Saudi Arabia and China: Economic Relations and Impact on the Financial Market

The relationship between Saudi Arabia and China has evolved significantly over the past decades, transitioning from limited diplomatic cooperation to a comprehensive strategic partnership. Official meetings began in the 1980s, but real openness came with China's rise as a global economic power and the increasing Chinese demand for energy, specifically Saudi oil. In the last decade, relations regained momentum with the launch of Saudi Vision 2030, focusing on diversifying national income sources and attracting foreign investments. Saudi Arabia has sought to enhance cooperation with China in energy, petrochemicals, technology, and logistics sectors. Conversely, China has targeted the Saudi market as a key station in the Belt and Road Initiative, investing in infrastructure and industrial projects within the Kingdom. Bilateral agreements have established frameworks for cooperation covering economy, trade, investment, and education, reflecting on institutional relations between Saudi and Chinese companies and opening the door to new strategic alliances.

The trade volume between Saudi Arabia and China is among the highest in the Middle East. In 2024 and 2025, Saudi oil exports to China reached daily rates estimated between 8 to 9 million barrels, representing about one-third of the Kingdom's production. On the other hand, Saudi Arabia imported electronic equipment, electrical appliances, and industrial machinery from China, with a high annual growth rate according to reports from the Saudi Customs Authority. Saudi exports to China also included petrochemicals and industrial products, while the Kingdom imported consumer and agricultural goods. Official indicators show that the value of bilateral trade exceeded tens of billions of dollars annually, making China the primary partner for Saudi Arabia in oil exports and one of its most important partners in other sectors. These figures reflect the significance of economic relations between the two countries and illustrate the interconnectedness of the Saudi financial market with Chinese developments.

Oil forms the backbone of economic relations between Saudi Arabia and China. China has long relied on Saudi oil imports as a fundamental pillar to meet its enormous industrial needs. In recent years, China has become the largest buyer of Saudi oil, and any changes in Chinese demand directly impact Saudi revenues and major companies like Aramco (Symbol: 2222). In turn, Chinese investments in refining and petrochemical projects within the Kingdom have strengthened, with major deals emerging such as the establishment of the Fujian Sinopec Aramco refinery project in China. This interconnection makes oil prices and revenues of major Saudi companies sensitive to movements in the Chinese economy, which in turn reflects on Tadawul market indicators and stocks related to energy and basic materials.

Saudi-Chinese partnerships extend beyond traditional trade exchanges to include advanced industrial and technological projects. Saudi companies like Aramco and SABIC have formed partnerships with major Chinese firms in refining, petrochemicals, and clean energy sectors. For instance, Aramco has signed investment agreements with Sinopec to develop joint projects in China and Saudi Arabia, while SABIC collaborates with Chinese companies in advanced chemical manufacturing. In the tech sector, companies like Huawei and Lenovo have established regional headquarters and research centers in Saudi Arabia, alongside the introduction of artificial intelligence technologies and smart solutions in Saudi infrastructure. These partnerships not only enhance trade exchange but also contribute to technology transfer and the development of local competencies, positively impacting the performance of listed companies on Tadawul and enhancing the attractiveness of the Saudi financial market for international investors.

Saudi-Chinese relations deeply influence indicators of the Saudi financial market, especially stocks in sectors linked to oil, petrochemicals, and industrial services. When Chinese demand for oil rises, companies like Aramco achieve record profits, directly reflecting on their stock prices and increasing their weight in major indices. Conversely, when there is a slowdown in the Chinese economy or changes in monetary policy, the trading activity of Saudi stocks related to raw materials and energy is affected. Additionally, the entry of Chinese investors through sovereign wealth funds into the Saudi market has increased trading volume in technology and clean energy sectors. Regulatory changes in the Saudi financial market, particularly opening the door for 100% foreign ownership of certain companies, encourage the influx of more Chinese capital, enhancing market liquidity and boosting the competitiveness of Saudi stocks on the global stage.

Several key sectors in the Saudi market are affected by the growing relationship with China. The most important of these sectors include:
- Energy and Petrochemicals: Saudi companies like Aramco and SABIC heavily rely on Chinese demand, both for oil exports and chemical products.
- Industrial and Manufacturing Sector: Through manufacturing and technology partnerships between Saudi and Chinese companies, such as importing smart production equipment.
- Communications and Technology: With major Chinese tech companies like Huawei and Lenovo entering the Saudi market and partnering with local telecom companies (STC, Mobily).
- Logistics and International Trade: The movement of goods and ports between the two countries relies on Saudi transport and shipping companies, reflecting on the performance of the logistics sector.
- Financial Services: With the entry of Chinese investments through sovereign wealth funds, the financial sector and Saudi banks supporting trade financing between the two countries have seen increased activity.
These sectors form the backbone of trade and investment relations, and any developments within them directly reflect on Tadawul market indicators.

Several Saudi and Chinese companies have emerged at the forefront of economic and investment cooperation. On the Saudi side, Aramco and SABIC are leading companies that have established strategic partnerships with major Chinese firms like Sinopec and Huawei. In the tech sector, Lenovo has opened a regional headquarters in Saudi Arabia to support expansion in the Middle East, while Huawei has signed agreements to develop 5G networks with local telecom companies. On the other hand, the Saudi-Chinese Trading and Investment Company acts as a strategic partner to provide innovative industrial and commercial solutions in collaboration with specialized Chinese companies in smart equipment. These partnerships create opportunities for knowledge and technology transfer, solidifying the presence of Saudi and Chinese companies in both local and international markets.

The Saudi market is witnessing strong competition between local and international companies amid the evolving relations with China. In the energy sector, Aramco competes with global oil companies but also collaborates with Chinese entities to develop joint projects. In industry, SABIC competes with international chemical companies but benefits from Chinese partnerships to transfer technology and increase production. In the tech sector, Saudi companies compete to attract the latest Chinese solutions in artificial intelligence and digital infrastructure. Meanwhile, local shipping companies compete to facilitate the movement of goods with China. This interplay of competition and cooperation enhances the dynamism of the Saudi market and increases its ability to attract foreign investments and develop vital sectors.

Political and economic developments play a crucial role in shaping the trajectory of Saudi-Chinese relations. Politically, official visits and bilateral meetings have led to the signing of strategic agreements in energy, industry, and education. Economically, changes in Chinese policies, such as supporting the local economy or lowering interest rates, affect the demand for Saudi oil and thus the performance of companies listed on Tadawul. Additionally, global trade tensions, especially between China and the United States, may cast a shadow over Saudi-Chinese trade relations, requiring investors to monitor news and international analyses to understand the implications of these developments on the Saudi market.

The years 2024 and 2025 witnessed significant developments in Saudi-Chinese relations. Aramco and Sinopec signed an agreement to establish a refining and petrochemical project in China valued at nearly $4 billion, aimed at processing one million barrels of Saudi oil daily. Lenovo also announced the opening of a regional headquarters in Saudi Arabia to support the tech sector. On another front, the Saudi Capital Market Authority has begun steps to open the main market to foreign investors, enhancing the role of Chinese capital in the Saudi market. Partnerships expanded in agriculture, fintech, and artificial intelligence, alongside increasing mutual investments. These developments reflect a trend toward deepening economic cooperation and expanding the base of partnerships between the two countries.

The Saudi-Chinese partnership directly impacts investors in the Tadawul market, especially those interested in energy, industrial, and technology stocks. An increase in Chinese demand for oil leads to higher profits and stock prices for oil companies, while the expansion of Chinese investments in industrial and tech sectors enhances growth opportunities for listed Saudi companies. At the same time, regulatory reforms and opening the market to foreign investment provide opportunities for Chinese investors, increasing market liquidity and diversifying investors. However, these opportunities come with challenges related to price volatility and the impact of global political and economic changes, necessitating investors to carefully study conditions and refer to official sources before making any investment decisions.

Economic relations between Saudi Arabia and China are expected to deepen and expand in the coming years. With the continued implementation of Saudi Vision 2030, the importance of partnership with China in renewable energy, technology, and advanced manufacturing is increasing. Chinese investments in the Saudi market are expected to rise, especially with the facilitation of regulatory procedures and lifting foreign ownership restrictions. Additionally, technology and artificial intelligence projects will play a key role in the upcoming phase, with the potential for new Chinese companies to enter the Saudi market. In the long term, Saudi-Chinese cooperation is likely to remain a key driver of Saudi economic growth and enhance the Kingdom's position as a regional investment hub.

The Saudi Capital Market Authority plays a pivotal role in regulating and facilitating foreign investments, including Chinese investments. During 2024 and 2025, the Authority launched initiatives to open the market to all non-resident foreign investors and raised foreign ownership limits for major companies. It also worked on updating regulatory frameworks to meet global requirements and attract Chinese capital. The Authority has also issued guidelines ensuring transparency and protecting investor rights, emphasizing the importance of consulting a licensed financial advisor before making any investment decisions. These efforts enhance the attractiveness of the Saudi market and support the goals of Vision 2030 to make the Kingdom a regional financial hub.

In light of the rapid changes in Saudi-Chinese relations, the importance of following official news and reports issued by relevant authorities such as the Capital Market Authority, Ministry of Investment, and specialized economic media becomes evident. These sources provide accurate information about the latest developments in partnerships, agreements, and regulatory changes. Companies like Aramco and SABIC publish periodic reports on their financial performance and the impact of international partnerships on their results. On the other hand, research centers like Argaam provide in-depth analyses of the performance of sectors and companies linked to China. Investors are always advised to refer to these sources and not rely on rumors or unofficial recommendations when making their investment decisions.