The relationship between Saudi Arabia and China has been evolving rapidly over the past few years, and one of the most significant aspects of this shift has been the increasing use of oil payments in local currencies, rather than relying on the US dollar. This trend has significant implications for both countries’ economies and their standing on the global stage. In this blog post, we’ll take a closer look at the rise of the Saudi-China alliance and what it means for the world economy.

Introduction

In recent years, Saudi Arabia has been strengthening its relationship with China, with the two countries collaborating on various business ventures. The alliance between Saudi Arabia and China is becoming increasingly important, as the kingdom diversifies its economy away from the West and looks to protect its oil revenue. This article will explore the rise of the Saudi-China alliance, including the countries’ switch to oil payments and abandonment of the US dollar.

Saudi Arabia and China’s Historic Business Conference

In 2016, Saudi Arabia and China held a historic business conference, where they announced $10 billion in investments. The conference aimed to strengthen economic ties between the two countries and increase Chinese investment in Saudi Arabia. The kingdom sees China as the ascendant power in the world and is keen to collaborate with them, rather than compete.

Saudi Arabia’s Diversification Plans

Saudi Arabia is looking to diversify its economy away from the West, and China is becoming a key partner. The kingdom has plans to join the BRICS bank and make investments in mining, technology, and renewable energy. By diversifying its economy, Saudi Arabia hopes to reduce its reliance on oil revenue and create more job opportunities for its citizens.

China is Saudi Arabia’s Largest Trading Partner

China is Saudi Arabia’s largest trading partner, with over $87 billion in trade. The kingdom has a trade surplus with China, which is beneficial for its economy. In addition to this, China stepped in to invest in Saudi Aramco in 2017 when Western investors were hesitant. The relationship between China and Saudi Arabia has been developing for years, and Saudi Arabia values loyalty.

Abandonment of the US Dollar

Saudi Arabia’s relationship with the US has been strained in recent years, and the kingdom is actively protecting its oil revenue. One of the ways it is doing this is by abandoning the US dollar and switching to oil payments in Chinese yuan. This move is significant as it challenges the US dollar’s status as the world’s reserve currency. By switching to yuan, Saudi Arabia can reduce its dependence on the US and strengthen its relationship with China.

Conclusion

The alliance between Saudi Arabia and China is becoming increasingly important, as the kingdom diversifies its economy away from the West and looks to protect its oil revenue. With the two countries collaborating on various business ventures, the relationship between Saudi Arabia and China is expected to continue to develop in the coming years.

FAQs

1. Why is Saudi Arabia diversifying its economy away from the West?
   A: Saudi Arabia is looking to reduce its reliance on oil revenue and create more job opportunities for its citizens.

2. What is the significance of the historic Arab-China Business Conference?
   A: The conference aimed to strengthen economic ties between the two countries and increase Chinese investment in Saudi Arabia.

3. Why is the relationship between Saudi Arabia and China important?
   A: Saudi Arabia sees China as the ascendant power in the world and is keen to collaborate with them, rather than compete.

4. How is Saudi Arabia protecting its oil revenue?
   A: One way Saudi Arabia is protecting its oil revenue is by abandoning the US dollar and switching to oil payments in Chinese yuan.

5. What is the impact of Saudi Arabia switching to yuan?
   A: By switching to yuan, Saudi Arabia can reduce its dependence on the US and strengthen its relationship with China.