Li Qiang to the Gulf, news on China-Gulf and China-North Africa
I’m going to do this differently today since I’ve got several days worth of stories to cover. So this one clears five days’ worth of tabs on the browser. More regular posting to resume next week.
Li Qiang to the Gulf
The top one has to be Premier Li Qiang’s visit to Saudi and the UAE this week. Li is the co-chair of the China-Saudi High Level Joint Committee, the steering mechanism for the comprehensive strategic partnership signed during Xi Jinping’s 2016 state visit. He’s the third Chinese official to have this role, following Zhang Gaoli and Han Zheng, and PM and Crown Prince Mohammed bin Salman has been the co-chair from the Saudi side. So it makes sense that he’d be the one visiting the Gulf. If you’re interested in the HLJC I wrote a bit about it in this large 2020 report on China-Saudi relations for the Atlantic Council.
This trip focused on the China-Saudi and China-UAE relationships, as well as China-GCC. On the GCC side, there’s not much to say. Here’s the readout from the State Council. They discussed Gaza, so I assume China’s role in working with the Palestinians was a part of the discussion. Of course, there was a call to accelerate the FTA negotiations. For those of you who are new to the newsletter, these talks have been progressing, haltingly, since 2004. In May Reuters reported that the current stalling was due to Saudi concerns about how a FTA with China would impact its nascent manufacturing sector. I wrote about it here.
On the China-Saudi meetings it looked like a pretty standard HLJC session, with discussions on enhancing the bilateral relationship. According to Asharq Al Awsat,
Talks focused on strengthening the comprehensive strategic partnership between the two countries across all fields. They also touched upon key regional and international issues of mutual interest….
During the meeting, the Saudi and Chinese delegations discussed ways to enhance cooperation across various fields, including politics, security, defense, energy, trade and investment, finance, science, technology, culture, and tourism.
On the China-UAE meetings, this is hot on the heels of Chen Min’er’s visit just a week prior. As you’ll see below, there’s been a lot of unrelated China-UAE momentum this week - it really is the PRC’s most dynamic relationship in the Middle East. For Li’s visit, he was invited by PM and ruler of Dubai Sheihk Mohammed bin Rashid Al Maktoum, which I assume is a protocol issue. He hosted Li and his delegation at an official reception at Qasr al Watan. Li met yesterday with President Sheikh Mohammed bin Zayed Al Nahyan, who shared a message in Chinese on social media to welcome him.
From The National’s reporting on the visit:
The President and Mr Li reviewed the progress of bilateral co-operation across various sectors, including trade, investment, renewable energy and sustainability, as well as education and culture, state news agency Wam reported…
Sheikh Mohamed conveyed his appreciation of Chinese President Xi Jinping’s efforts towards strengthening ties, following his visit to China in May and highlighted the UAE's keenness to remain a strategic partner in the Belt and Road global infrastructure initiative.
Sheikh Mohamed and Mr Li also discussed efforts aimed at achieving a ceasefire in Gaza and stressed the importance of working towards a comprehensive peace based on the two-state solution.
In his excellent Sinocism newsletter, Bill Bishop asked: How much can KSA invest huge amounts in China with oil at its current price? Are both sides looking to the other as deep pockets? China is definitely looking at the Gulf as deep pockets. I’ve seen lots of delegations from China passing through, looking for investment. As I wrote in this post in June, Gulf capital is a lot more cautious than is generally perceived, and everyone here has been watching the Chinese economy as closely as the rest of the world does. Gulf sovereign wealth funds have been willing to invest in China, but not at levels one would expect:
On the $2.3 billion that Gulf sovereign wealth funds have invested in China - that sounds impressive. But according to Global SWFs 2024 annual report, GCC sovereign wealth funds manage $4.1 trillion worth of assets. So that gives a bit of context when we’re thinking of Gulf capital flows into China.
This essay was relatively early in the life of the newsletter so if you didn’t see it, you might circle back to get a sense of what I’ve seen on the China-Gulf investment side of things.
China-Gulf
Saudi Arabia ‘open’ to petroyuan, closer China ties, minister says - South China Morning Post. I’m a skeptic on this. As I’ve repeatedly written and said, here and in other forums, there are a lot of reasons why the dollar continues to be important for Saudi and the GCC. And China too for that matter. That this story came during a visit from Minister of Industry and Mineral Resources Bandar Al-Khorayef, who was looking to drum up Chinese trade and investment, makes this story look like someone trying to keep a door open, knowing he probably will never use it.
“The petroyuan is not substantial to [the ministry], we believe Saudi Arabia will do what’s in its best interest ... but I think Saudi Arabia will always try new things, and is open to new ideas, and we try not to mix politics with commerce,” Khorayef said in an interview on Saturday in Hong Kong…
“Our monitoring policy is based on having a balanced exchange rate between the Saudi riyal and [US] dollar,” Khorayef said. “This gives us great opportunity to plan and compete, but most importantly, it gives our investors who will invest in our country the ability to hedge their risk on currency.”
So really, a misdirecting headline driving the story that won’t go away.
Saudi Arabia, China Discuss Investment Opportunities in Lithium, Copper Production - Asharq al Awsat. This is the more interesting angle of Al-Khorayef’s trip, in my opinion. Mining is one of the pillars of Saudi Vision 2030, and presents opportunities for whoever is willing and able to support this growing industry in the Kingdom. Chinese mining SOEs, of course, are well positioned.
Saudi Minister of Industry and Mineral Resources Bandar bin Ibrahim Alkhorayef discussed with Chinese mining companies on Friday boosting cooperation in the mining sector and joint investment opportunities in processing and producing lithium used in electric car batteries and processing and refining copper.
Assistant Minister of Industry and Mineral Resources for Planning and development Abdullah Ali Alahmari, CEO of the National Industrial Development Center, Saleh Al-Solami and CEO of the Saudi Authority for Industrial Cities and Technology Zones (MODON) Majed Al-Argoubi attended the meeting in China.
The auto industry is a big one to watch too:
Alkhorayef reviewed with the Chairman of the Board of Directors of General Lithium Corporation the Kingdom's objectives in the electric car manufacturing sector, the available investment opportunities in the sector, and the importance of developing cooperation and exchanging knowledge and innovation in the sector, especially in the field of lithium production and processing.
The minister highlighted the Kingdom's plans to become a global hub for producing and exporting electric vehicles and develop its industry to produce 500,000 electric vehicles annually by 2030 as part of developing the infrastructure for the electric car industry in Saudi Arabia.
Ruler of Ras Al Khaimah meets Vice Premier of State Council of China - Emirates News Agency. Sheikh Saud bin Saqr Al Qasimi, ruler of Ras AL Khaimah, one of the UAE’s 7 emirates, was in China to represent the UAE at the China International Fair for Investment and Trade, making stops in Xiamen, Dongguan and Shenzhen. He gave the keynote address at CIFIT. Interesting to me in that these things are typically the domain of Abu Dhabi or Dubai, so this looks like a diversification strategy to deepen the bilateral more broadly across the country.
UAE emerges as key player in global development, strengthens role in China's Belt and Road Initiative - Emirates News Agency. The article itself is really just a bullet-point list of data about the bilateral, but a few points of interest:
The two countries aim to reach US$200 billion in trade volume by 2030.
The two countries signed more than 148 bilateral agreements and MoUs in various fields, and the volume of the UAE's non-oil foreign trade with China during the past year reached AED296 billion, equivalent to US$81 billion, a growth rate of 4.2 percent compared to 2022, thus maintaining China's position as the first trading partner of the UAE in its non-oil trade in 2023, accounting for 12 percent of that trade.
UAE investment flows to China totalled US$11.9 billion between 2003 and 2023, covering sectors such as telecommunications, renewable energy, transport and storage, hotels and tourism, and rubber, while Chinese investment flows to the UAE totalled US$7.7 billion during the same period.
Hudong-Zhonghua inks $2.86bn LNG carrier order from Qatar - Seatime Maritime News. “It is the largest export LNG carrier construction contract a Chinese shipyard has ever received.”
Qatar Petroleum, the world’s largest LNG producer, launched the tender for LNG carrier construction last year, which expected to deliver 60 LNG carriers initially to support its increasing LNG production capacity, with a potential expansion to construct 100 new LNG carriers.
“Qatar’s nature gas project will invest up to $10bn in new ship construction. Hudong-Zhonghua showed its competence in LNG ship building market and won the first batch of Qatar Petroleum’s newbuidling contract,” said Chen Jianliang, chairman of Hudong-Zhonghua.
Chinese companies win 95% of all Iraqi energy projects - Middle East Economic Digest. Paywalled and I don’t have a MEED subscription anymore but it’s a good resource on contracting and business in the region; this headline will grab some attention.
China-North Africa
Egypt and China sign contracts worth $1 billion - Egypt Independent. Again, so much happening between Egypt and China. Last week there were lots of rumours about the Egyptian air force purchasing an unknown quantity of J10s from China as replacements for their aging fleet of F16s. I haven’t seen it reported from a credible source - mostly bloggers and then op-ed pieces following the bloggers - so I haven’t written about it yet. I’ll continue tracking it though; it’s obviously an important story. But for now, it looks like Egypt using China as leverage in its ongoing quest for the elusive F35. That said, there were plenty of significant confirmed developments in the relationship during FOCAC:
On the sidelines of the forum, Madbouly witnessed the signing of final contracts for a package of new projects within the Suez Canal Economic Zone, including chemical and food industries, bromine production, and the manufacturing of components for renewable energy projects.
These projects are anticipated to generate investments exceeding $1bn.
He also oversaw the signing of five Memoranda of Understanding (MoUs).
These MoUs pave the way for the establishment of three factories for the production of fibre optic cables and telecommunications equipment and three outsourcing service export centres, creating 800 job opportunities.
They cover areas such as electronic circuit design, software development, research and development in optical networks, green transformation technologies, semiconductors, and the establishment of a $300m technology investment fund, a data centre, and four training centres and labs. These facilities are expected to train and build the capacity of over 3,250 specialists.
China to Build Morocco High-Speed Rail Line For $350 Million - Newsweek. So much happening between China and Morocco lately.
Morocco's transport agency, the Office National des Chemins de Fer (ONCF) signed a new contract with China Railway No.4 Engineering (CREC 4) for the project, for the price of around $348 million
Local outlet Medias24 reported the project would entail the construction of a high-speed line between Kenitra and Marrakech, connections of this line to existing lines, the development of stations, as well the modernization of preexisting infrastructure.
CITIC Dicastal strengthens China-Morocco ties with first aluminium alloy wheel facility Another story about Chinese auto making in Morocco.
"Before we came to Morocco, most of the products we provided to European and Moroccan customers were manufactured in China and then shipped here. Morocco didn't have an aluminium alloy hot processing industry," Zhang said.
"During the construction phase, we faced several challenges. For example, Morocco lacked expertise in producing aluminium alloy wheels. We sent key personnel to China for training. Additionally, the local supply chain was insufficient, so we brought our domestic supply chain system here in the early stages," Zhang said.
China’s Textile Company Sunrise to Invest $422.2 Million in Morocco - Morocco World News. This is a deal signed on the sidelines of FOCAC.
Chinese textile giant Sunrise announced plans to invest MAD 4.1 billion ($ 422.2 million) in Morocco.
The announcement came during a meeting between Lei Xu, president of Sunrise Group, and Morocco’s Head of Government Aziz Akhannouch, on Saturday.
The meeting took place on the sidelines of Akhannouch’s visit to Beijing, where he represented King Mohammed VI at the Forum on China-Africa Cooperation Summit (FOCAC).
During the meeting, Akhannouch expressed support for the Chinese company's investment projects amounting to $422.2 million.
The project is set to create 11,000 direct jobs within three years across several provinces and regions in Morocco.
OK, this clears a bunch of the tabs open on my browser. More to come on Monday. Have a great weekend!