Nov 15, 2022
The report that Chinese President Xi Jinping is planning his first overseas trip after the Party Congress and it may be to Saudi Arabia, drips with enormous symbolism. According to the Wall Street Journal, the visit is likely to take place in early December and hectic preparations are underway.
The daily cited people familiar with the preparations that the Chinese leader’s welcome is more likely to resemble the 2017 visit by Donald Trump in its pomp and pageantry.
Predictably, the focal point will be the future trajectory of the Chinese-Saudi oil alliance, rather, the making of an oil alliance
comparable to the Russian-Saudi framework of OPEC Plus. That said, there is a great deal more to the forthcoming visit by Xi in geopolitics in the dramatically shifting alignments in the West Asian region and indeed its impact on the world order can be far-reaching.
The point is, both China and Saudi Arabia are major regional powers and any matrix involving them bilaterally will be highly consequential to international politics. The Wall Street Journal said, Beijing and Riyadh seek to deepen ties and advance a vision of a multipolar world where the US no longer dominates the global order.
At its core, therefore, both China and Saudi Arabia see the US retrenchment gathering momentum in the West Asian region.
One major item of discussion during Xi’s visit to Saudi Arabia will be the latter’s Look East foreign-policy strategy that anticipated the US retrenchment at least by the middle of the last decade. Xi’s visit to Saudi Arabia in 2016 was a landmark event.
This latest round of talks and agreements comes very shortly after the signing of a multi-pronged memorandum of understanding (MoU) between the Saudi Arabian Oil Company, formerly the Saudi Arabian American Oil Company – ‘Aramco’, and the China Petroleum & Chemical Corporation (Sinopec), which can be regarded as a critical step in China’s ongoing strategy to secure Saudi Arabia as a client state. As the president of Sinopec, Yu Baocai, himself put it: “The signing of the MoU introduces a new chapter of our partnership in the Kingdom, The two companies will join hands in renewing the vitality and scoring new progress of the Belt and Road Initiative [BRI] and Saudi Arabia’s Vision 2030.”
As a reminder, back in March 2018, China introduced yuan-priced oil contracts as part of its efforts to make its currency tradable across the world, but they haven’t made a dent in the dollar’s dominance of the oil market, largely because the USD remained the currency of choice for oil exporters. But, as Pozsar also noted recently, for China the use of dollars has become a hazard highlighted by US sanctions on Iran over its nuclear program and on Russia in response to its invasion of Ukraine.
Today’s historic transition is not exactly a surprise: China has been stepping up its courtship of the Saudi kingdom in recent years, helping Saudi Arabia build its own ballistic missiles, consulting on a nuclear program, and investing in Crown Prince Mohammed bin Salman’s pet projects, such as Neom, a futuristic new city.
If Saudi Arabia joins BRICS, it would be a promotion to the Middle East countries to strengthen their ties with BRICS countries and weaken the intervention and influence of the US in the area. The oil for security framework between Saudi Arabia and the US needs to be adjusted in light of the evolving international situation.
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