Alamy via Reuters
Saudi global trade hub ambition
China manufacturing strengths
Growing bilateral trade
President Trump’s trade war is strengthening economic ties between Saudi Arabia and China and encouraging Chinese investors to increase their holdings in the kingdom, analysts say.
As China and its near neighbours face the imposition of economic tariffs – “the most beautiful word in the world”, according to the 47th president – Saudi Arabia has emerged as a haven for those looking to diversify abroad.
The relationship between Riyadh and Beijing was already growing fast: bilateral trade surpassed $100 billion in 2023, while China accounted for 58 percent of total greenfield investment in the kingdom.
“It’s just going higher and higher,” said Cliff Chau, founder and managing partner of Ewpartners, an investment company based in Riyadh with assets under management nearing $1 billion.
“Just the level of activities; on the ground, we can feel it,” Chau said.
Since Ewpartners launched in Saudi Arabia in 2017, Chinese greenfield foreign direct investment (FDI) in the kingdom has grown exponentially from $38 million to $16.3 billion in 2023, a figure Chai expects to grow along with restrictions on exports from China.
“All these macro factors are making Chinese businessmen consider if they need to find a new place outside of China,” he said. “And today, there are basically two regions: one is the Asia-Pacific – Vietnam, Thailand, Malaysia, Indonesia – and the second is the GCC region.”
Asia-Pacific, however, also remains under threat of US sanctions, making the GCC the much safer bet.
As part of its Vision 2030 programme, through which the kingdom hopes to diversify its economy, Saudi Arabia wants to quadruple FDI inflows from SAR96 billion in 2023 to SAR388 billion. At the same time, China is pursuing its own Belt and Road Initiative, through which it hopes to diversify its own economy and strategic interests abroad.
“With a lot of countries turning away from wanting Chinese investment and trade, Saudi and the rest of the Gulf are really open to this and provide a relatively attractive destination,” said Tim Callen, a former International Monetary Fund mission chief to Saudi Arabia and fellow at the Arab Gulf States Institute in Washington.
“There are a lot of synergies between what China can offer and what Saudi Arabia wants,” said Callen. “I would expect to see more Chinese investment into Saudi Arabia.”
The Belt and Road Initiative aims to leverage Chinese know-how in technology, infrastructure and strategic sectors such as communications to win foreign investment contracts. Along with manufacturing and renewable energy, these sectors, in which China has a wealth of experience, happen to be the same ones in which Saudi Arabia is looking to develop with outside help.
Naser Al-Tamimi, an analyst at the Global Institute for Strategic Research in Qatar, said the Belt and Road Initiative and Vision 2030 align infrastructure, trade, and economic diversification, and tend to foster cooperation in renewable energy, technology, and logistics.
“Their partnership combines China’s manufacturing strengths with Saudi Arabia’s ambition to become a global trade hub,” Al-Tamimi said.
The World Bank sees Saudi Arabia’s non-oil sector growing at 4.5 percent over the next two years, while the government is projecting 6.2 percent growth for 2026, making it one of the fastest growing non-oil economies in the world.
Since 2005, China has invested more than $60 billion in Saudi Arabia, according to research by the American Enterprise Institute.
In January Lenovo, the world’s largest computer manufacturer, agreed to invest $2 billion to build a 200,000 sq m factory in Riyadh. In February, it broke ground on the site, where it intends to begin producing millions of laptops and desktops. Elsewhere, renewable energy companies are stepping up investments to produce solar photovoltaic panels in the kingdom in support of its nascent green technology sector.
As part of Vision 2030, Saudi Arabia aims to increase the contribution of non-oil exports from 16 percent to 50 percent. China, which earned the moniker “the world’s factory” during the 2000s following the massive growth of its manufacturing sector, is well placed to take the opportunity this presents.
“Saudi economic reform is like China’s economic reform in the early stage,” said Chau. “It’s going from an economy highly concentrated in oil to opening up all these non-oil industries.”
These may be ambitious expectations in most countries but for China, which has grown by an annual average of 9 percent over the past 30 years, they seem almost modest.
“This reform is very familiar to the Chinese,” Chau said.
