ALBAWABA - The value of acquisitions and investments by Gulf companies, including Saudi investments, in China has increased by more than 1,000 percent year-on-year, Bloomberg reported Saturday.
Meanwhile, Chinese investments and business flowing into Gulf Cooperation Council (GCC) countries have also increased, according to data compiled by Bloomberg.
Overall, the value of Gulf business in China hit 5.3 billion since July 2022, including Saudi investment. While multiple GCC sovereign funds are engaged in discussions with the Chinese over becoming cornerstone investors in seed giant Syngenta Group’s planned $9 billion Shanghai IPO.
Syngenta Group is already in talks with Saudi Arabia’s Public Investment Fund (PIF) and the United Arab Emirates’ (UAE) Abu Dhabi Investment Authority, unnamed sources told Bloomberg.
Economic exchanges between China, Saudi Arabia and the UAE have been accelerating significantly since the first China-Gulf summit in Riyadh, seven months ago.
UAE, Saudi investments in and from China
Abu Dhabi’s $280 billion fund, Mubadala Investment Co., is actively hunting for investments in China, the sources said. And Dubai has seen a 24 percent surge in Chinese companies setting up in its commodities free zone after roadshows in China.
Last month, entrepreneurs and government officials from China arrived in Riyadh for the largest-ever Arab-Chinese business gathering. The meetings resulted in MoUs with the Saudi government worth more than $10 billion, including a $5.6 billion deal with Chinese carmaker Human Horizeons, to develop cars in Saudi Arabia, apart from Saudi investments in China.
According to Bloomberg, oil-rich gulf monarchies are using wealth to strengthen ties with China amid anxiety over the future of their longstanding security partnership with the US.
Officials in Riyadh have described China as indispensable for Vision 2030 — Crown Prince Mohammed bin Salman’s multi-trillion-dollar economic and social transformation plan.
In fact, several Chinese firms have won tender contracts for the futuristic city NEOM, Bloomberg confirmed.
China will not replace US as Saudi, UAE security guarantor
In the meantime, Gulf officials have reaffirmed that their moves toward China are not intended to replace Washington with Beijing as their principal partner. But they are looking for a wider set of global alliances, the New York-based news agency said.
Dissatisfaction with the decades-old US security umbrella had been brewing for at least 15 years in the Middle East. Tensions are exacerbated by what Gulf states viewed as unpredictable US policies toward the region, Hasan Alhasan, a Bahrain-based research fellow at the International Institute for Strategic Studies, told Bloomberg.
“I don’t ascribe to this zero-sum game,” Saudi Foreign Minister Faisal bin Farhan said in a June press conference with US Secretary of State Antony Blinken when he visited Saudi Arabia. “I think we are all capable of having multiple partnerships and multiple engagements, and the US does the same in many instances.”
“Now they [GCC countries] are realigning their foreign policies to serve their economic agendas,” Hasan underscored. “They’re going to prioritize relations that are going to serve their national economic visions.”
Publicly, US officials have welcomed Chinese mediation in the Middle East.
“With regard to China, we’ve also been very clear we’re not asking anyone to choose between the United States and China,” US State Secretary Anthony Blinken said in June.
“We are simply trying to demonstrate the benefits of our partnership and the affirmative agenda that we bring in what we’re trying to do.”
UAE, Saudi investments for unconditional ties
However, in 2021, the UAE suspended talks on a $23 billion deal to purchase F-35 jets and other weaponry after rejecting US conditions. The US insisted on UAE to remove Huawei Technologies Co. from its telecommunications network.
The UAE later agreed to buy Chinese L15 light attack and combat training jets, Bloomberg reported.
In the meantime, trade, primarily oil, remains key to the relationship between China and the Gulf.
Two-way commercial flows between Saudi Arabia and China ballooned to $117 billion last year, including Saudi investments, from just $834 million three decades ago.
UAE-China bilateral trade has grown almost a hundredfold to $107 billion in 2022 from $1.15 billion in 1992, according to Bloomberg’s data.
In the most recent major deal with China, Saudi Arabia inked a $3.6 billion contract to buy 10 percent of China’s Rongsheng Petrochemical Co.
Still, unlike the US, does not offer any security guarantees with its deals. According to Bloomberg’s specialists, GCC countries still need to maintain strong relations with the US to guarantee their security.
Washington is making its own efforts to reinvigorate relations in the Gulf.
Senior US officials have shuttled to the city of Jeddah in recent months to meet the crown prince and revive a bid to secure a peace pact with Israel, building upon the Abraham Accords.
Washington remains the chief security backer of the Gulf states, not to mention having multiple military bases in the region.
The US is also the biggest source of foreign direct investment for countries like Saudi Arabia. Yet the US has been reluctant to give Saudi Arabia and the UAE the security guarantees and advanced weaponry, including F-35 fighter jets, they have demanded.
