Moves to ease pressure from low oil prices, strengthen partnership: experts
Oil-rich Saudi Arabia is seeking more investment from China, signing 14 memoranda of understanding (MoUs) with Chinese companies on Wednesday concerning various sectors such as energy, logistics and telecommunication.
The two countries have been deepening their strategic partnership for years, and their cooperation will not end in the energy sector. It will also extend to other areas such as security, finance, national defense, technology and cultural exchange, Dr -Majed Abdullah Al-Kassabi, Saudi Minister of Commerce and Investment, told a meeting held on Wednesday in Beijing.
"Our newly proposed 'Saudi Vision 2030' has much in common with the China-proposed 'One Belt, One Road initiative [B&R initiative],' which will both offer more business opportunities to the countries involved," he said.
"Saudi Vision 2030," approved by the Saudi Cabinet in April, constitutes a road map for the kingdom's development and economic goals for the coming 15 years, according its government's website.
The economic plan includes such goals as lowering the unemployment rate, increasing the contribution of small and medium-sized enterprises to GDP and maximizing the investment capabilities of the country. It will cost 270 billion riyals ($72 billion), according to media reports.
China's B&R initiative, which was proposed in 2013, is also known as the Silk Road Economic Belt and the 21st Century Maritime Silk Road.
Saudi Arabia is striving to lower its dependence on the energy sector while looking for an economic transformation, which requires further diversification of its industries and deepening global cooperation, Li Li, an industry expert at Shanghai-based consulting firm ICIS China, told the Global Times on Wednesday. "That is exactly what the B&R initiative promotes," she said.
Crude oil exports from Saudi Arabia slumped 27 percent year-on-year from January to August this year to 1.89 billion barrels, according to the Economic and Commercial Counselor's Office of the Chinese Embassy in Saudi Arabia. The IMF also projected in July that Saudi Arabia's GDP growth will slow to 1.2 percent this year from 3.5 percent in 2015 but recover to 2 percent in 2017, according to an announcement published on its website in July.
The country faces important challenges stemming from the decline in oil prices, the IMF noted, but it has begun a fundamental policy to respond to those low prices.
Looking beyond the energy sector, Chinese investors will find more opportunities in sectors such as e-commerce, transportation, logistics and information technology, Dr Mohammed Al-Suwaiyel, Minister of Communications & IT, said during the meeting.
"In the next five years, we'll be committed to data communications … and to the implementation of digital [facilities] to support the B&R initiative," he said, noting that an improved data exchange framework will help smooth transportation between the two countries.
For instance, Saudi authorities on Wednesday granted Chinese networking and telecommunications equipment and services provider Huawei Technologies Co a 100 percent foreign ownership trade license, which will help the company fully access the retail and wholesale markets in the country.
Despite sluggish oil prices, China remains the market with the most potential for Saudi Arabia, Lin
Boqiang, dean of the China Institute for Studies in Energy Policy at Xiamen University, told the Global Times on Wednesday.
"Faced with rising competition from countries like Iran and Russia amid low oil prices, expanding cooperation with China will also help strengthen their energy ties," he said.
Some MoUs signed on Wednesday laid the ground for deeper energy cooperation between Saudi Arabia and China. For example, Saudi Aramco and China National Petroleum Corp signed an agreement to collaborate on downstream investment and project development.
In addition, the Royal Commission for Jubail and Yanbu and Saudi Aramco entered into a deal with two Chinese companies - Yinchuan Yucheng Investment Co and Guangzhou Industrial Development Group Corp - to allow them to invest in Jazan Economic City and other transport and logistics hubs in the country.
