Skip to main content
Part of complete coverage on

Middle East and China forge ties over oil

By John Defterios, CNN
updated 8:12 PM EST, Wed November 14, 2012
King Abdullah of Saudi Arabia and Chinese President Hu Jintao attend a ceremony in Beijing in 2006.
King Abdullah of Saudi Arabia and Chinese President Hu Jintao attend a ceremony in Beijing in 2006.
STORY HIGHLIGHTS
  • China's foreign policy values relationships to fuel its resource-hungry economy
  • Oil drives strategic relationship between Middle East and China
  • China's "Great Game" seeks supplies rather than political influence

Abu Dhabi (CNN) -- China's Xi Jinping, who is expected to be named president in March and likely next premier Li Keqiang will inherit a foreign policy that puts a premium on partnerships that can help China fuel its resource-hungry economy.

In the world of geo-politics, symbolism goes a long way in forging lasting, strategic relations. This is certainly the case when it comes to China's role within the Middle East, specifically with Saudi Arabia, the country with the world's largest proven oil reserves.

When King Abdullah took over the throne in Saudi Arabia, his first foreign visit in January 2006 was to Beijing after an invitation of President Hu Jintao. Six years later, the countries' two state-run energy giants, China's Sinopec and Saudi Aramco, inked a huge oil agreement guaranteeing the Asian nation an additional 400,000 barrels a day from a Red Sea refinery in the Saudi city of Yanbu. This is on top of the estimated one million barrels of oil a day it now orders from the Kingdom.

"We need China as much as China needs us," said Khalid Al-Falih in a CNN interview right after he signed the agreement, "But the energy corridor is only part of it. We envisage an exchange of goods and services and trade in other areas that add value to the Chinese economy and to the Saudi economy as well."

China's Middle East trading ties
Hong Kong wants Middle Eastern tourists
China's expanding trade connections
Rebuilding the ancient Silk Road

That deal follows a major equity investment in the Fujian province where Saudi Aramco invested in petrochemical manufacturing facilities along with U.S. energy giant ExxonMobil.

In the 19th century the battle over influence of Central Asia was described as the "Great Game" as the British and Russian empires vied for control and influence in the region. In the 21st century, one may view China's influence in the Middle East in a similar vein.

"Clearly there are mutual interests in terms of large energy suppliers and consumers, but there will be stress points, of course," said Ben Simpfendorfer, co-founder of Silk Road Associates, an investment advisory firm specializing on trade between the Middle East and Far East Asia.

China, experts say, is keen to lock in strategic commodity supplies rather than exercise political influence at this juncture. This is reflected in its vetoes -- together with Russia -- striking down resolutions against Syria on the United Nations Security Council.

This strategy of non-intervention may not be sustainable, says Simpfendorfer, "I think China's position will be challenged by the Gulf countries and that is certainly a risk the new leadership has to look out for" especially since Beijing is so dependent on the region to fuel its economic expansion.

But one cannot doubt whether the world's second largest economy is instrumental in rebuilding the ancient Silk Road. China continues to go to great lengths to foster developing market trade partners -- some argue to exploit their natural resources in the case of Africa -- as part of its "Great Game" strategy. China rolls out the welcome mat on its soil, for example recently inviting Arab leaders to Yinchuan, in northern-central part of the country, for the 3rd China-Arab States Economic and Trade Forum.

There are some lofty expectations for trade between China and the Arab states. The United Arab Emirates' foreign trade minister, Sheikha Lubna Al Qasimi, said bilateral trade between the Gulf and China could hit $300 billion by 2014. Trade between China and the UAE grew 10% last year alone, witnessing a fivefold increase in less than a decade. Some see Dubai's Jebel Ali port as an excellent gateway for China into the African continent.

This keen business interest in the Middle East is not likely to change with Xi Jinping taking over the helm in 2013, but is China ready for a G-2 world dominated by Washington and Beijing? Not yet, strategists suggest. Beijing prefers the relative comfort of the broader G-20 world that brings the developed and developing world under one umbrella, with the ability for the new leaders of China to seek political alignment from BRICS partners Brazil, Russia, India and South Africa.

All the while, China continues to blaze new trails beyond the Middle East in search of strategic supplies. This autumn, the country made inroads into Afghanistan with the first high level visit in more than a half century. The bounty is a promising one with more than a trillion dollars of mineral deposits estimated in the country.

China's "Great Game" continues with an ever expanding footprint from the Middle East well into South Asia.

ADVERTISEMENT
Part of complete coverage on
updated 7:13 AM EDT, Fri October 17, 2014
A smuggler in Dandong, a Chinese border town near North Korea, tells CNN about the underground trade with North Korean soldiers
updated 2:54 AM EDT, Fri October 17, 2014
Yenn Wong got quite a surprise one morning earlier this month when she found out an exact copy of her Hong Kong restaurant had opened in China.
updated 11:15 PM EDT, Tue October 14, 2014
When I first came across a "virtual lover" service on e-commerce site Taobao, China's version of Amazon, I thought it was hype.
updated 9:15 AM EDT, Tue October 14, 2014
Each year Yi Jiefeng does what she can to stop China turning into a desert.
updated 10:54 AM EDT, Mon October 13, 2014
As its relationship with the West worsen, Russia is pivoting east in an attempt to secure business with China.
updated 10:29 PM EDT, Tue October 7, 2014
Aspiring Chinese comics performing in Shanghai's underground comedy scene hope to bring stand-up to the masses.
updated 12:54 PM EDT, Tue September 30, 2014
Liu Wen is one of the world's highest-paid models and the first Chinese face to crack the top five in Forbes' annual list of top earners.
updated 7:44 AM EDT, Fri October 3, 2014
Cunning wolf? Working class hero? Or bland Beijing loyalist? C.Y. Leung was a relative unknown when he came to power in 2012.
updated 7:25 AM EDT, Thu October 2, 2014
 A man uses his smartphone on July 16, 2014 in Tokyo, Japan. Only 53.5% of Japanese owned smartphones in March, according to a white paper released by the Ministry of Communications on July 15, 2014. The survey of a thousand participants each from Japan, the U.S., Britain, France, South Korea and Singapore, demonstrated that Japan had the fewest rate of the six; Singapore had the highest at 93.1%, followed by South Korea at 88.7%, UK at 80%, and France at 71.6%, and U.S. at 69.6% in the U.S. On the other hand, Japan had the highest percentage of regular mobile phone owners with 28.7%. (Photo by Atsushi Tomura/Getty Images)
App hopes to help those seeking a way out of China's overstrained public health system.
updated 8:20 PM EDT, Thu October 2, 2014
Yards from pro-democracy protests, stands the Hong Kong garrison of the People's Liberation Army (PLA), China's armed forces.
updated 7:23 AM EDT, Thu October 2, 2014
The massive street rallies that have swept Hong Kong present a major dilemma for China's leadership.
updated 3:07 AM EDT, Sat September 27, 2014
Chinese wine drinkers need to develop a taste for the cheap stuff, not just premium red wines like Lafite.
updated 9:09 PM EDT, Tue September 23, 2014
The Dalai Lama, Tibet's spiritual leader, set off a media kerfuffle this month when he spoke about his next reincarnation.
updated 10:18 AM EDT, Sun September 28, 2014
He's one of the fieriest political activists in Hong Kong — he's been called an "extremist" by China's state-run media — and he's not old enough to drive.
updated 10:57 PM EDT, Mon September 22, 2014
China has no wine-making tradition but the country now uncorks more bottles of red than any other.
updated 5:29 AM EDT, Tue September 16, 2014
Christians in eastern China keep watch in Wenzhou, where authorities have demolished churches and removed crosses.
updated 1:38 AM EDT, Wed September 10, 2014
Home-grown hip-hop appeals to a younger generation but its popularity has not translated into record deals and profits for budding rap artists.
ADVERTISEMENT