Saudis sharpen Asian focus with $65bn China partnership
Economic, security ties to compensate for American disinterest
TAKESHI KUMON, Nikkei staff writer, and SHUHEI YAMADA, Head of Nikkei's China Headquarters
DUBAI/BEIJING -- Saudi Arabia and China have inked $65 billion worth of deals and agreed to bolster security ties as the Middle Eastern kingdom scans Asia for partners to support an economic overhaul.
Saudi King Salman met with Chinese President Xi Jinping in Beijing on Thursday, rounding out a series of Asia visits in the first trip by a Saudi king to China in 11 years. The duo inked cooperation pacts in 14 areas, including politics, the economy, investment, energy and aerospace. These involve 35 specific projects, though such details as cost breakdowns have not been released.
Chinese Vice Foreign Affairs Minister Zhang Ming said the leaders agreed to strengthen the comprehensive strategic partnership, established during Xi's visit to Saudi Arabia in January 2016.
Zhang said the king voiced approval for the Belt and Road Initiative -- Beijing's plan to establish modern sea and overland routes linking China and Europe. Salman apparently envisions using Chinese steel and cement, two industries suffering from severe overproduction, to build infrastructure such as harbors and airports with Saudi involvement.
The two men also confirmed that they would cooperate on fighting terrorism. Violence between China's Uighur minority and the Han Chinese majority continues to rattle the Xinjiang Uighur Autonomous Region in the country's west. Beijing has implicated Islamic extremism in the attacks and aims to use ties to Saudi Arabia, an influential Muslim nation, to help get the situation under control.
Meanwhile, partnering with China could help Saudi Arabia advance economic reform plans spearheaded by Deputy Crown Prince Mohammed bin Salman aimed at cutting the kingdom's reliance on oil revenue. King Salman and Prime Minister Shinzo Abe agreed to the Saudi-Japan Vision 2030 economic cooperation plan, which has similar aims, during the monarch's Japan visit Sunday to Wednesday.
Saudi Arabia is the top source of oil for both China and Japan. Assisting reform efforts is an excellent opportunity for the Asian countries to strengthen ties with the kingdom. Stock markets in Tokyo, Hong Kong, New York and London are competing for state oil giant Saudi Aramco's planned initial public offering in 2018. Riyadh could be "weighing China and Japan against one another to gain cooperation from both," a foreign affairs source said.
Salman's Asia tour aims to strengthen economic and security ties across the continent. The kingdom has agreed to bolster military ties with Malaysia, the first stop, and to form a united front against terrorism with Indonesia, the second. Both countries, like Saudi Arabia, have large Sunni Muslim populations. The visits can be seen as a rebuke to Iran, a Shiite-majority nation with which the Saudis cut off diplomatic relations in 2016.
During the king's stay in Malaysia, Aramco agreed to invest $7 billion in a major refinery and petrochemical project planned by state oil company Petroliam Nasional. Indonesia has been promised $1 billion in development aid.
American disengagement from the Middle East is a factor behind Saudi Arabia's turn to Asia. The kingdom relies on the U.S. for security. But that country needs Middle Eastern petroleum less nowadays, thanks to its exploitation of domestic shale oil and gas. Ties were further strained by the Obama administration's overtures to Iran. While no country can immediately replace the U.S. as an economic and security partner, Riyadh has begun casting a wider diplomatic net with an eye toward the future.