TRADE

INTERNATIONAL TRADE: SAUDI CASTS ITS NET WIDER IN ASIA

Saudi Arabia’s decision to include the Chinese language in its curriculum underscores the growing trade and investment ties between the two G20 nations.

A Chinese language learning programme, announced by Saudi Crown Prince Mohammed bin Salman during his visit to China in 2019, was implemented in eight high schools in Riyadh, Jeddah, and Eastern Province in its first phase.

Integral to the development of basic skills of manpower, the programme links the Chinese language to the Saudi Economic Vision 2030, aiming to enhance the skills and competitiveness of the locals in the labour market, the Saudi minister of education Hamad Al-Sheikh told Xinhua.

In 2021, China was the destination of 27% of Saudi Arabia’s total crude oil exports, lifting its volumes by 3.4% to an annual record of 1.75 million barrels per day (mb/d). China is also the largest trading partner for Saudi Arabia’s chemical industry, taking almost a quarter of the kingdom’s exports from this sector, according to Mercator Institute for China Studies (Merics).

“Saudi Arabia has also been the largest regional recipient of Chinese contracting and investment, which totalled nearly USD 43.5 billion between 2005 and 2021. In turn, Saudi Arabia has invested or is planning to invest about USD 35 billion in China-based projects, with production capacity reaching 7.5 million tonnes of chemicals, amounting to 45% of total overseas production capacity for Saudi producers,” Merics noted.

                  

China was the kingdom’s largest trade partner, accounting for USD 9.2 billion of exports, and was also the largest source of imports, taking in Chinese products valued at USD 31 billion in 2021, according to the International Trade Centre.

And the trade ties are growing.

The kingdom's exports to China in the second quarter of 2022 reached SAR 63 billion (about USD 16.8 billion), making China the main destination for Saudi exports. The kingdom has topped the list of oil suppliers to China, since the beginning of the year so far, with the total quantities supplied by Saudi to the Asian giant amounting to 49.84 million tonnes. In addition, the kingdom is the largest partner for Chinese investments within the Belt and Road Initiative during the first half of 2022, with investments amounting to SAR 20.6 billion, or approximately SAR 3.5 billion per month, according to Saudi Press Agency.

“The kingdom's exports to China, during the second quarter of 2022, amounted to SAR 63.4 billion (USD 16.9 billion), while the value of the kingdom's imports from China, during the second quarter of 2022, amounted to SAR 33.75 billion (USD 9 billion),” according to SPA.

In August, Saudi Arabian Oil Company signed a memorandum of understanding (MoU) with China Petroleum & Chemical Corporation (Sinopec) covering multiple areas of potential collaboration.

“The wide-ranging areas of potential co-operation include; assessing refining and petrochemical integration opportunities; engineering, procurement and construction; oilfield services, upstream and downstream technologies; as well as collaboration across carbon capture and hydrogen processes,” Aramco said.

The companies will also discuss the opportunities for the establishment of a local manufacturing hub in King Salman Energy Park.

This latest collaboration builds on existing joint ventures between the two companies, including Fujian Refining and Petrochemical Company (FREP), Sinopec Senmei (Fujian) Petroleum Company (SSPC) in China, and Yanbu Aramco Sinopec Refining Company (YASREF) in Saudi Arabia.

But the partnership is going beyond oil and petrochemicals.

ASIAN TRADE

Apart from China, India, and Singapore were among the top five export destinations for Saudi Arabia in 2021, highlighting the importance of Asian countries to Saudi trade.

India is the third largest destination for Saudi exports (after China and the UAE) in 2021, accounting for USD 4.9 billion, while Singapore was the fifth largest export destination with USD 3.36 billion during the year.

Among main import sources, India was the second source market for Saudi Arabia, accounting for around USD 8 billion of imports, while Japan came in third with shipments of USD 6 billion, according to ITC.

Saudi Arabia’s trade alignment to Asia comes at a critical time as the kingdom expands its ports and logistics infrastructure.

In September, the Saudi Ports Authority (Mawani) said that Mediterranean Shipping Company (MSC), a global transport and logistics company, will introduce a new call to its Himalaya Express Service to connect Jeddah Islamic Port with 10 global ports, including Colombo in Sri Lanka, and the Indian ports of Nhava Sheva and Mundra.