Why China's deals with Saudi Arabia could be the beginning of a profitable new relationship
This paper will analyze the energy and geo-political issues related to the Sino- Saudi relationship. First, the paper will describe the growing. In late January his royal highness Abdullah bin Abdul Aziz, custodian of the Two Holy Mosques and king of Saudi Arabia, summoned to his. As the dynamics in the Middle East continue to fluctuate, powerful regional actors like Saudi Arabia and Iran have looked to other powers in the.
Chinese Oil Demand and Saudi Oil Supply The relationship between China and Saudi Arabia is primarily an energy and economic relationship, though there is a potential for it to expand to a political and security relationship as well in the future.
The energy and economic relationship is driven by the massive energy demand produced by the Chinese economy.
In the absence of a large shift in the transport and automobile sectors, the growing Chinese population, and corresponding increase in Chinese automobile ownership, will require substantial oil imports. These numbers illustrate that China is the most lucrative oil export market for Saudi Arabia, especially considering that the United States has drastically decreased its oil imports from Saudi Arabia, due to the development and success of unconventional oil sources.
Conversely, China has acknowledged that it has a vital national interest is ensuring that the country has access to sufficient oil imports from a diverse range of oil suppliers, in order to maintain a sufficient energy supply to continue its economic growth.History of Saudi Arabia–United Kingdom relations
This is not to say that the Saudis do not have immense competition for the Chinese oil market, including from competitors in the Middle East as well outside of the region.
Following the Iranian nuclear deal, President Xi Jinping was the first world leader to visit Iran, marking the importance of the Iranian-Chinese relationship.
As Iran accelerates its oil production and exports following the nuclear deal, the Chinese oil market will undoubtedly be one of its main targets. The competition between Saudi Arabia and Iran for Chinese market share also has important geo-political implications, as will be discussed below.
The expansion of a Sino-Russian oil pipeline, which is targeted to be complete by the end ofwill result in increased competition between Russia and Saudi Arabia to satisfy the growing Chinese oil demand.
This allows the Chinese to purchase oil from a diverse group of oil suppliers and reduce their risk of any major interruptions to their oil import supply.
It is also worth noting that continued Chinese economic growth is extremely important to Saudi Arabia, and not only because of the corresponding increase in the purchase of Saudi oil.
Because China constitutes such a large portion of the world oil demand, its oil consumption can heavily influence the price of oil, which greatly impacts the Saudi economy. The oil sector accounts for 90 percent of Saudi exports, 80 percent of its government revenues and 40 percent of its GDP, making the price per barrel of oil a primary concern of the House of Saud Nazer.
A decline in economic growth in China, and the associated decline in oil consumption, would bring down global oil demand and the price of oil, which would negatively impact the fiscal stability of Saudi Arabia. As has been described above, Saudi Arabia and China are natural partners because of their energy production and consumption capabilities and, as a result, both countries should seek to further strengthen their energy and economic ties.
Sino-Saudi Relations: Expect stronger ties under OBOR & Vision | Arabia Monitor
Geo-Political Issues The energy relationship between Saudi Arabia and China has important geo-political and security implications, especially for the Middle East. As oil flows from Saudi Arabia to China increase, the importance of maintaining secure transit routes from the Persian Gulf to China will also increase.
The United States has also played the primary role of attempting to establish a secure Middle East, although it has obviously been less than successful in some instances in this regard.
One potential scenario that could result in a significant increase in oil prices would be a major confrontation between regional powers Saudi Arabia and Iran, which is giving China an impetus to direct its efforts to reducing tensions in the region. China is in the unique position of having a significant interest in Middle East peace and security, while at the same time being viewed as an honest power broker in the region.
Saudi Arabia has also started to understand the geo-political importance of its energy and diplomatic relations with China. Currently, China is able to court both Saudi Arabia and Iran through the purchase of large amounts of oil from both nations; however, should tensions escalate beyond their current state, China may be forced to choose which side of the Middle Eastern sectarian schism it most benefits from supporting.
As a result, both Saudi Arabia and Iran view their ability to increase their oil exports to China as not just an economic benefit, but also essential to their position of power in the Middle East. Renewable Energy Sources The development of renewable energy sources is an important issue for Saudi Arabia and China, and this development will affect their energy relationship.
China–Saudi Arabia relations
China is coming under increasing domestic pressure to address the issue of pollution and, as a result, it is vital that the country shift away from its dependence on coal and develop its renewable energy sector.
While it may appear that this type of investment may threaten Saudi oil imports, this is not the case, as renewable energy sources are geared primarily towards domestic power generation, with the aim of cutting high carbon emitting coal, rather than at the transportation and other oil heavy sectors in China.
Through this large investment, China aims to increase the percentage of its domestic power mix from 18 to 27 percent renewables, with the ultimate goal of achieving 80 percent of its power being generated by renewables in Taylor. For Saudi Arabia, the development of solar, wind and nuclear energy will play a vital role in diversifying its domestic energy consumption mix and stopping its use of oil as a major source for its domestic electricity demand.
Saudi Arabia has the twentieth largest economy in the world, yet it is the fifth largest consumer of oil El Gamal, et. Currently, Saudi Arabia burns a quarter of the oil it produces through domestic consumption and this consumption is growing at a rate of seven percent per year, which, if trends continue on this path, would make Saudi Arabia a net oil importer by the year Ball.
China is winning hearts among oil producers and countries that are crucial to the US War on Terror, such as Pakistan and Bangladesh. Taken together, the deteriorating popular image of Saudi Arabia in the West, and of the West in the Middle East, offers opportunities for China. Saudi Arabia will need China after the cooling down of relations with the West. So what will this friendly new Sino-Arabian relationship mean for the West and the rest of the world?
Now it expands by developing global logistics and financial infrastructure logistics and financial infrastructure — an economic push with political and military implications. China has power within its sphere of economic influence, and to some extent Saudi Arabia is now entering this sphere.
Now that we know that China will not be a deputy sheriff for the US, the West should hope China retains its distance.
Sino-Saudi Energy Relations | Global Affairs Review
The interventions China would likely engage in would not be the ones the West would like to see. Increased Chinese influence in the domestic policies of the Philippines, Myanmar, Cambodia, Bangladesh, Pakistan or Vietnam would not be in the interest of the West. The tendency of powerful countries, even democracies, to interfere militarily in the domestic affairs of third word autocracies has not helped global democracy or the well-being of global civilians.
Perhaps a greater Chinese presence in the Middle East would not be all that bad for the region after all.