Saudi Arabia and China: Economic Alliance and Its Impact

The relations between Saudi Arabia and China have witnessed significant leaps since the beginning of the 21st century, transitioning from limited trade exchanges to a multidimensional strategic partnership. This cooperation initially focused on Saudi oil exports to China, which formed the backbone of trade between the two countries. With China's increasing energy needs due to its rapid industrial growth, it found a reliable partner in Saudi Arabia to secure its oil requirements. In return, the vast Chinese market opened up to Saudi products, especially in petrochemicals and minerals.

China's Belt and Road Initiative has further integrated Saudi Arabia into the Asian trade and investment system, making the Kingdom a pivotal hub for transcontinental projects. The goals of this initiative align with Saudi Vision 2030, which focuses on diversifying the economy and attracting foreign capital, contributing to the consolidation of cooperation between the two countries through joint projects and substantial direct investments in energy, infrastructure, and technology.

Cooperation is no longer limited to the government; it has extended to the private sector and major companies such as Aramco and SABIC, as well as the entry of Chinese companies into projects within the Kingdom. This new dynamic has made Saudi-Chinese relations a model for economic integration in the current century.

Official data indicates that China has topped the list of Saudi Arabia's trading partners in recent years, with the annual trade volume between the two countries exceeding $40 billion in 2023. Saudi crude oil accounts for about 20% of the Kingdom's total exports to China, with an average of approximately 1.4-1.65 million barrels per day during 2024-2025. Saudi shipments to China reached record levels in mid-2025, supported by Aramco's price cuts and increased Chinese demand for energy.

The exchange is not limited to oil; it also includes petrochemical products, minerals, and agricultural products. On the other hand, Saudi Arabia imports a variety of Chinese products, including heavy machinery, electronics, and construction materials. These indicators show that the bilateral relations are characterized by increasing economic integration, with expectations for continued growth in trade volume as the global economy recovers and joint investments expand.

In recent years, there has been a flow of direct Chinese investments into Saudi Arabia, particularly in renewable energy, petrochemicals, infrastructure, and technology projects. Among the most notable investments is the signing of an agreement between the Saudi Sarim Petrochemicals Company and the Chinese Sinopec to establish a massive polyolefin production complex in Yanbu, valued at approximately $4 billion. Chinese companies have also expanded in the construction sector by participating in the construction of ports and railways, contributing to mining projects and developing information and communication technologies.

This is in line with a clear Saudi policy to attract foreign investments and provide an attractive investment environment through economic reforms, making the Kingdom a preferred destination for Chinese capital seeking to enhance its presence in the Middle East. These investments contribute to technology transfer, create local job opportunities, and increase the added value to the Saudi economy.

The energy sector remains the cornerstone of Saudi-Chinese relations, as China primarily relies on Saudi oil to meet its industrial needs, while Saudi Arabia depends on the Chinese market as its largest oil buyer. The average Saudi oil exports to China reached about 1.65 million barrels per day in October 2025, the highest level in two years. These exports account for about 20% of the Kingdom's total production, positively reflecting on the revenues of Saudi oil companies, led by Aramco.

The oil partnership extends beyond trade, with large-scale joint projects in petrochemicals, such as the "Sinopec-Aramco" complex in Yanbu, as well as cooperation in developing renewable energy and natural gas technologies. This demonstrates the increasing interest from both sides in diversifying energy sources and exploring new avenues for cooperation in hydrogen and clean energy, aligning with Saudi Vision 2030 goals and China's commitment to reducing carbon emissions.

Saudi Aramco (Tadawul: 2222) stands out as the most prominent example of the impact of Saudi-Chinese relations on the performance of companies listed in the Saudi financial market. As the world's largest oil exporter, Aramco relies heavily on the Chinese market to sell a significant portion of its production. The company has seen a notable increase in its exports to China during 2024 and 2025, which has reflected positively on its financial results.

Aramco's share price reached around 34 riyals in November 2025, with a market capitalization of approximately 4.1 trillion riyals. The company recorded an 11% growth in third-quarter 2024 profits compared to the previous year, supported by increased Asian demand, particularly from China. Aramco has also entered into several strategic partnerships with Chinese companies such as Sinopec and Sinochem in petrochemical and renewable energy projects.

Other companies like SABIC (Tadawul: 2010) also benefit from Chinese demand for chemicals, while Saudi companies in the technology and renewable energy sectors have begun attracting Chinese investments within the framework of Vision 2030.

In a notable development, there has been an increasing Chinese trend towards investing in Saudi stocks through the launch of exchange-traded funds (ETFs) focusing on the Saudi market. In July 2024, two exchange-traded funds were announced in China, allowing Chinese investors to invest in shares of companies listed on Tadawul.

This represents an important step to enhance liquidity and attract foreign capital to the Saudi financial market. It also reflects the interest of Chinese investors in the opportunities available in the energy, petrochemicals, infrastructure, and technology sectors in the Kingdom. The growth of this type of financial product is expected to strengthen the ties between the two markets and aligns with Saudi Arabia's direction to internationalize its financial market and increase its attractiveness for foreign investments.

In addition to energy, the petrochemicals and technology sectors emerge as key drivers in the Saudi-Chinese partnership. Chinese companies are investing in Saudi petrochemical plants and participating in the development of massive industrial complexes aimed at producing high-value materials for global and specifically Chinese markets. For example, Sinopec is collaborating with Aramco on joint projects to produce polyolefins in Yanbu.

In technology, leading Chinese companies such as Lenovo and Huawei have announced plans to expand their presence in Saudi Arabia, establishing regional centers and contributing to the development of 5G networks in collaboration with Saudi telecommunications companies. This trend reflects both countries' desire to transfer technical knowledge and localize modern industries, enhancing the competitiveness of the national economy and supporting digital transformation goals under Vision 2030.

Politics and bilateral agreements play a pivotal role in driving economic cooperation between Saudi Arabia and China. The year 2025 witnessed several high-level ministerial and economic meetings that resulted in the signing of new agreements in the fields of energy, investment, technology, and education. These agreements aim to eliminate obstacles for investors, enhance investment protection, and facilitate the movement of capital and technologies between the two countries.

Regulatory bodies such as the Saudi Capital Market Authority are working to develop legislative frameworks to attract Chinese investments and facilitate the listing of new financial products that enhance the interconnection between the two markets. This is essential for the sustainability of the strategic partnership and attracting more foreign capital to the Saudi market.

The economic relations between Saudi Arabia and China and the Saudi financial market are affected by global geopolitical and trade fluctuations, especially tensions between China and the United States. When relations between these two global economic powers escalate, trade and investment trends may change, impacting investor sentiment in the Gulf.

For example, the imposition of tariffs or trade restrictions between the U.S. and China may lead to increased Chinese reliance on oil imports from safer sources like Saudi Arabia, thereby boosting demand for Saudi products. Conversely, these tensions may create uncertainty in financial markets and affect corporate strategies in the region. Therefore, it is essential for investors to monitor global developments and their impact on the local market.

Saudi Arabia and China have explored the possibility of diversifying trade instruments between them by using the Chinese yuan instead of the dollar in some transactions, as part of China's efforts to enhance the international status of its currency. So far, Saudi oil is still priced in U.S. dollars in official contracts, but there are preliminary steps to use the yuan in some trade exchanges, especially in joint infrastructure projects.

This contributes to reducing currency fluctuation risks on trade exchanges and provides new financing options for Saudi and Chinese companies. It also paves the way for launching new financial products that allow Chinese investors to invest in Saudi assets more easily, enhancing the flexibility of the financial market in the face of global monetary shifts.

The year 2024 witnessed unprecedented facilitation in granting entry visas to Chinese citizens to Saudi Arabia under the electronic tourism visa program. China was included in the list of countries eligible for an electronic visa or visa-free entry, resulting in a significant increase in the number of Chinese tourists.

This positively reflects on the hospitality, retail, and services sectors in the Kingdom and enhances cultural exchange between the two peoples. It also opens the door to new investments in the tourism sector and represents a strategic step to diversify national income sources, aligning with Vision 2030 goals. Cooperation in education and training is expected to increase, contributing to knowledge transfer and localization of competencies.

Despite the significant momentum in economic relations between Saudi Arabia and China, there are several risks and challenges that must be considered. Fluctuations in oil prices and global demand top the list of challenges, as any sharp decline in Chinese demand or a drop in crude prices negatively impacts the revenues of Saudi companies. Competition from oil and petrochemical producers in the Gulf, Russia, and the U.S. poses a challenge to the Kingdom's market share in the Chinese market.

On the other hand, legislative or political changes in either country or at the international level may affect the flow of investments and trade. Additionally, projects for technology transfer and localization of modern industries require substantial investments and intensive training for local competencies. Therefore, these risks should be monitored when considering any investment opportunities related to Saudi-Chinese relations.

Current data indicates that the Saudi-Chinese partnership is poised for further expansion and deepening in the coming years. The renewable energy, technology, mining, and infrastructure sectors are expected to witness greater collaboration, supported by joint projects and new financing. Opportunities may also arise for the listing of Saudi companies in Chinese market indices, or vice versa, enhancing the integration of financial markets.

On the policy front, the coordination of legislative frameworks to facilitate the movement of capital and technologies is likely to continue. Cultural and tourism exchanges will take a larger role in bilateral relations, reflecting on new consumer and service sectors. The energy sector will remain a key focus, but with a diversification of cooperation sources to align with global shifts towards sustainability and clean energy.