China, Saudi Arabia upgrade diplomatic ties as Riyadh seeks new allies

Beijing also pledges support for Yemen’s Saudi-backed government fighting Iran-allied Houthi militia

PUBLISHED : Wednesday, 20 January, 2016, 11:23pm
UPDATED : Wednesday, 20 January, 2016, 11:28pm

China and Saudi Arabia have vowed to elevate their ties to form a comprehensive strategic partnership as President Xi Jinping continues touring the Middle East and seeking greater presence in the region.

Observers say it is China’s first time establishing such a partnership with a western Asian nation, as the Arab state – once a staunchly anti-communist nation and a close ally of the United States – diversifies its diplomatic ties.

Xi kicked off his trip in Saudi Arabia on Tuesday and visited Egypt on Wednesday. He will wrap up his tour in Iran, just days after economic sanctions on the country were lifted last week following its agreement to roll back the scope of its nuclear activities.

READ MORE: ‘Solutions welcome’: Tehran sees bigger role for China in Middle East

During Xi’s two-day stay in Riyadh, China and Saudi Arabia, the world’s biggest oil importer and producer respectively, signed 14 agreements and memoranda of understanding, including massive oil deals and pacts to speed up China-Gulf region free-trade talks and build a nuclear reactor.

A joint statement by the two states said China supported Saudi Arabia’s counterterrorism efforts and would step up cultural and religious exchanges. They would also set up a high-level committee to guide bilateral cooperation.

In another agreement on Tuesday, Beijing signalled its support for Yemen’s Saudi-backed government, which is fighting Iran-allied Houthi militia.

Saudi Arabia weighs significantly in China’s energy security. In 2014, Beijing bought nearly 50 million tonnes of crude oil from it – 16 per cent of its oil imports and the most from a single country.

But its importance to China has been weakened as Beijing diversifies its energy sources. By October, oil trade between the two nations had dropped more than 10 per cent year-on-year, with Russia occasionally overtaking Saudi Arabia as China’s top monthly oil supplier.

Still, the Middle Eastern nation remains crucial to China as it features prominently in the country’s “One Belt, One Road” strategy, through which Beijing is promoting trade and infrastructure cooperation.

A politically, economically and religiously influential country at the crossroad of the “Silk Road Economic Belt” and the “Maritime Silk Road”, Saudi Arabia is one of the most important destinations in the initiative.

At the same time, pressured by falling oil prices, the Middle Eastern country is also looking into alternatives to drive its economy.

The move would provide Chinese firms with businesses opportunities, according to Chinese Academy of Social Sciences ­researcher Wang Jian.

Saudi Arabia is home to holy sites of Islam and is the religious centre for Sunni Muslims. Most Chinese Muslims, who number about 30 million, are Sunni.

“China should take advantage of Saudi Arabia in the area of ­anti-terrorism,” said Gong Zheng, a researcher at the China Institute of Contemporary International Relations.

The upgrading of bilateral ties comes as relations fray between Saudi and the US. Riyadh is Washington’s closest ally in the Gulf region. It established diplomatic ties with Beijing only in 1990.

“Saudi Arabia used to trade oil for security with the US,” Wang said. “But now they feel abandoned as there has been a large difference between the US’ and Saudi Arabia’s interests. As a result, Saudi Arabia is seeking to diversify its diplomatic ties.”

Domestic oil production in the US has surged in recent years with the development of shale – or natural – gas. The Saudi regime, after the Arab Spring pro-democracy movement, has also come under increasing US criticism for its poor human rights records.

READ MORE: Iran to compete with Russia, Saudi Arabia to supply China’s huge demands for oil

Beijing and Riyadh had military ties even before official diplomatic ties were established. China sold up to 60 intermediate-range ballistic missile DF-3s to Saudi Arabia in 1988, and has reportedly also provided it with more advanced medium-range DF-21 ballistic missile systems.

Xi’s Middle East tour comes after Saudi Arabia and Iran severed ties following Riyadh’s execution of a Shiite cleric. Observers are watching how Beijing will strike a balance between the two states; China is expected to downplay political issues while focusing on economic matters.

“The visits to Saudi Arabia and Iran exemplify this approach,” said Mary Gallagher, associate professor of political science at the University of Michigan.

“China tries to placate both sides through its oil purchases and infrastructure development plans for central Asia.”

But with declining Chinese growth, Beijing’s economic diplomacy may also be less effective, at least in the short run, she said.