RIYADH, Dec 9 (Reuters) – President Xi Jinping instructed Gulf Arab leaders on Friday that China would work to purchase oil and fuel in yuan, a transfer that might assist Beijing’s objective to ascertain its forex internationally and weaken the U.S. greenback’s grip on world trade.
Xi was talking in Saudi Arabia the place Crown Prince Mohammed bin Salman hosted two “milestone” Arab summits with the Chinese chief which showcased the highly effective prince’s regional heft as he courts partnerships past shut historic ties with the West.
Top oil exporter Saudi Arabia and financial large China each despatched robust messages throughout Xi’s go to on “non-interference” at a time when Riyadh’s relationship with Washington has been examined over human rights, power coverage and Russia.
Any transfer by Saudi Arabia to ditch the greenback in its oil trade could be a seismic political transfer, which Riyadh had beforehand threatened in the face of attainable U.S. laws exposing OPEC members to antitrust lawsuits.
China’s rising affect in the Gulf has unnerved the United States. Deepening financial ties have been touted throughout Xi’s go to, the place he was greeted with pomp and ceremony and on Friday met with Gulf states and attended a wider summit with leaders of Arab League nations spanning the Gulf, Levant and Africa.
At the beginning of Friday’s talks, Prince Mohammed heralded a “historic new phase of relations with China”, a pointy distinction with the awkward U.S.-Saudi conferences 5 months in the past when President Joe Biden attended a smaller Arab summit in Riyadh.
Asked about his nation’s relations with Washington in mild of the heat proven to Xi, Foreign Minister Prince Faisal bin Farhan Al Saud mentioned Saudi Arabia would proceed to work with all its companions. “We don’t see this as a zero sum game,” he mentioned.
“We do not believe in polarisation or in choosing between sides,” the prince instructed a information convention after the talks.
Though Saudi Arabia and China signed a number of strategic and financial partnership offers, analysts mentioned relations would stay anchored largely by power pursuits, although Chinese corporations have made forays into know-how and infrastructure sectors.
“Energy concerns will remain front and centre of relations,” Robert Mogielnicki, senior resident scholar at the Arab Gulf States Institute in Washington, instructed Reuters.
[1/4] Saudi Crown Prince Mohammed Bin Salman stands with Chinese President Xi Jinping in Riyadh, Saudi Arabia December 8, 2022. Saudi Press Agency/Handout through REUTERS
“The Chinese and Saudi governments will also be looking to support their national champions and other private sector actors to move forward with trade and investment deals. There will be more cooperation on the tech side of things too, prompting familiar concerns from Washington.”
Saudi Arabia agreed a memorandum of understanding with Huawei this week on cloud computing and constructing high-tech complexes in Saudi cities. The Chinese tech large has participated in constructing 5G networks in Gulf states regardless of U.S. issues over a attainable safety threat in utilizing its know-how.
NATURAL PARTNERS
Saudi Arabia and its Gulf allies have defied U.S. strain to restrict dealings with China and break with fellow OPEC+ oil producer Russia over its invasion of Ukraine, as they attempt to navigate a polarised world order with a watch on nationwide financial and safety pursuits.
Riyadh is a prime oil provider to China and the 2 nations reaffirmed in a joint assertion the significance of world market stability and power collaboration, whereas striving to spice up non-oil trade and improve cooperation in peaceable nuclear energy
Xi mentioned Beijing would proceed to import massive portions of oil from Gulf Arab nations and develop imports of liquefied pure fuel, including that their nations have been pure companions who would cooperate additional in upstream oil and fuel growth.
China would additionally “make full use of the Shanghai Petroleum and National Gas Exchange as a platform to carry out yuan settlement of oil and gas trade,” he mentioned.
Beijing has been lobbying for use of its yuan forex in trade as an alternative of the U.S. greenback.
A Saudi supply, talking earlier than Xi’s go to, instructed Reuters {that a} choice to promote small quantities of oil in yuan to China might make sense in order to pay Chinese imports straight, however “it is not yet the right time”.
Most of Saudi Arabia’s belongings and reserves are in {dollars} together with greater than $120 billion of U.S. Treasuries that Riyadh holds, and the Saudi riyal, like different Gulf currencies, is pegged to the greenback.
Earlier, the Chinese chief mentioned his go to heralded a brand new period in relations, voicing hope the Arab summits would change into “milestone events in the history of China-Arab relations”.
Additional reporting by Eduardo Baptista in Beijing, Riham Alkousaa, Ahmad Ghaddar and Lina Najm in Dubai
Writing by Ghaida Ghantous and Dominic Evans
Editing by Mark Heinrich, William Maclean and Mark Potter
Our Standards: The Thomson Reuters Trust Principles.
