China – Saudi Arabia summit agreements put pressure on US influence

Chinese President Xi Jinping and Crown Prince Mohammed bin Salman, the de facto leader of Saudi Arabia, participated in a major meeting Friday, signaling increasingly close ties between the nations as US relations with both nations grow increasingly chilly.

One significant result of the summit — which focused on trade agreements concerning oil, technology, infrastructure, and security — was an agreement that the two nations would not interfere with each other’s domestic affairs. Alleged human rights violations have been a serious pressure point in the once-strong US-Saudi alliance, while criticism of China’s treatment of pro-democracy activists in Hong Kong and Muslim minorities in the Xinjiang region have rankled the economic superpower.

The China-Saudi relationship isn’t new, but Friday’s summit outlined the terms of the two countries’ cooperation and heralds a shift in the global geopolitical order — away from the US.

The US-Saudi alliance, which has endured through seven Saudi monarchs and 15 presidents, has taken a blow under US President Joe Biden, who vowed during his campaign in 2019 to make the oil-rich Gulf nation a “pariah” for directing the murder of Saudi dissident journalist Jamaal Khashoggi in 2018 and the kingdom’s role in the punishing Yemeni civil war. The tension has continued, most notably over Saudi oil production as sanctions on Russian energy help drive up fuel prices around the world.

What do Saudi and China get from a stronger alliance?

The Crown Prince, who is commonly known by the acronym MBS, has met with Xi before, most recently at the 2022 Winter Olympics in Beijing. Although it might seem an odd pairing, the two nations actually have quite a bit in common, including autocratic leadership, serious repression of dissent, a clear need to diversify in order to maintain economic growth, and ambitious infrastructure projects.

China is Saudi Arabia’s largest trading partner, with Chinese exports to the kingdom reaching $30.3 billion in 2021 and Saudi exports totaling $57 billion in the same year, according to Reuters. Saudi oil makes up 18 percent of Beijing’s total crude oil imports — worth about $55.5 billion between January and October of this year.

Saudi Arabia, meanwhile, has great ambitions to diversify its economy, which has for decades relied on crude oil output. But in order to do that, it needs money — oil money. That’s at least part of why Saudi Arabia limited production in the midst of a global oil crisis and prices for crude oil remain high.

Both nations also have ambitious infrastructure projects. The Belt and Road initiative, China’s effort to create a 21st-century Silk Road international trade route by providing the finances to develop series of ports, pipelines, railroads, bridges, and other trade infrastructure to nations across Asia and Africa, is a milestone effort for Xi. It’s also received major criticism for potentially exploiting poor nations by essentially lending them money they can’t pay back, in some cases granting China control over these critical hubs.

Xi’s presence in Saudi Arabia, both with MBS and as part of a larger summit with Arab and Gulf Cooperation Council (GCC) nations, present multiple opportunities to strengthen ties with a host of nations in the region — and to make sure that in the global great power competition, those nations are, at least, not aligned with the US, as Shannon Tiezzi wrote in The Diplomat Wednesday.

Critically, Saudi Arabia knows it cannot depend on generous US weapons sales under Biden so China is an increasingly viable alternative. In fact, Reuters reported, Riyadh is thought to have signed $30 billion in defense contracts at this summit with China.

In forging their alliance, both nations get a strong trading partner who won’t question their policies; Saudi gets a more predictable relationship in Xi than it has seen in the switch from former President Donald Trump to Biden.

How does this affect the US and its global position as a superpower?

The US-Saudi relationship is longstanding; it officially started towards the end of World War II; the basic oil-for-security trade that has lasted for decades and has been increasingly important to the kingdom, between Iraq’s invasion of Kuwait in the 1990s and the increasing influence of regional rival Iran. Despite Saudi repression and alleged human rights abuses, Riyadh could count on US weapons, and the US could almost always count on cheap Saudi oil.

Of course, there have been tensions in the relationship before; the 1973 oil embargo in retaliation for the US decision to resupply the Israeli military during the Arab-Israeli War, as well as Saudi involvement in the terror attacks on September 11, 2001, tested the alliance, but US leadership maintained that the kingdom was a key regional partner nevertheless.

Under Trump, the relationship between the two nations was somewhere between transactional and downright chummy — Trump even reportedly bragged that he defended MBS against criticism from Congress over Khashoggi’s death.

But the relationship has become the most strained it has been in recent memory due to MBS’s abuses and Biden’s criticism. In March, after Russia’s invasion of Ukraine sparked a fuel shortage, MBS refused to take Biden’s calls to negotiate increased oil production and help ease prices. When they finally met in July, Biden was extremely uncomfortable — and he left almost empty-handed.

The growing Saudi-China relationship may indicate a threat to the US’s historic position as an international leader, evidenced in Saudi Arabia’s failure to condemn Russia’s invasion of Ukraine in favor of its own economic needs. This fall, after Biden asked for increased oil production to help drive down inflation in the US, Saudi Arabia and the other OPEC+ countries, including Russia, chose to continue a limited production scale — a move Washington interpreted as tacit support for Russia.

MBS has done much, at least superficially, to bring Saudi Arabia into the 21st century; women are now allowed to drive, and entertainment like cinemas, concerts, and sporting events are available after decades of conservative Wahabbist culture. But he’s also committed egregious, violent acts like fueling a war that’s killed an estimated 15,000 Yemeni civilians and further devastated the impoverished country, as well as ordering Khashoggi — a US resident who wrote for the Washington Post — to be killed.

The deepening China-Saudi relationship has implications beyond just the geopolitical, though. If, as China has repeatedly requested, Saudi Arabia and other Gulf nations begin allowing China to pay for oil in its currency, the yuan, as opposed to the dollar, it could have even further economic consequences for the US. Such a move, the Wall Street Journal explained in March, would devalue the dollar and erode its standing in the international financial system

“The oil market, and by extension the entire global commodities market, is the insurance policy of the status of the dollar as reserve currency,” economist Gal Luft, co-director of the Washington-based Institute for the Analysis of Global Security, told the Journal at the time. “If that block is taken out of the wall, the wall will begin to collapse.”

A single alliance does not necessarily indicate that US primacy and hegemony is over for good — but it certainly solidifies a major repositioning of the global order. How that will unfold, and the US’s role in that order, remains unclear.

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