Geopolitical and Trade Relations Between China and Saudi Arabia

US – Iran tensions have essentially compelled the ChinaFund.com team to cover China’s relationship with Iran a bit sooner than we would have normally planned to, through an article which we invite you to read by clicking HERE. That being stated, however, your perspective on the current US – Iran situation and China’s interests in the region would be limited at best without paying adequate attention to… of course, the relations between China and Saudi Arabia.

While Iran being more than willing to embrace China as an ally comes as no surprise in light of the fact that it doesn’t exactly have stellar options, being considered arguably the number one geopolitical enemy of the United States, this situation is multiple orders of magnitude trickier when it comes to Saudi Arabia in light of it being considered an important regional partner by the United States. So important, in fact, that Saudi Arabia ended up being the very first country visited by the US President upon taking office. Furthermore, it is a well-known fact that both countries have made numerous statements with respect to working together so as to contain Iran and even more so, personal relationships have been build between Donald Trump’s son-in-law Jared Kushner and the crown prince of Saudi Arabia, Mohammed bin Salman.

However, it has become more and more apparent that Saudi Arabia is eager to hedge rather than put all of its eggs in the US basket. While the first visit of Donald Trump was precisely to Saudi Arabia, King Salman of Saudi Arabia visited China before the US despite the unwritten law/custom or if you will expectation that the United States would come first in light of the fact that at that point, Donald Trump had recently been sworn into office.

Why is Saudi Arabia hedging?

For primarily pragmatic reasons such as:

1. It understanding that while the United States is (still) the world’s number one oil consumer, China represents the number one IMPORTER and this trend is likely to persist in light of the oil and gas boom that has been taking place over in the US on the one hand (with the US currently importing approximately one quarter less compared to the 2005 peak) and on the other hand, in light of US optimization on the consumption front as well (for climate-related reasons and many others, energy efficiency has become more of a priority than it was in the past)
2. The United States taking its foot off the proverbial pedal in terms of its willingness to be involved in geopolitical matters, with not even the Middle East representing an exception, a trend which China has taken advantage of, with it becoming notably more assertive than in the past. To put it differently, the isolationist tendencies of the US (compared to previous administrations, at least) have started generating geopolitical consequences
3. Simply put, money, with there being a lot of just that on the table when it comes to relationships with China, for example the $28 billion deal signed in February of 2019 that will result in Saudi Arabia building a petrochemical complex in China. To put it differently, China’s willingness to put long-term arrangements on the table is paying dividends
4. Current trends, with over 10% of China’s impressive oil imports coming from South Arabia and developments such as Saudi Arabia’s YOY Beijing export numbers even doubling, trends which make the situation described when referring to reason #1 even more obvious
5. Saudi Arabia finding itself increasingly isolated from the West, for reasons which range from its involvement in the Yemen civil war in 2015 and especially the consequences when it comes to civilians to the crown prince arresting (potential) rivals in 2017 and even the widely-publicized Jamal Khashoggi situation

The list above could continue and, of course, there are also issues from the perspective of Saudi Arabia, for example it not exactly being thrilled about the Iran deal signed by Barack Obama in 2015 and the (in)famous pivot to Asia of the US at that point in time. The bottom line, however, is this: Saudi Arabia’s relationship with the United States has deteriorated over the years, with a proverbial pivot to China not exactly being surprising under these circumstances.

Does it mean the US – Saudi Arabia relationship is doomed?

Of course not.

Saudi Arabia is still arguably dependent on the United States for reasons which go beyond economics, for example security-related ones. While an eventual pivot to the let’s call it Russia-China axis is not impossible (never say never in the world of geopolitics), it is quite unlikely in light of the Iran component and many other issues.

At the end of the day, the current Saudi Arabia situation can be considered something countries such as Russia and China have long been calling for: an early sign that we might be moving from a “one game in town” paradigm that revolves exclusively around the United States to a multi-polar world. This state of affairs has been brought about by a wide range of reasons, from China’s ascension to… well, ultimately even the attitude of the United States, whether we are referring to it taking a step back in terms of leadership on many fronts in some of the world’s most volatile regions or even to its approach when it comes to allies (with Trump being considerably more aggressive than past US leaders, who have made this point themselves but in more let’s say diplomatic terms, when it comes to pressuring NATO members to respect their 2% commitment).

In light of such developments, China’s foreign policy has thus far proven to be a relatively effective combination between assertiveness (with China still, however, being in soft power territory) and diplomacy (with China managing to successfully maintain relationships with both Saudi Arabia and Iran, despite it being a remarkably complex endeavor).