Saudi Arabia and a Chinese company have inked a significant $5.6 billion deal to manufacture electric vehicles, as the kingdom strives to bolster economic ties with Beijing and position itself as a leader in the Arab world’s expansion of relations with China. The memorandum of understanding, signed during the 10th Arab-China Business Conference held in Riyadh, encompasses the development, production, and sale of vehicles. This agreement accounted for more than half of the $10 billion in investments secured on the conference’s opening day.
The conference, organized in collaboration with the Arab League and the China Council for the Promotion of International Trade, drew over 3,500 government officials, investors, business representatives, and experts from 23 countries. The event aimed to fortify a “strategic” partnership centered around the Belt and Road Initiative, as highlighted by the Saudi Press Agency.
While Saudi Arabia’s association with China has primarily centered on energy due to its status as the world’s leading oil exporter, the country is now focused on diversifying its economy in line with its Vision 2030 plan. This plan includes significant investments in non-oil sectors such as electric vehicles. In October, Saudi Arabia unveiled its own electric car brand called Ceer, with plans to commence production of electric SUVs and sedans in 2025 through an upcoming manufacturing facility.
Human Horizons, a Chinese electric and self-driving car manufacturer, signed the $5.6 billion deal with Saudi Arabia. The company, known for its luxury electric vehicles under the HiPhi brand, seeks to expand its presence in Western markets. In March, Human Horizons announced its intention to enter European markets, focusing on Western Europe or Scandinavia.
Alongside the electric vehicle deal, Saudi officials announced several other substantial agreements in various sectors, including technology, renewable energy, agriculture, real estate, metals, tourism, and healthcare. Noteworthy among these deals were a $533 million agreement to establish an iron factory and a $500 million cooperation pact for copper mining within the kingdom.
While some Western countries have expressed concerns about Saudi Arabia’s deepening ties with China, Saudi officials have emphasized prioritizing business interests. Energy Minister Abdulaziz bin Salman Al Saud indicated that more energy deals would be forthcoming, dismissing Western criticism. During the conference, Saudi Foreign Minister Prince Faisal bin Farhan Al Saud lauded the growing connections between China and the Arab world, emphasizing the opportunity to strengthen historical Arab-Chinese friendship and work toward a mutually beneficial future.
Saudi Arabia highlighted that the total trade volume between China and the Arab world reached a record $430 billion in 2022, with Saudi Arabia accounting for approximately 25 percent of that figure, reflecting a significant bilateral trade volume of $106 billion that increased by 30 percent from the previous year. This conference follows Chinese President Xi Jinping’s visit to Riyadh in December, during which he met with Arab leaders and signed a comprehensive strategic partnership agreement with Saudi Arabia. China has been steadily expanding its diplomatic presence in the region and brokered a landmark agreement between Saudi Arabia and Iran in March, leading to the re-establishment of diplomatic relations after a seven-year rift.
The $5.6 billion deal between Saudi Arabia and Human Horizons represents a significant step toward realizing Saudi Arabia’s ambitious goals of diversifying its economy and reducing its reliance on oil. By investing heavily in the electric vehicle sector, Saudi Arabia aims to position itself as a key player in the emerging market for clean and sustainable transportation. This move aligns with the kingdom’s Vision 2030 plan, which seeks to transform Saudi Arabia into a thriving hub of innovation, technology, and sustainable industries.
The partnership with Human Horizons brings valuable expertise in electric and self-driving vehicle manufacturing to Saudi Arabia. As Human Horizons expands its reach into Western markets, the collaboration provides an opportunity for Saudi Arabia to gain insights and knowledge from a company at the forefront of electric vehicle technology. This knowledge transfer can pave the way for the development of a robust domestic electric vehicle industry in Saudi Arabia, creating jobs, fostering technological advancements, and boosting the country’s global competitiveness.
Furthermore, the investments announced at the Arab-China Business Conference signify the deepening economic ties between China and the Arab world. China’s Belt and Road Initiative has been instrumental in facilitating infrastructure development and fostering economic cooperation between the two regions. The Arab world, with its strategic location and abundant resources, presents an attractive opportunity for China to expand its economic influence and access new markets. Similarly, the Arab world sees China as a key partner for trade, investment, and technology transfer, enabling mutual benefits and shared growth.
The conference’s focus on sectors beyond energy highlights Saudi Arabia’s commitment to diversification and creating a more resilient economy. The investments in technology, renewable energy, agriculture, real estate, metals, tourism, and healthcare demonstrate a comprehensive approach to economic development. By nurturing these non-oil sectors, Saudi Arabia can mitigate the risks associated with oil price volatility and enhance its long-term economic stability.
While the growing Saudi-China partnership holds great potential, it also raises questions and concerns. Some observers caution about the geopolitical implications of deepening ties with China, citing issues such as human rights concerns and potential economic dependencies. However, Saudi Arabia has made it clear that its priority lies in advancing its own economic interests and achieving its Vision 2030 objectives.
As Saudi Arabia continues its journey toward economic diversification, the partnerships forged with Chinese companies and the investments made in various sectors will play a pivotal role in shaping the kingdom’s future. By capitalizing on China’s technological expertise, financial resources, and access to global markets, Saudi Arabia aims to become a regional leader in innovation, sustainability, and economic growth. These developments not only strengthen the relationship between Saudi Arabia and China but also contribute to the broader goal of fostering greater economic integration and collaboration between the Arab world and China.
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