Saudi Arabia, China Sign Deals Worth Up to $65 Billion

Flanked by a thousand-person entourage, Saudi Arabian King Salman traveled to China Thursday to deepen economic ties between the world’s biggest oil exporter and the world’s second-largest oil consumer. It’s a key stop in the king’s six-week trip to Asia that comes as Riyadh struggles with a slumping oil market and a desperate need to diversify its economy.

During his meetings with Chinese President Xi Jinping, King Salman oversaw the signing of up to $65 billion worth of economic and trade deals, spanning sectors from energy to space, though the Chinese government disclosed few specifics. Saudi Arabia and China also deepened their energy relationship with more than 20 agreements on oil investments and in renewable energy. China even discussed taking a stake in Saudi Aramco, the state-owned oil firm, which is preparing for a public listing, Bloomberg reported.

Saudi Arabia limped into 2017 facing grim economic forecasts fueled by a global oil glut. In January, the IMF revised downward its projection for Saudi economic growth from 2 percent to 0.4 percent this year. King Salman, and especially crown prince Mohammed bin Salman, have launched an ambitious campaign to shock the country out of oil-dependency and diversify the economy under the auspices of its Saudi Vision 2030 plan. It’s culminated in the unusual six-week trip to Asia that includes stops in Japan, Malaysia, Indonesia, Brunei, and the Maldives as Salman courts foreign investors.

The two leaders also dropped hints that China could boost its diplomatic footprint in the Middle East. “Saudi Arabia is willing to work hard with China to promote global and regional peace, security and prosperity,” Salman said. He added he hoped China would increase its role in Middle East affairs.

Xi couched China’s future role in the Middle East in purely economic terms, citing his country’s ambitious “One Belt, One Road” initiative, China’s state-run Xinhua News reported. He stressed China would continue its longstanding policy of non-interference in the Middle East, in contrast to the United States and European counterparts.

But China has steadily ramped up involvement in the region as its dependence on Middle Eastern oil grows. Beijing began building its first overseas military outpost, a naval base in Djibouti on the Horn of Africa, in 2016. And it funneled thousands of peacekeepers to U.N. missions, including in oil-rich countries like South Sudan.

Beijing has started taking sides in some disputes, hinting at a more committed policy. China backed Bashar al-Assad’s government in the Syrian war in 2016, boosting military cooperation with the regime. And in January, Xi signaled support for Yemen’s government in its war against Iran-backed Houthi rebels during a visit to Saudi Arabia. Saudi Arabia is leading an air campaign against the Houthi rebels.

Photo credit: NICOLAS ASFOURI/AFP/Getty Images