February 7, 2023

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China’s Xi arrives in Saudi Arabia for an energy-related visit

Chinese President Xi Jinping landed in Saudi Arabia on Wednesday for a visit that will likely focus on energy ties but also after months of tensions with the United States.

Xi, recently newly anointed as leader of the world’s second-largest economy, arrived in the capital Riyadh, Chinese and Saudi state media said, for a three-day visit that will include talks with the Saudi rulers and other Arab leaders.

Saudi Foreign Minister Prince Faisal bin Farhan and Riyadh Governor Prince Faisal bin Bandar were among those who greeted Xi at the airport, where a ceremonial purple carpet was laid down from the plane’s steps.

On main streets in Riyadh, the red and gold Chinese flag alternated with the green Saudi emblem.

China is the main customer for oil from Saudi Arabia, the top crude exporter, and both sides appear keen to expand their relationship at a time of economic turmoil and geopolitical realignment.

The trip — only Xi’s third trip abroad since the coronavirus pandemic began and his first to Saudi Arabia since 2016 — comes after US President Joe Biden’s visit in July, when he unsuccessfully pleaded for increased oil production.

It will include bilateral meetings with Saudi King Salman and Crown Prince Mohammed bin Salman, the de facto ruler, as well as a summit with the six-member Gulf Cooperation Council and a broader Sino-Arab summit.

A picture taken in Riyadh on Dec. 7, 2022 shows the Chinese and Saudi flags decorating a street ahead of the Chinese President’s visit to the Saudi capital. – Chinese President Xi Jinping will pay a three-day visit to Saudi Arabia this week and meet the king and de facto ruler of the world’s largest oil exporter. (Photo by Fayez Nureldine / AFP)

– Oil Markets –

The program represents the “largest diplomatic activity between China and the Arab world since the founding of the PRC,” or People’s Republic of China, Foreign Ministry spokeswoman Mao Ning said on Wednesday.

The official Saudi press agency said the kingdom accounted for more than 20 percent of Chinese investment in the Arab world between 2005 and 2020, “making it the largest Arab country to receive Chinese investment over the period.”

Oil markets are likely to be high on the agenda of China-Saudi Arabia talks, especially given the turmoil markets have seen since Russia invaded Ukraine in February.

The G7 and the European Union on Friday agreed on a price cap of $60 a barrel for Russian oil, denying the Kremlin’s wartime resources and further unsettling markets.

On Sunday, the Saudi Arabia-Russia jointly run oil cartel OPEC+ decided to keep production cuts of two million barrels a day approved in October.

Saudi and Chinese officials have provided scant information about the agenda, although Ali Shihabi, a Saudi analyst close to the government, said he expects “a number of agreements to be signed”.

Beyond energy, analysts say leaders from the two countries are likely to discuss potential deals that could see Chinese firms become more involved in mega-projects central to Prince Mohammed’s vision to diversify the Saudi economy away from oil .

This includes a $500 billion futuristic megacity called NEOM, a so-called cognitive city that will rely heavily on facial recognition and surveillance technology.

– Tensions with Washington –

OPEC+ production cuts approved in October marked the latest blow to the long-standing partnership between Saudi Arabia and the United States, which said they amounted to “alignment with Russia” in the war in Ukraine.

Xi’s visit to Washington, which struck up a partnership with Saudi Arabia near the end of World War II, is expected to be closely watched, often referred to as the oil-for-security partnership.

While the Biden administration has mooted the production cuts, Riyadh has at times accused the United States of failing to uphold the security side of the deal, particularly after strikes in September 2019 claimed by Yemen’s Houthi rebels temporarily halted the kingdom’s crude oil production halved.

China and Saudi Arabia are already collaborating on arms sales and production.

But analysts say Beijing cannot — and does not want to — provide the same security guarantees as Washington.

However, when the Saudis are “trying to extort more security guarantees from the US… signaling that they have an opportunity to strengthen ties with China is something that suits them well,” said Torbjorn Soltvedt of risk intelligence firm Verisk Maplecroft.

The GCC-China summit will be held in Riyadh on Friday, the bloc said in a statement.