In recent days, a major agreement was signed between PIF, the Public Investment Fund, the sovereign fund of Riyadh, and several banking institutions of the Dragon
![Saudi-China ties strengthen: PIF and Chinese banks reach $50 billion deal](local/cache-gd2/b4/49de376ae6a671088530316414b85a.jpg?1725210684)
The rapprochement, not only diplomatic but also economic, between Saudi Arabia and China continues. In recent days, a maxi agreement has been staged between PIF, Public Investment Fund, the sovereign fund of Riyadh, and multiple banking institutions of the Dragon.
Specifically, the parties in question have signed six memoranda of understanding for a total value of $50 billion. The piggy bank of the Saudi prince Mohammad bin Salman has put them down in black and white with the Agricultural Bank of China (ABC), the Bank of China (BoC), the China Construction Bank (CCB), the China Export and Credit Insurance Corp. (SINOSURE), the Export-Import Bank of China (CEXIM) and the Industrial and Commercial Bank of China (ICBC).
PIF, which controls $925 billion in assets, said the MOUs cover areas of cooperation such as encouraging two-way capital flows, both through debt and equity.
The white smoke is presumably linked to a recent trip behind the Wall by Yasir Al Rumayyan, a key lieutenant of Bin Salman, who led a large Saudi delegation to Beijing in July, where he met with Chinese Vice Premier He Lifeng. As PIF governor and chairman of Aramco, Al Rumayyan (also the country’s point person for Saudi-China relations) controls Saudi Arabia’s two most important economic engines.
The Economic Convergence between China and Saudi Arabia
The Saudi Kingdom’s ambitious Vision 2030 plan aims to diversify the national economy, abandoning fossil fuels to develop a vibrant private sector. The task of PIF, which boasts a very broad investment portfolio - ranging from date plantations to multinational conglomerates - is to favor the entire project through agreements, signatures, and understandings with governments, entities, and institutions that can favor Riyadh’s "vision".
In July Beijing declared that it is ready to deepen cooperation in the sectors of infrastructure, energy resources, green development, and the digital economy with Saudi Arabia, and invited Bin Salman’s companies, such as his sovereign funds and the oil giant Aramco, to continue to "put down roots" in the People’s Republic of China.
Despite China and Saudi Arabia’s desire to strengthen their economic relations, Bloomberg has however highlighted a fact to take into account: the United States still remains by far Riyadh’s most important economic and strategic partner.
In 2022, the stock of US foreign direct investment in the Kingdom was almost three times greater than Beijing’s; even Bahrain, whose $45 billion economy hardly compares to China’s $18 trillion, can claim to be a much larger investor than China in Saudi Arabia. In short, the Asian giant still has a long way to go.
Riyadh and Beijing plan
The Gulf countries are hungry for investment and need a lot of capital. On the other hand, China needs to find new markets in which to distribute its products, due to trade tensions with the US and the EU. Beijing also wants to convince the oil-rich kingdom to abandon its traditional dependence on the United States for security and investment.
Recall that in August 2023, Saudi Arabia was invited to the informal BRICS grouping, which includes China, Brazil, Russia, India, and South Africa. And that Beijing’s Belt and Road Initiative (BRI), which is aligned with Vision 2030, has made considerable investments and will aid Riyadh’s push to diversify the Saudi economy.
The feeling is that whoever the next US president is, one of the main tasks of the White House tenant will be to check China’s growing influence with a key ally of the country in the Middle East...
Original article published on Money.it Italy 2024-08-14 07:04:00. Original title: Si rafforza il legame Arabia-Cina: accordo da 50 miliardi tra PIF e le banche cinesi