GCC ties with China
Ties between GCC (Gulf Cooperation Council) countries -- especially Saudi Arabia and UAE -- and China have grown significantly in recent years. A strong illustration of this is not just the growing economic and strategic relations between two Gulf countries – UAE and Saudi Arabia -- and China, but also the China brokered Saudi Arabia -Iran agreement (signed in May 2023) which will help in resumption of diplomatic ties between both countries, and have a significant influence on the geopolitical landscape of the Middle East.
China-Saudi ties in recent years
Trade between China and GCC was $ 330 billion in 2021. China’s investments in GCC, especially Saudi Arabia have risen significantly. In 2022, of the $9 billion Belt and Road Initiative (BRI) related investments in the GCC over $5 billion (5.5) were invested in Saudi Arabia. In March 2023, Saudi Arabia’s state owned oil giant Aramco announced that it will acquire a 10% interest in China’s Rongsheng Petrochemical Co. Ltd (this deal was estimated at $3.6 billion). Aramco will also be supplying 4,80,000 bpd (barrels per day) to a Rhongsheng affiliate -- Zhejiang Pettroleum and Chemical Co. Ltd. Aramco had also announced that it would be making a new refinery and petrochemical complex .
The US has expressed its discomfort regarding the growing proximity of both UAE and Saudi Arabia with China. Both Riyadh and Abu Dhabi have emphatically stated on more than one occasion that they would not like to get embroiled in US-China competition in the Middle East.
In December 2022, during Chinese President Xi Jinping’s visit to Saudi Arabia the first GCC-China summit was held. While speaking at the summit Xi Jinping stated that China would strengthen security ties with the Gulf and increase its oil imports from GCC. Xi also said that China would seek to purchase oil and gas from Gulf countries in the Yuan (Chinese currency).
Saudi Arabia’s Foreign Minister Prince Faisal bin Farhan Al Saud while commenting on the possible impact of Riyadh’s increasing proximity with Beijing on the Gulf state’s ties with the US said:
"We do not believe in polarisation or in choosing between sides,"
GCC countries with Russia
In the aftermath of the Russia-Ukraine war, Saudi Arabia and UAE have also sought to walk a tightrope between US and Russia. In October 2022, OPEC+ announced that it would cut oil production by 2 million bpd, while in April 2023, it announced a further oil cut of 1.16 million bpd. This decision resulted in a rise in oil prices and may help Russia in dealing with US sanctions.
Saudi Arabia’s interest in BRICS and SCO and De-dollarization
Here it would also be important to point out, that Saudi Arabia has also joined the Shanghai Cooperation (SCO), a China dominated organization, and has applied for membership of Brazil, Russia, India, China and South Africa grouping (BRICS). UAE was also granted Dialogue Partner Status at the recent SCO Foreign Ministers meeting. Other GCC countries which have joined SCO as Dialogue partners are Kuwait, Qatar and Bahrain.
Like many other countries, Saudi Arabia and UAE have both said that they are open to ‘de-dollarization’ or trading in currencies other than the US Dollar. Saudi Arabian Finance Minister, Mohammed Al-Jadaan while commenting on the same stated:
“There are no issues with discussing how we settle our trade arrangements, whether it’s in the U.S. dollar, the euro, or the Saudi riyal,”
GCC ties with US
While strengthening ties with China and taking a balanced position on other issues, both Gulf countries realize the importance of their strategic and economic linkages with the US. The UAE which had normalized ties with Israel, via Abraham accords, is part of the I2U2 (other members are India, Israel and US). Under the umbrella of I2U2, UAE is working with other members on a gamut of issues such as food security, climate change, energy and infrastructure.
In recent years, India’s ties with Gulf countries – especially UAE and Saudi Arabia -- have grown significantly. Here it would also be pertinent to point out, that India has also proposed linking of its power grids to Saudi Arabia and UAE through undersea cables. There is also talk of possible rail connectivity between Saudi Arabia, UAE and India (the US is keen to push this project)
While it is true, that Gulf countries are seeking to balance their relations between the west and China it is important not to view their ties with Beijing from a zero-sum perspective. It is important for Gulf nations to have cordial ties with western not just from a strategic context, but also to fulfil their economic and social agenda for the future.