China and the Gulf Cooperation Council, an economic group of Middle East states that are one of the world’s fastest-growing regions, wrapped up a high-profile, two-day Arab-China Business Conference in Riyadh last Monday that made international headlines for the size of the business deals announced—more than $10 billion involving approximately two dozen agreements.
The event also grabbed attention because of the warming relations between China and an area with traditionally close ties to the United States. In a keynote speech, New Development Bank chief Dilma Rousseff said: “China and Saudi Arabia have the potential to re-write the rules of the global energy market, leading the way in diversifying currencies and embracing new models of economic collaboration.” Among the agreements announced was a $5.6 billion investment by the Saudi Arabia Ministry of Investment and China EV maker Human Horizons.
Members of the Gulf Cooperation Council, or GCC, include the United Arab Emirates, Bahrain, Saudi Arabia, Oman, Qatar, and Kuwait. The region’s economy is smaller than China’s—the world’s No. 2 with a GDP of $18 trillion in 2022. Yet collectively, the oil-rich GCC nevertheless has a GDP of approximately $2 trillion, a youthful population of over 50 million, and large capital pools available for investment in China and elsewhere.
What’s next in business ties between China and GCC members after the high-profile conference?
To learn more, I exchanged by Zoom on Friday with two editors from Forbes Middle East, the licensed Middle East edition of Forbes—managing editor Claudine Coletti and head of research Jason Lasrado. “The general feel and message for us in this part of the world is that the relationship is strong and is getting stronger,” Coletti said. “And that the opportunities are in a way limitless.” Edited excerpts follow.
Flannery: What are your main takeaways from the Arab-China Business Conference?
Coletti: The announcements seemed very much focused on Chinese investment in Saudi Arabia and that relationship. Saudi Arabia and the UAE are the two biggest markets here.
There were two key points. The first was that the big investment deals show how much potential there is between Saudi Arabia and China—and the GCC and China. Some 30 investment deals were signed, worth more than $10 billion. Over half of that came from one deal between the Saudi Ministry of Investment and Chinese electric vehicle company Human Horizons for $5.6 billion. Another was a $533 million investment in an iron factory by the Saudi AMR ALuwlaa Company and Zhonghuan International Group, and another was a $500 million cooper mining agreement between the Saudi ASK Group and the China National Geological & Mining.
The second key point was the Riyadh Declaration. From it, you can see there’s a general strengthening of trade, investment, and economic affairs ahead, and there will be joint efforts in fields like energy, renewable energy, the digital economy, and entrepreneurship, which are already interesting sectors. There was mention of enhancing cooperation in fields like AI, cybersecurity, e-commerce, and the industrial internet, which I think is very interesting when you’re talking about China and Saudi Arabia. There’s obviously an appetite to really develop in those areas and work together.
They also mentioned addressing the negative effects of global recession, turbulence from the effects of the pandemic, and the repercussions of what’s happening in Ukraine. Also really interesting was the mention of the importance of reducing carbon emissions between the two countries. This could be a good thing for the world and an opportunity to invest more in renewable energy and the various opportunities that it would bring. The general feel and message for us in this part of the world is that the relationship is strong and is getting stronger. And the opportunities are, in a way, limitless.
Flannery: Beyond oil, what are the opportunities for GCC companies in China?
Coletti: You can’t ignore the significance of oil. It’s still a huge part of the trade between the two areas. And yet Saudi Arabia and most other states in the Middle East are looking to diversify away from oil. There is interest in partnering in technology, healthcare, tourism, and education, among other sectors.
Flannery: So there’s also a view that China can be a source of capital and technology?
Coletti: Yes, but it’s not all about investing China’s money here. The Middle East’s sovereign wealth funds are increasingly active in Asia. Abu Dhabi’s Mubadala, the Qatar Investment Authority, the Abu Dhabi Investment Authority, and the Kuwait Investment Authority have all made moves to invest in China. Just earlier this year, in February, Saudi Arabia’s Public Investment Fund invested $265 million in an e-sports company in China backed by Tencent. Beyond China itself, there’s also an interest in creating stronger ties and finding opportunities in other Asian markets.
Lasrado: The GCC is also interested in actual manufacturing facilities and the job creation side of the partnership.
Flannery: How competitive is GCC’s manufacturing environment for outsiders such as China?
Lasrado: Traditionally, it hasn’t been known for manufacturing. Until even a couple of years ago, and even to a large extent now in Saudi Arabia, foreign owners haven’t been allowed to own more than 50% of a company in a lot of sectors. Under Vision 2030, they’re trying to change that and open up. The Middle East has not been known for manufacturing, but that is changing. When I first came to the Middle East (from India) 10 years ago, you hardly saw any locally-made pharmaceuticals, for example. But now, most are made in the UAE or Saudi Arabia. That’s just an example.
Flannery: There have been quite a few secondary listings in Europe of late by Chinese companies that are not turning to the U.S. in a way that they would have turned to the Nasdaq or the New York Stock Exchange not too long ago. Do you expect to see more Chinese companies listing on stock exchanges in the Middle East?
Lasrado: I think it’s unlikely overall because the Middle Eastern stock exchanges aren’t yet mature enough, and they’re focusing on local listings. They haven’t been focused on international listings yet.
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