This March, the Saudi Monarch King Salman embarked on a six-week tour of Asia, the highlight of which was without question his visit to Beijing where he and China’s President Xi rubber-stamped a raft of 20 or so economic and trade deals worth $65bn, principally . covering oil, investment and energy. Two of the most notable agreements was an MoU between Saudi Aramco and China North Industries Group Corporation for the construction of refineries on the Chinese mainland an agreement between Saudi Basic Industries Corporation and Sinopec for the development of petrochemical products.
The refinery agreement reflects Saudi Arabia’s desire to protect its oil export market share in the face of rising Russian oil exports to China and the petrochemicals agreement reflected Saudi Arabia’s ambition to catch up with Iran, and will also help Beijing’s maintain a diverse range of suppliers for energy and critical inputs; with China’s demand expected to grow by 2.4% over the next five years, it is expected to be consuming up to 9.4 million barrels of oil a day by the end of the decade. By becoming a significant stakeholder in Saudi Aramco, Beijing believes it will be able to better oversee the management of Saudi Arabia’s ageing fields to ensure continuity of supply.
The warm welcome extended to King Salmanin the Chinese capital was about much more than energy security, however; at its heart, this was all about China’s effort to create its self-declared 21st century Maritime Silk Road MSR — a maritime commercial transportation corridor between China and Europe.
The development of the MSR is already well under way, as the series of Chinese-built port installations extending westward across the Indian Ocean and then via the Red Sea and Suez Canal to the now Chinese-owned Greek Port of Piraeus amply illustrate.
After heavy Chinese investment, Piraeus is now one of Europe’s major seaports and a hub for Chinese goods to enter European markets.
In the view of the Chinese, the major threat to these plans is Iran and in January 2016, Xi visited the Iranian capital where he signed off on a 10-year program to raise Chinese–Iranian bilateral trade to US$600bn.
But relationships have been complicated and soured by what Beijing sees as Tehran’s effort to expand its sphere of influence to the Gulf of Aden and Red Sea corridor through its proxy war against Saudi Arabia in Yemen and the Horn of Africa which from Xi’s point of view represents a disruption to the security of its maritime route. In the same month that he signed the bilateral deal with Iran, Beijing declared its support for Yemen’s efforts to defeat Iranian-backed Houthi rebels.
Three months later , China began construction of its first overseas bases in Djibouti, which strategically straddles the Gulf of Aden and the Red Sea. Saudi Arabia is currently finalising arrangements or the establishment of a Saudi base in the small north-east African country that will sit beside a Chinese naval base housing up to 10,000 personnel.
During the Saudi royal visit to Beijing, the two countries also agreed to collaborate on the manufacture of drones, another indication of their intention to strategically cooperate to contain Iranian activities in region.The growing partnership between China and Saudi Arabia therefore signals a consequential shift in the Middle East–Asia security architecture as China seeks to extend and protect its ‘soft power’ influence westward.
This is an abridged version of an article written Micha’el Tanchum which first appeared in East Asia Forum in March. Micha’el Tanchum a Fellow at the Truman Research Institute for the Advancement of Peace, The Hebrew University of Jerusalem and the Energy Policy Research Center at Bilkent University, Turkey.You can follow him on Twitter at @michaeltanchum.