- Xi says Gulf-Arab League summit ‘landmark’
- The US is wary of growing Chinese influence in the Arab world
- Arabs defy US pressure to limit ties with China and cut off Russia
- The summits show Saudi Crown Prince Mohammed as a key leader
RIYADH, Dec 9 (Reuters) – President Xi Jinping told Gulf Arab leaders on Friday that China will work to buy oil and gas in yuan, a move that would support Beijing’s aim to establish its currency internationally and weaken the US dollar’s hold on world trade. .
Xi was speaking in Saudi Arabia, where Crown Prince Mohammed bin Salman hosted two “landmark” Arab summits with the Chinese leader that showcased the powerful prince’s regional fortitude as he courts partnerships beyond close historical ties with the West.
Top oil exporter Saudi Arabia and economic giant China sent strong messages during Xi’s visit about “non-interference” at a time when Riyadh’s relationship with Washington has been tested on human rights , energy policy and Russia.
Any move by Saudi Arabia to abandon the dollar in its oil trade would be a seismic political move, which Riyadh has previously threatened in the face of possible US legislation exposing OPEC members to antitrust lawsuits.
China’s growing influence in the Gulf has puzzled the United States. Deepening economic ties were touted during Xi’s visit, where he was received with pomp and ceremony and on Friday met with Gulf states and attended a broader summit with leaders of Arab League countries in Gulf, the Levant and Africa.
At the start of the talks on Friday, Prince Mohammed announced a “historic new phase in relations with China”, a stark contrast to the awkward meetings between the US and Saudi Arabia five months ago, when the president Joe Biden attended a smaller Arab summit in Riyadh.
Asked about his country’s relations with Washington in light of the warmth shown to Xi, Foreign Minister Prince Faisal bin Farhan Al Saud said Saudi Arabia would continue to work with all its partners. “We don’t see it as a zero-sum game,” he said.
“We don’t believe in polarization or choosing between sides,” the prince told a news conference after the talks.
While Saudi Arabia and China signed several strategic and economic partnership agreements, analysts said relations would remain anchored mainly by energy interests, although Chinese companies have made inroads into technology sectors and infrastructures.
“Energy concerns will remain front and center in the relationship,” Robert Mogielnicki, a resident researcher at the Arab Gulf States Institute in Washington, told Reuters.
[1/4] Saudi Crown Prince Mohammed Bin Salman meets with Chinese President Xi Jinping in Riyadh, Saudi Arabia, December 8, 2022. Saudi Press Agency/Handout via REUTERS
“The Chinese and Saudi governments will also look to support their national advocates and other private sector players to move forward with trade and investment deals. There will also be more cooperation on the technology side of things, prompting concerns familiar to Washington.” .
Saudi Arabia agreed to a memorandum of understanding with Huawei this week on cloud computing and the construction of high-tech complexes in Saudi cities. The Chinese tech giant has been involved in building 5G networks in the Gulf states despite US concerns about a possible security risk in the use of its technology.
NATURAL PARTNERS
Saudi Arabia and its Gulf allies have defied US pressure to limit deals with China and break with fellow OPEC oil producer + Russia over its invasion of Ukraine, as they try to navigate for a polarized world order looking at economic and national security interests.
Riyadh is one of China’s major oil suppliers, and the two countries reaffirmed in a joint statement the importance of global market stability and energy cooperation, while striving to boost non-oil trade and improve cooperation in peaceful nuclear energy.
Xi said Beijing would continue to import large amounts of oil from the Gulf Arab countries and expand imports of liquefied natural gas, adding that their countries were natural partners that would further cooperate in oil and gas development.
China will also “make full use of the Shanghai National Oil and Gas Exchange as a platform to carry out yuan settlement of oil and gas trade,” he said.
Beijing has been pushing to use its yuan currency in trade instead of the US dollar.
A Saudi source, speaking ahead of Xi’s visit, told Reuters that the decision to sell small amounts of oil in yuan to China could make sense to directly pay for Chinese imports, but “it is not yet the right time.”
Most of Saudi Arabia’s assets and reserves are in dollars, including more than $120 billion of US Treasuries held by Riyadh, and the Saudi riyal, like other Gulf currencies, is pegged to the dollar.
Earlier, the Chinese leader said his visit heralded a new era in relations, and expressed hope that Arab summits would become “important events in the history of China-Arab relations.”
Additional reporting by Eduardo Baptista in Beijing, Riham Alkousaa, Ahmad Ghaddar and Lina Najm in Dubai Writing by Ghaida Ghantous and Dominic Evans Editing by Mark Heinrich, William Maclean and Mark Potter
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