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China-Saudi Arabia trade ties remain steadfast

Editor: Li Kun 丨CCTV.com

01-19-2016 14:57 BJT

By Tom McGregor, CNTV Commentator

2015 was a challenging year for Saudi Arabia, since global oil prices have plunged further. The start of 2016 saw Riyadh break diplomatic ties with Iran in the aftermath of Iranian protesters ransacking the Saudi Consulate in Tehran.

 

Despite dismal prospects, Chinese President Xi Jinping will have a state visit to Saudi Arabia this week to reaffirm diplomatic and economic bilateral relations.

Xi will meet Saudi King Salman as both sides are expected to sign cooperation deals in the fields of economics, investments, commercial and technologies.

"Xi's visit in the first year of King Salmon's reign represents vital importance for the two countries," China's ambassador to Saudi Arabia Li Chengwen told Arab News.

Continuous oil flow at the helm

Saudi Arabia will continue to be a strong oil-exporting nation for the next few decades. However, a rapid rebound of oil prices appears unlikely, due to lower global demand. Nevertheless, China maintains a healthy economy to ensure that Saudi's oil would flow to the world's second-largest economy.

The International Monetary Fund estimates that as of 2013, China-Saudi trade has increased more than 61-fold, since Beijing-Riyadh normalized diplomatic relations in 1990; from $US1.28bn. In 1990 to $US74bn. in 2012.

Saudi Arabia is China's top trade partner in the Middle East. China imports oil, gas and petrochemicals from Saudi Arabia, while Saudis imports electronics, textiles and food from China.

China's ongoing economic expansion, external trade and urbanization would keep oil demand potent.

"We view China as a strategic partner and seek to strengthen such partnership," said Saudi Minister of Petroleum Ali Al-Naimi.

Saudi oil seeks Chinese cash

Riyadh recognizes its oil & gas sector must utilize more hi-tech upgrades for operational purposes. Lower crude prices are forcing oil companies to lower costs.

Currently, oil & gas excavation costs in Saudi Arabia are at one of the lowest in the world, but Saudi companies require more foreign direct investments to adapt to the current economic climate.

Saudi Aramco, a state-owned oil giant, is considering a bid to sell publicly-listed shares on the Saudi Stock Exchange, which may attract Chinese investors.

"Aramco's history is the story of the discovery and development of the greatest energy reserves in the world as ever known and the rapid transformation of Saudi Arabia," an Aramco press release said. "Its pledge has always been to maximize the value of the country's petroleum reserves for the benefit of the kingdom's citizens."

Education revitalizes the oil sector

Education programs can spark the creation of more hi-tech upgrades for Saudi Arabia's oil & gas industry. Engineers and technicians require more training to develop new oil & gas equipment that would run more efficiently and at lower costs.

Daily Sabah newspaper reports that, "China-Saudi Arabia ties have expanded rapidly to include more education exchanges in the fields of technology. As of 2011, more than 1,100 Saudi-born students had enrolled in Chinese universities to enhance their technical expertise."

Hundreds of Chinese students are studying at King Abdullah University of Science and Technology (KAUST). Governments on both sides have subsidized scholarships for students studying abroad.

Additionally, Chinese companies are working with Saudi Aramco to open more refineries in China. Chinese oil companies have also focused on engineering, pipeline and oil repairs, along with natural gas projects when engaging in business deals with Saudi firms.

Moving ahead for stronger ties

Saudi Arabia is facing difficult moments, but stands poised for a robust economic recovery in the long-term future. China can help the Arab nation overcome its present-day challenges as Beijing-Riyadh have drawn closer together for the benefit of peace and prosperity in the Middle East and Asia.

Tmcgregorchina@yahoo.com

WeChat ID: +86 13439758718

 

( The opinions expressed here do not necessarily reflect the opinions of Panview or CCTV.com. )

 

 

Panview offers a new window of understanding the world as well as China through the views, opinions, and analysis of experts. We also welcome outside submissions, so feel free to send in your own editorials to "globalopinion@vip.cntv.cn" for consideration.

Panview offers an alternative angle on China and the rest of the world through the analyses and opinions of experts. We also welcome outside submissions, so feel free to send in your own editorials to "globalopinion@vip.cntv.cn" for consideration.

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