Xi Jinping Gets Saudi Red Carpet as Middle East Looks Beyond US

(Bloomberg) — Two months after rejecting U.S. President Joe Biden’s requests for oil, Saudi Arabia is rolling out the red carpet for its Chinese counterpart Xi Jinping.

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Xi will visit Saudi Arabia for several days starting Wednesday, during which he will participate in a regional summit with Saudi Crown Prince Mohammed bin Salman and other Arab leaders, the kingdom’s SPA state news agency said Tuesday, promising a deal worth about $30 billion. Energy and infrastructure deals will top the agenda, according to two people briefed on the plans.

China confirmed the trip on Wednesday morning, a day after it led the nation in mourning the death of former leader Jiang Zemin in the wake of recent protests against its Covid Zero policy. The summit will give both Xi and Prince Mohammed an opportunity to showcase the Gulf’s close ties to Beijing, underscoring how far US-Saudi relations have sunk.

“This visit is the culmination or crown of the deep strengthening of relations over the past few years,” said Ali Shihabi, a Saudi commentator and member of the advisory board for the kingdom’s Neom megaproject. “The US is concerned about this but this will not slow down the already strong relationship.”

US-Saudi relations hit a low point in October when Biden accused Riyadh of colluding with Russia over oil production cuts and vowed “consequences”. However, relations have been sour for some time now as the US has turned its global focus on competition with China.

It’s been a decade since the US was Riyadh’s biggest trading partner, and not only has China overtaken the US in that time, but so have India and Japan. Total US-Saudi trade fell from about $76 billion in 2012 to $29 billion last year.

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That’s in part because the US shale industry means it no longer imports much Middle East oil; China is now Saudi Arabia’s top crude customer – and regional oil exporters will be keen for information on China’s plans to lift Covid restrictions.

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Yet Washington has also rattled Saudi over its efforts to – now all but – return to the nuclear deal with regional Saudi rival Iran, while Riyadh’s powerful alliance with Russia and other oil exporters in OPEC+ is another point of friction.

“For Arab states, it’s all potentially about options.”

“It’s high time we stop seeing this as purely about economic and trade relations,” said Cinzia Bianco, a visiting fellow at the European Council on Foreign Relations who focuses on the Gulf. “For Arab states, it’s all potentially about options.”

Beijing is picking up some of that economic and political slack.

Over the past six months, Jane’s IntelTrack Belt and Road Monitor has tracked US-blacklisted telecom firm Huawei Technologies Co. across the Middle East. Increased activity was noted by; China’s State Grid Corporation was looking at investment opportunities in regional electricity transmission and distribution; And Saudi Arabia and China agreed to coordinate their investments in nations participating in the Belt and Road Initiative.

Negotiations on a free trade agreement between China and the six-nation Gulf Cooperation Council are entering the “final stage,” China’s ambassador to the United Arab Emirates, Zhang Mingi, said last month. Zhang also referred to a memorandum on lunar exploration signed with the UAE.

Gulf states see the US as an increasingly unreliable partner and want to “take advantage of the new global multipolar landscape that presents new opportunities,” said Elham Fakhro, a research fellow at the University of Exeter’s Center for Gulf Studies. By doing so, they can “strengthen their own bargaining power with the United States,” she said.

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However, the US Saudi Arabia maintains a significant troop presence in and across the region, and there are limits to how far the Gulf states will look elsewhere.

It is seen as unlikely, for example, that Saudi Arabia will go ahead with the idea of ​​accepting yuan payments instead of dollars for oil, two people briefed on the preparations said, citing reports earlier this year. Diplomats and analysts said at the time that the reports should be seen as a political message to the US rather than imperial plans.

While Donald Trump chose Riyadh for his first foreign trip as president, Biden came into office vowing to treat the crown prince as a pariah for his part in the assassination of columnist Jamal Khashoggi.

But due to high inflation in the midterm elections, he swallowed his pride and visited the state in July to seek help to lower global oil prices.

It appeared to be making some progress, expressing optimism that Riyadh would take steps to comply – only to announce production cuts for Saudi Arabia and OPEC+. An angry Biden said it was time for the US to rethink the relationship.

Buoyed by high oil revenues fueled by Russia’s war, the Saudi crown prince has presented the kingdom as a power capable of withstanding American pressure.

China has cheered from the sidelines: Foreign Minister Wang Yi praised the kingdom’s “independent energy policy” and efforts to stabilize the international energy market after meeting with his Saudi counterpart in October. Wang also thanked Riyadh for its “long-term and steadfast support” on issues including Taiwan, Xinjiang, Hong Kong and human rights — all touchstone issues for the US.

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China has praised Saudi Arabia’s ‘independent’ energy policy

“There is a real synergy in the relationship,” said Jonathan Fulton, a nonresident senior fellow at the Atlantic Council, focusing on China’s ties to the Gulf.

Where “the US talks about a great power game” and focuses on counter-terrorism, China is helping to alleviate domestic concerns. He said the result is less about China trying to replace the US than that the two countries play completely different games when it comes to the Middle East.

As China held its last biennial dialogue with Arab states in July 2020, Saudi Aramco revived discussions to build a multi-billion dollar refining and petrochemicals complex in China.

Saudi Arabia began working with Huawei to develop artificial intelligence systems, and the kingdom is using Chinese expertise to build its own drones. According to a US intelligence assessment, it is also known to be manufacturing ballistic missiles with the help of China.

It’s not all one way, though. High oil prices hurt China as well as the US and Beijing nurtures closer ties with Saudi Arabia’s main rival, Iran. China cannot replicate US military support for the region.

U.S. State Department counselor Derek Cholette said at a briefing in Kuwait ahead of Xi’s visit that the U.S. is not asking countries to choose between Washington and Beijing but to be “mindful” of the relationship they are developing.

“Our assessment is that China, in its efforts to build relationships in the region, is not interested in building a mutually beneficial partnership,” he said.

–With assistance from Jing Li, Alfred Kang, Matthew Martin and Fiona McDonald.

(Updates with confirmation from China in paragraph 3)

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