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

Economic relations between Saudi Arabia and China began to expand significantly in the late twentieth century, but the last two decades have witnessed a qualitative shift in the volume and level of cooperation between the two countries. As the Chinese economy developed and became the second-largest economy in the world, its energy needs increased, making Saudi oil a strategic choice to meet this growing demand. In turn, Saudi Arabia sought to diversify its income sources and enhance its international partnerships, finding in China a reliable and sustainable economic partner.

By 2024, China had become the largest importer of Saudi oil, making it a pivotal player in stabilizing the Kingdom's oil revenues. Cooperation has not been limited to the energy sector but has extended to various fields such as construction, technology, industrial development, and agriculture. Cooperation received a strong boost after the launch of Saudi Vision 2030, where Saudi leadership focused on attracting foreign investments, finding in the Chinese Belt and Road Initiative a suitable platform to enhance joint projects.

In recent years, dozens of trade agreements and memorandums of understanding have been signed, covering financing energy projects, exchanging industrial expertise, and supporting digital innovation. Notable examples include Chinese banks financing massive projects in the Saudi gas and energy sector and the participation of Chinese construction companies in executing major infrastructure projects in new cities like NEOM and the Red Sea.

These developments have made Saudi-Chinese economic relations a model for integration between a resource-rich emerging economy and a giant industrial economy, establishing a solid foundation for continued cooperation in the coming decades. Official entities and the private sector in both countries continue to enhance dialogue and partnership, directly reflecting on the performance of vital sectors in the Saudi financial market.

The volume of trade between Saudi Arabia and China represents one of the most prominent indicators of the strength of the economic relationship between the two countries. Recent years have recorded record figures in the volume of exports and imports between the two parties. In 2024, the volume of bilateral trade exceeded tens of billions of dollars annually, with China ranking first as the largest importer of Saudi oil, with its imports accounting for approximately 20-25% of total Saudi oil exports in the first quarter of 2024, according to official data.

Trade was not limited to oil but also included petrochemical products, metals, raw materials, and agricultural products. On the other hand, Saudi Arabia imports from China industrial equipment, electronics, cars, building materials, and various technological products. This trade exchange gains special importance in light of Saudi Arabia's efforts to develop its infrastructure and modernize its vital sectors technologically and industrially.

Figures show that Saudi exports to China are continuously increasing, supported by rising Chinese demand for energy and petrochemical products, while Saudi imports of Chinese products are expanding with the growth of construction and technological projects. Mid-2025 reports indicate that Chinese banks continued to inject financing into massive Saudi projects, such as their billions of dollars contribution to financing the Al-Jubail gas project of Aramco.

These indicators reflect the depth of economic interdependence between the two countries, as Saudi Arabia increasingly relies on the Chinese market as a primary source of oil revenues, while China counts on Saudi Arabia as a reliable energy supplier and partner in developmental projects. This trade exchange directly affects the indicators of the Saudi financial market, especially in sectors related to energy and industry, increasing the interconnection between the two financial markets and providing new opportunities for capital flow between the two countries.

The relationship between the Chinese economy and the Saudi financial market is clearly demonstrated in the impact of Chinese growth indicators and economic policies on the performance of key sectors in the Kingdom. China, as the largest importer of Saudi oil, plays a pivotal role in determining global oil demand levels and prices, which directly reflects on the profits of Saudi companies listed in the financial market, especially those operating in the energy, petrochemical, and construction sectors.

Any economic slowdown in China or changes in its central bank policies—such as raising or lowering interest rates or adjusting reserve requirements—quickly show repercussions in emerging markets, including the Saudi financial market. For example, if Chinese economic growth slows, oil demand may decrease, leading to a global price drop, thereby reducing revenues for the Saudi government and oil companies, which reflects on stock performance in the Tadawul market.

Conversely, Chinese expansionary policies, such as injecting investments into infrastructure projects or supporting industry, stimulate demand for raw materials and energy, enhancing sales for Saudi companies and leading to improved indicators in the local financial market. Additionally, the stability of the Chinese economy and the confidence of Chinese investors drive more capital into the Saudi market, especially after easing restrictions on foreign ownership and facilitating the entry of international investment funds.

The period from 2024 to 2025 witnessed growth in the shares of foreign funds, including Chinese ones, in the Saudi stock market, where the general index recorded positive performance supported by a rebound in corporate profits, particularly in the energy and industrial sectors. These phenomena confirm the extent of the Saudi financial market's interconnection with economic developments in China and highlight the importance for investors and decision-makers to monitor Chinese economic indicators as a significant factor influencing the performance of the Saudi market.

Chinese investments in Saudi energy and infrastructure projects represent one of the most important aspects of cooperation between the two countries, as the Kingdom benefits from Chinese financing and technical capabilities to support its mega-projects under Vision 2030. In recent years, Saudi Arabia has witnessed a wave of Chinese financing for massive strategic projects, most notably the financing of the Al-Jubail gas project by the Industrial and Commercial Bank of China and Bank of China, with an estimated financing value of around $3.75 billion.

Chinese investments are not limited to traditional energy sectors but also include gas, renewable energy, and industrial facilities. These investments contribute to accelerating project implementation and reducing financing costs, thanks to the competitive advantages provided by Chinese banks and institutions. Chinese companies also offer their expertise in engineering and construction, participating in building power plants, factories, and smart infrastructure networks.

On the other hand, the importance of the Chinese partnership in developing new economic cities in the Kingdom, such as the NEOM area, Red Sea projects, and special industrial zones, is highlighted. These projects are often implemented through public-private partnerships, with the involvement of specialized Chinese construction companies in project management and the supply of modern equipment.

These investments lead to increased demand for local construction materials such as cement and steel, which reflects on the growth of Saudi cement companies and increases their production and profits. They also contribute to technology and knowledge transfer and support training Saudi personnel on the latest industrial systems. Thus, Chinese investments form a fundamental pillar in achieving Saudi economic development goals and support the stability of the financial market through the injection of new capital and investments into vital sectors.

The Saudi cement sector is one of the main beneficiaries of the wave of economic cooperation between Saudi Arabia and China, especially in light of the increasing mega infrastructure projects being implemented by the Kingdom with the participation or financing of Chinese companies. With the launch of new cities and special economic zones, the demand for cement and construction materials has risen, which has reflected in the growth of production and sales of local companies.

Reports from the financial platform "Argaam" indicate that the total profits of Saudi cement companies reached about 2.0 billion riyals during the first nine months of 2024, while their net profits in the third quarter alone reached 648.3 million riyals. These results are attributed to improved demand for cement due to intensive construction activity, which is often supported by financing or execution from Chinese entities. Cement companies have also seen an increase in their clinker inventories in preparation for a new wave of local and foreign projects.

Data shows that giant housing projects and the development of infrastructure in major cities like Riyadh and Jeddah are often carried out in cooperation with Chinese construction companies, increasing local cement demand and boosting sales for Saudi companies. On the other hand, Chinese investments contribute to modernizing cement factory production lines by supplying advanced equipment and modern technology to improve efficiency and reduce operating costs.

Despite international competition from foreign cement companies, the local market remains relatively protected, giving Saudi companies like Hail Cement and their peers an opportunity to grow and benefit from the construction boom. Recent financial results indicate that the cement sector is witnessing a recovery driven by Saudi-Chinese cooperation, with expectations for this dynamic to continue as massive development projects in the Kingdom are executed.

Hail Cement Company (symbol 3001) is one of the medium-sized companies in the Saudi cement sector, established in the 1980s to meet the growing demand for construction materials in the Hail region and northern Saudi Arabia. The company operates a main factory with a medium production capacity, primarily serving the markets of northern Saudi Arabia and government and private projects in those areas.

Financially, the company's market value is estimated at several hundred million Saudi riyals, with the stock typically trading in the range of 20-30 riyals during 2025. The stock is noted for significant short-term volatility due to the limited activity of the company and its regional focus, with daily trading liquidity lower than larger companies in the sector.

Hail Cement's stock has performed modestly in recent years, with the company's net profits for 2023 reaching about 24.6 million riyals, reflecting a slight decline compared to some previous periods. In the first quarter of 2024, the company recorded net profits of about 15 million riyals, down 19% from the same period in 2023. Cash dividends remain limited or nearly nonexistent, as the company prefers to reinvest modest profits to update factories and reduce costs.

The company faces strong competition from major cement companies with higher market shares and larger production capacities, such as Saudi Cement (3005), Yanbu Cement (3039), and Arabian Cement Company (3110). Nevertheless, Hail Cement remains part of the positive dynamics of the sector and benefits from any increase in local demand resulting from government projects or Chinese investments in construction and infrastructure.

The financial performance of Hail Cement Company has shown significant fluctuations during the period 2023–2025, affected by changes in cement demand, rising operating costs, and intense competition from larger companies. In 2023, the company recorded net profits of 24.6 million riyals, representing a slight decline in profitability compared to profits from some previous years. In the first quarter of 2024, net profits reached 15 million riyals, down 19% from the same period in 2023, due to rising energy and raw material prices and price pressures in some local markets.

Regarding financial market indicators, the company's price-to-earnings (P/E) ratio is over 40–50 times, which is relatively high and reflects limited profits compared to the stock price. The earnings per share (EPS) remains low, at about 0.246 riyals per share in 2023 (based on approximately 100 million shares), while the stock price at the end of 2025 exceeds 20 riyals. Thus, the investment attractiveness of the stock appears moderate, as it does not offer high returns compared to larger competitors.

Cash distributions to shareholders in recent periods have been nearly nonexistent or symbolic, as the company prefers to maintain liquidity for investment in factory development and to cope with market fluctuations. The company's ability to improve its profitability in the future depends on rising local demand for cement, its expansion into neighboring markets, or updating production lines to reduce costs.

Hail Cement remains an example of medium-sized companies in the Saudi cement sector that are directly affected by general economic conditions and government project trends, while also benefiting indirectly from any boom resulting from Saudi-Chinese cooperation in the construction and infrastructure sectors.

The Saudi cement sector operates in a highly competitive environment that includes several large and medium-sized companies, with players like Saudi Cement (3005), Yanbu Cement (3039), and Arabian Cement Company (3110) standing out as the largest in terms of market share and production capacity. In contrast, Hail Cement occupies a medium position in the sector, with relatively lower productivity and sales, but maintains a strong presence in northern Saudi Arabia.

Larger companies have a greater ability to achieve high profits and provide attractive dividends to shareholders. For example, Saudi cement companies collectively recorded profits of 2.0 billion riyals in the first nine months of 2024, while Hail Cement's profits did not exceed 24.6 million riyals in 2023. Additionally, the P/E ratio for larger companies is often lower than that of Hail Cement due to higher net profits relative to the stock price.

Larger companies rely on market and regional diversity, giving them flexibility to cope with fluctuations in local demand. They often benefit from large government contracts and projects, some of which are directly linked to joint projects with Chinese companies or international financing. In contrast, Hail Cement focuses its activities in a limited geographical area, making it more sensitive to changes in local demand.

Despite these differences, all companies in the sector benefit from the construction boom that the Kingdom is witnessing, fueled by Chinese investments and massive infrastructure projects. Additionally, modernizing production lines and adopting advanced Chinese technologies contributes to improving the efficiency of local companies, including Hail Cement. The diversity in size and productivity serves as a motivation for medium-sized companies to enhance their performance and keep pace with competition through investment in development and sound management.

Saudi government policies and Vision 2030 initiatives play a pivotal role in stimulating the cement sector and supporting the growth of local companies. Vision 2030 aims to diversify the Saudi economy and reduce dependence on oil by launching massive projects in infrastructure, housing, transportation, and smart cities. These projects primarily rely on local building materials, raising demand for cement and enhancing sales for companies operating in the sector.

The Saudi government has launched several initiatives supporting the sector, including developing special economic zones and stimulating investment in new cities like NEOM, the Red Sea, and Qiddiya. It has also facilitated the entry of foreign companies, including Chinese firms, to invest and participate in project implementation, contributing to bringing advanced technologies and international expertise that have helped modernize the Saudi construction sector.

On the financial policy front, the government has eased restrictions on foreign ownership in the financial market, encouraging international investment funds (including Chinese ones) to acquire stakes in Saudi cement companies. Credit facilities and financing guarantees for housing and infrastructure projects have also been provided, increasing the pace of project implementation and stabilizing demand for cement.

The effects of these policies are reflected in the rising financial performance of cement companies, which recorded increases in profits and sales during 2024–2025. Government initiatives have also helped protect the local market from unfair international competition by imposing protective tariffs on imports and providing logistical support to Saudi companies. Thus, government policies and Vision 2030 initiatives remain a fundamental pillar for the growth and expansion of the cement sector in the coming years.

Chinese bank financing for Saudi projects is one of the most prominent aspects of economic cooperation between the two countries, providing substantial financial resources for strategic projects in energy, infrastructure, and industry. For example, the Industrial and Commercial Bank of China and Bank of China participated in financing the Al-Jubail gas project of Aramco with nearly $3.75 billion, reflecting the confidence of Chinese financial institutions in the strength of the Saudi economy.

Chinese financing offers competitive terms in terms of interest rates and repayment periods, helping Saudi companies implement projects more efficiently and at lower costs. It also contributes to attracting Chinese contracting companies to participate in project execution and transferring technology and knowledge to the Saudi market. These financings open the door to new partnerships in sectors such as renewable energy, smart transportation, and real estate development.

However, these financings face some challenges, including risks associated with currency fluctuations, changes in economic policies in China, and the need to comply with Saudi regulatory standards and ensure local knowledge transfer. Partnerships with Chinese institutions also require effective contract management and agreements to maximize the benefits from the expertise and resources provided by China.

Overall, Chinese financing opens wide horizons for the Saudi economy to accelerate the implementation of strategic projects and supports the growth of vital sectors such as cement and construction, but it requires prudent management and long-term planning to maximize benefits and minimize risks.

Economic cooperation between Saudi Arabia and China is influenced by overall changes in the global economy, such as fluctuations in oil prices, shifts in supply chains, and changes in international trade policies. As trade tensions between China and the U.S. escalate, China's desire to strengthen partnerships with Middle Eastern countries, led by Saudi Arabia, increases to ensure energy security and diversify trade sources.

On the other hand, changes in oil prices directly affect the budgets of both countries, especially Saudi Arabia, which heavily relies on oil revenues. When oil prices rise due to increased Chinese demand or global supply disruptions, Saudi Arabia benefits from increased revenues, positively reflecting on infrastructure projects and investments in non-oil sectors. Conversely, if the Chinese economy experiences a slowdown or energy demand decreases, prices may drop, putting pressure on the Saudi government's budget and affecting its ability to implement major projects.

Additionally, changes in global supply chains affect the flow of raw materials and equipment from China to Saudi Arabia, which may cause delays or increase execution costs in joint projects. These challenges necessitate enhancing logistical integration and developing local infrastructure to reduce reliance on external sources.

Despite these challenges, Saudi-Chinese cooperation remains resilient due to shared strategic interests and both countries' willingness to develop innovative solutions to face global economic fluctuations. The Saudi financial market remains in a state of constant anticipation for international changes, as they have direct implications for growth and investment opportunities in the Kingdom.

The period between 2024 and 2025 witnessed several significant developments in the trajectory of Saudi-Chinese economic relations, which had a direct impact on the Saudi financial market and the cement sector. Among the most notable developments was a visit by a high-level Chinese delegation to the Kingdom in October 2025, where new cooperation agreements were signed in the fields of energy, technology, and infrastructure, reflecting the continued positive momentum in the partnership between the two countries.

On the financing front, Chinese banks continued to inject massive investments into Saudi energy projects, such as financing the Al-Jubail gas project managed by Aramco. Mid-2025 reports announced an increase in sales of Saudi cement companies and an increase in clinker inventories in preparation for implementing massive government and private projects, some in partnership with Chinese entities.

Hail Cement Company has seen stability in production despite rising operating costs for some facilities. The results for the first quarter of 2024 showed a net profit of 15 million riyals, down 19% from the same period in 2023, while the company did not announce significant cash distributions during this period. In contrast, major cement companies achieved high quarterly profits, with a combined profit of 648.3 million riyals in the third quarter of 2024.

These news items confirm the ongoing economic activity supported by Saudi-Chinese cooperation and the connection of local production sectors, such as cement, to the comprehensive development projects emphasized by the Kingdom, with investors looking forward to continuing to benefit from this dynamic in the coming years.

Saudi-Chinese economic cooperation represents a strategic axis for the future development of the Kingdom, as the partnership between the two countries opens wide horizons for growth in energy, industry, infrastructure, and technology sectors. With the continued implementation of Saudi Vision 2030, opportunities to attract Chinese investments in smart city development projects, sustainable transportation, and renewable energy are expected to increase, providing new opportunities for local companies, especially in the cement and construction materials sector.

China is expected to continue supporting Saudi energy projects, whether through financing or technology transfer, leading to increased demand for industrial products and local services. In the coming years, there may also be an expansion of cooperation in areas such as digital innovation, artificial intelligence, and vocational training, enhancing the competitiveness of the Saudi economy globally.

On the financial market side, the opening up to foreign investments provides new opportunities for Chinese investment funds to contribute to the growth of Saudi companies and exchange expertise in asset management and the development of innovative financial products. Additionally, the partnership between banks and financial institutions in both countries supports the development of the Islamic finance sector and the launch of new products that meet the needs of investors both locally and internationally.

However, challenges remain related to global economic fluctuations and the need to develop local legislation and infrastructure to meet the requirements of partnership with China. The success of these opportunities depends on the ability of Saudi companies to adapt to international standards, develop human resources, and enhance innovation in industrial and administrative processes. Overall, Saudi-Chinese relations hold immense potential for growth if strategically planned and sustainably cooperated.

The Saudi financial market (Tadawul) plays a pivotal role in enhancing the economic partnership with China by providing an effective platform for the flow of capital and investments between the two countries. With the easing of restrictions on foreign ownership and the development of the regulatory environment, the Saudi market has become more attractive to international investors, including Chinese institutions and funds.

Recently, there has been a significant increase in the shares of foreign investors in the Saudi market, especially in the energy, industry, and construction sectors, where Chinese investment funds have recorded record participation in purchasing shares of listed companies. These investments support the growth of local companies, enabling them to implement expansion projects and modernize production lines, positively reflecting on the overall financial market performance.

The Saudi financial market also opens the door for the listing of Chinese companies in the parallel market or through partnerships with Saudi companies to implement joint projects. It provides advanced financial instruments, such as sukuk and bonds, allowing Chinese investors to participate in financing government and private projects.

Moreover, the modern technical infrastructure of the market facilitates trading operations, providing transparency and efficiency in pricing stocks and financial instruments. The Saudi financial market remains a fundamental factor in attracting Chinese investments and enhancing financial integration between the two countries, supporting the stability and growth of the Saudi economy in the long term.

With the complexity of the economic landscape and the increasing interconnection between local and international markets, the need to consult a licensed financial advisor before making any investment decisions becomes paramount. Despite the significant opportunities presented by Saudi-Chinese relations, investing in stocks or projects linked to this partnership carries risks related to market fluctuations, changes in economic policies, and performance disparities between sectors and companies.

A qualified financial advisor can analyze financial data and economic indicators, providing an objective view of potential risks and returns, considering each investor's financial goals and risk tolerance. The advisor also helps diversify the investment portfolio and select financial products that align with individual needs, whether in terms of expected returns or the investment time horizon.

Additionally, the financial advisor keeps up with changes in regulatory frameworks and provides appropriate guidance to take advantage of available opportunities in the Saudi financial market or international markets. Continuous communication with a financial advisor is one of the most important factors for success in achieving investment goals in the medium and long term, especially in a changing economic environment like the one currently experienced by Saudi Arabia and China.

Therefore, it is always advised not to make individual investment decisions or rely solely on news and unofficial analyses, but to benefit from the expertise of certified financial advisors to ensure achieving the best financial results according to professional and regulatory standards.