Saudis forge Chinese ties
RIYADH (Bloomberg) - Li Wei, a Chinese diplomat in Riyadh, had only just seen off a Ministry of Commerce delegation to Saudi Arabia this month when he started preparing for another Chinese governmental visit in two weeks.
"Every month we have delegations coming to Saudi Arabia," said Li, who works in the Chinese Embassy's commercial section in the Saudi capital. "We are too busy."
China, the world's second-largest oil consumer, and Saudi Arabia, holder of about a fifth of global crude reserves, are forging ever closer ties as the Persian Gulf kingdom responds to a Chinese drive to feed its rising energy needs. China in November overtook the US as the main buyer of Saudi oil, and Saudi Arabian Oil Co. and Saudi Basic Industries Corp. are investing in refinery and petrochemicals projects in China.
The partnership between Saudi Arabia and China is part of a broader strategy by the world's largest oil exporter to tap Asian markets and extend global influence. It also helps Saudi Arabia reduce reliance on the US, which since World War II has protected Saudi security in return for stable oil supplies, said Ben Simpfendorfer, Hong Kong-based chief China economist at the Royal Bank of Scotland plc.
"China's rise has provided Saudi Arabia with an excuse to knock on Washington's door and to say, you are not our only partner," he said.
Compared with the US, whose support for Israel has created friction with Saudi Arabia, "with China, there is less baggage, there are easier routes to mutual benefit," said Prince Turki al-Faisal, a former Saudi ambassador to the US and brother of Foreign Minister Saud al-Faisal, in an interview.
Since Saudi Arabia and China established diplomatic ties in 1990, two-way trade has grown from $290 million that year to more than $40 billion in 2008.
Oil lies at the heart of the relationship. With about a fifth of China's crude imports now coming from Saudi Arabia, or about one million barrels a day compared with 455,000 barrels a day in 2005, the kingdom is investing to expand Chinese capacity for refining of Saudi heavy crude.
Saudi Aramco, the world's biggest crude producer, teamed with China Petroleum & Chemical Corp. and Irving, Texas-based Exxon Mobil Corp. to triple capacity at a refinery in China's Fujian province to 240,000 barrels a day last year. Dhahran- based Saudi Aramco is in talks with the same Chinese partner, Beijing-based Sinopec, to take a stake in a 200,000-barrel-a-day plant in Shandong.
Riyadh-based Saudi Basic Industries Corp., the world's largest petrochemicals maker, collaborated with Sinopec to build a petrochemical complex in the northern Chinese port city of Tianjin that starts up this year.
"China is a country that has the greatest market for our products, so there is no politics behind this, it is only straight business," Mohammed Al-Mady, the chief executive officer of the company known as Sabic, said in an April 10 interview at a conference on the Chinese island of Hainan.
China's need for oil is prompting it to seek greater influence in the Middle East, said Shi Yinhong, a professor of international relations at Renmin University in Beijing.
Increasing economic ties to Saudi Arabia "will play some role in gradually eroding American preponderance over that country, but this is not a very elaborate and conscious objective of China's relationship with Saudi Arabia", Shi said. "This is a by-product. China's objective is energy."