Chinese President Xi Jinping (R) and King of Saudi Arabia Salman bin Abdulaziz Al Saud (Photo: fortune.com)

It’s easy to understand why the media is paying close attention to Xi’s first visit to Saudi Arabia in 7 years, given their influence on the global economy.

Strengthening cooperation between China and the Arab world

A few days before the visit, the Chinese Foreign Ministry released a report on cooperation between China and Arab countries in the new era, laying out prospects for building a community of China and Arab states.

The report said relations between China and Arab states are well-established, and their long history of exchanges has set an example for friendly relations between nations.

China has always viewed the Arab states as strategic partners in its pursuit of peaceful development, further cooperation with developing countries, and building a community with a shared future for mankind, the report said. China considers this summit between China and the Arab states an opportunity to further their traditional friendship and deepen cooperation in all areas. 

On the sideline of the UN Conference on Climate Change (COP 27) in Egypt in November, Saudi Minister of State for Foreign Affairs Adel Al-Jubeir said that strengthening trade ties and regional security will be priorities for Xi’s upcoming visit. They will look at stability and security in the region, increasing trade and investment, and the climate issue. Mr. Al-Jubeir said China is Saudi Arabia's largest trading partner. They have huge investments in China and the Chinese have huge investments in Saudi Arabia.

Some Saudi diplomatic sources said that within the framework of President Xi’s visit, the Chinese delegation will sign dozens of agreements and memorandums of understanding with Gulf countries and other Arab countries in energy, security, and investment.

Prospects and impacts

October reports showed that Saudi Arabia has surpassed Russia as the biggest crude oil supplier to China. China and Saudi Arabia have restarted discussions on using the Chinese yuan for oil deals. The Bloomberg news agency said China and Saudi Arabia have been discussing this possibility for 6 years. If they do it, it will be an important move toward using the Chinese yuan for international payments, which are now dominated by the US dollar.

In Russia yuan-ruble trading in October was at 80 times the level seen in February. Analysts believe President Xi’s visit to Saudi Arabia and attendance at the China-Arab Summit will further consolidate China's international position economically and financially. Saudi Arabia, a power in the Middle East, will gain by political support and cooperation agreements with the world’s second largest economy. Saudi Arabia will have more confidence behind its oil policy, which is already having a profound effect on the world economy.

The changes will benefit international free trade and cooperation and strengthen the multilateralism that most countries in the world are pursuing.