Saudi king’s visit highlights Beijing’s Middle East engagement

King Salman (center) and President Xi Jinping (lef), arrive for a signing ceremony at the Great Hall of the People in Beijing, yesterday

Saudi Arabia’s King Salman began a visit to Beijing yesterday that highlights growing ties underpinned by China’s thirst for Saudi oil and the kingdom’s status as a key link in Beijing’s bid to connect China to Europe through infrastructure development.

Salman went immediately into talks with President Xi Jinping following a formal welcoming ceremony at the Great Hall of the People, the seat of China’s legislature. The 81-year-old monarch’s visit is part of a monthlong swing through Asia in a push to develop a less oil-dependent growth strategy.

Beijing for its part is rolling out a trade and investment initiative across Central Asia and the Middle East called “One Belt, One Road,” and sees the desert kingdom as a regional linchpin.

In opening remarks at their meeting, Xi said he looked forward to discussing projects under development, and said results so far “have surpassed our expectations.”

Security ties between the two have also grown significantly, with the Saudi air force deploying Chinese unmanned attack drones and the two militaries holding joint counter-terrorism exercises in western China. Chinese navy vessels have also visited the Saudi port of Jeddah as part of increasingly active maneuvers in the Gulf of Aden.

Chinese officials say their overriding security interest in the Middle East is to prevent ethnic Uighur fighters who have left western China and joined militant groups in Syria and Iraq from returning to strike at China.

“China’s Uighur ethnic minority is a key if sometimes under-appreciated factor in Beijing’s Middle East strategy,” said Andrew Scobell, a political scientist at the RAND Corporation.

Xi has signaled his desire to play a bigger role in the region as part of China’s quest for resources, markets and increased global influence on a par with its economic heft. In a major speech before the Arab League in Cairo last year, Xi indirectly alluded to how the U.S. presence had waned and how China hoped to present an alternative.

“Instead of looking for a proxy in the Middle East, we promote peace talks,” Xi said. “Instead of attempting to fill the vacuum, we build a cooperative partnership network for win-win outcomes.”

A relative newcomer to the Middle East’s complicated politics, China has tried to maintain friendly ties with all sides, despite sometimes conflicting geopolitical interests.

Beijing has backed President Bashar al-Assad in the Syrian conflict, while Saudi Arabia has insisted on Assad’s ouster and has supported the Syrian opposition, including Islamic militant groups unfriendly to China over Beijing’s sometimes harsh treatment of its Muslim minority.

China has also maintained close ties to Saudi Arabia’s bitter enemy Iran.

Salman, who is traveling with a 1,500-strong company of businessmen, princes and support staff in close to a dozen aircraft, is next due to visit the Indian Ocean island nation of the Maldives. Along with Japan, he earlier visited Indonesia, Malaysia and Brunei. Gerry Shih & Christopher Bodeen, Beijing, AP

Saudis study USD65b in China investments

Saudi Arabian Oil Co. may deepen investment in China’s oil industry as part of USD65 billion worth of potential deals signed between the two countries in everything from energy to manufacturing and a theme park.

Amin Nasser, chief executive officer of the Saudi state crude producer, signed a memorandum of understanding with China North Industries Group Corp. yesterday to explore downstream oil opportunities. Saudi Aramco, as the company is known, is already a partner in refineries and petrochemical plants in the country. The Chinese company, known as Norinco, manufactures weapons and machinery and also has a refining unit.

Companies from both countries signed 22 agreements to study joint investment opportunities at a ceremony in Beijing. Chinese firms will look at a $2 billion petrochemical plant in Jazan, in the southwest of Saudi Arabia, supplying solar energy material, building e-commerce businesses and investing in a cultural theme park in the Middle East.

King Salman bin Abdulaziz is in the midst of an Asia-wide trip that’s already seen Saudi Arabia pledge investments including $13 billion in Malaysian and Indonesian energy projects. The Middle East nation is also courting foreign investors as it seeks to diversify its economy and gears up for what may be the largest-ever initial public offering. The country plans to float a 5 percent stake in Aramco, which Deputy Crown Prince Mohammed bin Salman has said is worth $2 trillion.

“The visit is part of Saudi’s ’Look East’ policy that intends to broaden trade with Asia and particularly China,” said Yao Kuangyi, China’s former ambassador to Turkey. “Saudi Arabia also needs new markets and economic partners to help the country with its economic transformation from its dependence on oil, and China is a perfect target as a major economy with huge demands.”

Officials from the two countries have discussed the possibility of China Investment Corp., the country’s sovereign wealth fund, investing in the Aramco initial public offering, according to people with knowledge of the matter, who asked not to be identified because the talks are private. China National Petroleum Corp. may also be involved, they said Thursday. No formal agreement has been reached, according to the people.

Hong Kong, Tokyo and Singapore are among Asian locations that have been identified as possible venues for the listing of Aramco’s shares. The company’s primary listing will be on Saudi Arabia’s domestic exchange and it’s also evaluating other markets including as New York or London.  Bloomberg