Intensive Diplomacy and "Divide and Conquer" between China and Middle East Countries

The economic and trade relationship between China and Saudi Arabia can be summarized as "a huge volume and a single structure" - when China and Saudi Arabia established diplomatic relations in 1990, the trade volume was 400 million U.S. dollars, and it has grown to more than 87 billion U.S. dollars in 2021; China is a big buyer of Saudi Arabia's energy products 27% of the latter's oil exports and 25% of chemical exports go to China; but 95% of China's imports from Saudi Arabia are concentrated in oil and chemicals.

For China, one of the potential gains of this trip is to further expand the economic and trade field.

For example, in the field of infrastructure, Saudi Crown Prince Mohammed proposed the "2030 Vision", which aims to reduce the economy's dependence on oil, develop industries such as automobiles, military industry, and communications, and even build a future city (NEOM), with a plan of more than 500 billion US dollars. China has advantages in new energy vehicles, 5G and infrastructure, which may become areas for the two sides to expand cooperation.

For another example, the two sides may use RMB for settlement in some oil transactions, which will greatly promote the internationalization of the RMB, which is welcomed by China. In March this year, the Wall Street Journal quoted people familiar with the matter as saying that Saudi Arabia was considering using RMB instead of US dollars for settlement of oil sales to China. It is worth noting that over the years, whenever the relationship between the United States and Saudi Arabia has been cold, similar news will be released, but no further action has been taken.

"Petrodollar" is related to the strategic interests of the United States, and Saudi Arabia is the largest buyer of American weapons. It has a deep relationship with the United States in terms of strategy and security. Therefore, it will be very difficult to promote RMB settlement. In contrast, both Iran and Russia use RMB for settlement in oil transactions with China, but both countries have been sanctioned by the United States successively.

On security issues, there is only limited cooperation between China and Saudi Arabia. For example, the China-dominated Shanghai Cooperation Organization lists Saudi Arabia as a "dialogue partner."

From China's perspective, after the 20th National Congress, Xi Jinping has carried out intensive diplomatic activities. In the past month, he has met with leaders of more than 30 countries. The Economist Intelligence Unit (EIU) analyzed in an email sent to BBC Chinese that Xi Jinping has recently conducted intensive diplomatic contacts in order to create a more benign international environment for himself. More cooperation among allies, but the agency doesn't think that's achievable.

Generally speaking, the United States has been operating in the Middle East for a long time, with a solid foundation and great interests, but some problems have emerged recently. China has few exchanges in the Middle East, but it has a lot of space. It takes advantage of the shrinkage of the United States to seek greater diplomatic breakthroughs. What China is most likely to achieve is to reach a wider range of economic and trade cooperation in addition to the existing energy transactions; however, if there are breakthroughs in the internationalization of the renminbi and security cooperation, it will inject new variables into the tripartite relations between China, the United States, and countries in the Middle East.

Saudi Arabia: Balancing and Hedging

The luxury of the welcome ceremony is one of the focuses of this visit. Trump received a grand welcome when he visited Saudi Arabia in 2017, and King Salman personally greeted him at the airport; in contrast, Biden's visit in July this year was described by the media as "muted".

The change was linked to a murder. In 2018, after the exiled Saudi journalist Jamal Khashoggi entered the Saudi Consulate in Istanbul, Turkey, he was killed and dismembered by a Saudi assassination team. The whereabouts of his remains are still unknown.

U.S. intelligence agencies believe that Saudi Crown Prince Mohammed bin Salman likely approved the murder. During the campaign, Biden said Saudi Arabia faced international isolation (pariah state) and stressed that there would be consequences.

However, after the outbreak of the Russia-Ukraine war in February this year, oil prices skyrocketed. In order to cope with the subsequent skyrocketing prices, Biden visited Saudi Arabia, hoping that the Organization of the Petroleum Exporting Countries (OPEC), which he leads, would increase production and lower oil prices. But in October, OPEC later announced a production cut. In November, the U.S. government said in a court filing that Saudi Crown Prince Mohammed bin Salman had "immunity" from civil proceedings in the Khashoggi case.

Ayham Kamel, head of the Middle East and North Africa region of the Eurasia Group (Eurasia Group), believes that expanding relations with China is of course risky and counterproductive, leading to further deterioration of relations between Saudi Arabia and the United States, but Crown Prince Mohammed is certainly not motivated by Resentment against the United States, and trying to improve relations with China.

Kamel said that after calculating the strategic gains and losses, the Saudi side believes that Beijing must be accepted because China has become an indispensable economic partner.

Jon Alterman, director of the Middle East program at the Center for Strategic and International Studies (CSIS), said that while Saudi Arabia’s relationship with China appears to be developing “much faster” than its relationship with the United States, the actual relationship cannot be compared, “regardless of Complexity or intimacy, it’s a far cry.”