversary, the bilateral relationship is permanently changed. US policymakers will increasingly forego cooperation that promises immediate economic rewards if the longer-term result would be increased US vulnerability. 

The discussion that Wu envisions is unlikely to result in the US buying Huawei equipment or lifting the restrictions on PRC access to advanced semiconductors.

Washington would be open to talking about cooperating on climate change and avoiding accidental military incidents, but it’s unclear that is what Beijing really wants.

Finally, Wu calls for Sino-US negotiations on “some adjustments” to an “international order” that he says excessively caters to US preferences. In principle, this is reasonable. China is an emergent great power in a region already dominated by a long-established great power, a historically recurrent war-prone situation.

Accommodating China by changing the rules of international interaction is preferable to a decision by China that it must fight a war to replace US rules with Chinese rules. As with the “red lines” issue, however, it is doubtful that the “adjustments” the US is willing to make would satisfy Beijing. 

Key sticking points would be China’s insistence on winning its territorial claims, Chinese opposition to US alliances and military activity in the region, and US opposition to PRC economic coercion.  

Wu suggests a new order should be based on the United Nations Charter. But neither this nor any other legal document would be sufficient to smooth over the current frictions or adjudicate future disputes between the PRC and US.

Even now, Beijing argues that US military interventions in Iraq and Afghanistan violated the UN Charter. Washington can point to the PRC’s human rights violations, disregard for the Law of the Sea and support for the Russian invasion of Ukraine. 

Great powers pursue their self-interests first, often in defiance of the rules, and then secondarily limit reputational damage as best they can.

Wu’s commentary graciously avoids the usual Chinese call for the US to “correct its mistakes.” Nor does it admit to any imperfection in PRC policies, which is typical of PRC-based analysts. This evasion makes possible a hopefulness that, unfortunately, is superficial and unrealistic, despite Wu’s apparently admirable intent.

Denny Roy is a senior fellow at the East-West Center.

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