In addition to oil, China and Saudi Arabia also emphasized cooperation in the field of clean energy and coordinated the position of responding to climate change
Huawei signed a contract with Saudi Ministry of Communications and Information Technology Source: Saudi News Agency
Text | Finance reporter Han Shulin Jiang Fan
Edited by | Mark
During the visit to Saudi Arabia , the two countries further deepened various cooperation, including energy trade.
According to the Saudi News Agency (SPA) on December 8, On December 7, Saudi and relevant Chinese companies signed 34 investment agreements, covering multiple fields such as green energy, green hydrogen, photovoltaics, information technology, cloud services, transportation, logistics, medical care, housing and factory construction.
According to the on-site photo information released by the Saudi news agency on December 8, the contracted companies include IT giant Huawei, which signed an investment agreement with the Saudi Ministry of Communications and Information Technology (MCIT).
Infrastructure central enterprise giant China Construction signed an investment agreement with Saudi National Housing Company (NHC) and Saudi Ministry of Municipal and Rural Affairs.
China Construction and Saudi National Housing Company and Saudi Ministry of Municipal and Rural Affairs signed a contract. Source: Saudi News Agency
Tencent , CITIC Capital participated in the investment, Lianyirong (9959.HK, Linkogis), the supply chain finance company that participated in the investment, AutoX, the autonomous driving company that participated in the investment in Alibaba , and Jianhui Information (605186.SH), a pharmaceutical flow automation provider, signed investment agreements with Saudi Ajlan & Bros, respectively. Ajilan Brothers Holdings is a Saudi diversified group with business covering multiple fields such as financial services, consumer goods manufacturing, medical and health, education, games, mining, tourism and logistics.
Lianyirong signed a contract with Ajilan Brothers Holdings. Source: SPA
AutoX signed a contract with Ajilan Brothers Holdings. Source: Saudi News Agency
Jianhui Information signed a contract with Ajilan Brothers Holdings. Source: Saudi News Agency
The cooperation in the energy field is also a focus. On December 8, China GNN Group released a news that China GNN Energy International Holdings Company and AIJomaih Group signed a framework cooperation agreement in Riyadh, Saudi Arabia on December 7, and will work with Saudi Arabia, Laos , Bangladesh, Azerbaijan and other countries to create more than 10 million kilowatt energy projects, covering solar, wind, gas and thermal power generation projects.
China General Nuclear Corporation signed a contract with Saudi AIJomaih Company. Source: China General Nuclear Corporation
On December 9, photovoltaic company Jinko Energy released a message that during the first China-Arab Summit, Jinko Energy signed a memorandum of understanding with Saudi store developer ACWA Power, which will provide the latter with 4GW of efficient N-type TOPCon Tiger Neo photovoltaic modules.
JINCO Energy and ACWA Power Signed a Memorandum of Understanding Source: JINCO Energy
In addition, according to the news released by Saudi oil and gas giant Saudi Aramco and China Shandong Energy Group, the two parties signed the strategic cooperation agreement in Jinan on December 7. The scope of cooperation involves refining and chemical integration, hydrogen energy , renewable energy and carbon capture technology. According to the memorandum of Understanding signed by the two parties, the cooperation includes a potential crude oil supply agreement and a chemical product undertaking agreement.
Shandong Energy Group and Saudi Aramco signed a strategic cooperation agreement. Source: Shandong Energy Group
Customs Administration data shows that From January to October 2022, the total import and export volume between China and Saudi Arabia from January to October this year reached US$97.26 billion in US dollars, and increased by 37.4% year-on-year. Among them, imports from Saudi Arabia were US$66.59 billion, an increase of 45% year-on-year, and exports to Saudi Arabia were US$30.68 billion, an increase of 23.3% year-on-year.
According to information released by Saudi News Agency, China has been Saudi Arabia's largest trading partner in the past five years and has ranked first in Saudi Arabia's total import and export volume since 2018.
Energy trade, mainly based on crude oil, is the core of trade between the two countries. From January to October this year, China imported 73.76 million tons of crude oil from Saudi Arabia, with a total import volume of US$55.52 billion. Crude oil exports account for 83% of Saudi Arabia's total exports to China, accounting for more than half of the total import and export trade between the two countries.
Saudi Arabia is the third largest oil producer in the world, second only to the United States and Russia. In the export market, Saudi Arabia is the world's largest oil exporter, and Saudi Arabia's oil exports account for 16.5% of the world's oil exports in 2021.
In 2019, Saudi Arabia once again surpassed Russia and became the largest source of imports of China's crude oil, and maintained this position to this day. From January to October 2022, China imported a total of 413 million tons of crude oil, and the proportion of crude oil imported from Saudi Arabia accounted for 17.8%, ranking first. Crude oil imported from Russia accounts for 17.4%, followed closely behind.
In 2022, against the backdrop of the geopolitical conflict and the international market sanctions of Russian crude oil, Russia's crude oil exports to China increased by 9.5% year-on-year from January to October, and Saudi Arabia's crude oil exports to China increased by 0.3% year-on-year, and it is still the country with the largest crude oil exports to China.
This meeting between the two heads of state, oil-based energy trade is also the top priority.
According to Xinhua News Agency , on December 9, the Chinese President attended the first China-Arab Cooperation Committee Summit and delivered a keynote speech. In his speech, he proposed that in the next 3 to 5 years, China is willing to make efforts with the GCC countries in key areas of cooperation, the first of which is energy cooperation.
In his speech, he proposed to build a new pattern of three-dimensional energy cooperation. China will continue to expand imports of crude oil and liquefied natural gas from GCC countries, strengthen oil and gas development, clean low-carbon energy technology cooperation, and carry out RMB settlement of oil and gas trade. Establish the China Overseas Peaceful Utilization of Nuclear Technology forum, jointly build the China Overseas Nuclear Security Demonstration Center, and cultivate talents in the peaceful use of nuclear energy and nuclear technology for the GCC countries.
pic/Visual China
In the joint statement of the two countries issued on December 9, the two sides emphasized that strengthening energy cooperation is an embodiment of the important strategic partnership between the two countries. Saudi Arabia has rich oil resources and China has a broad market. The two sides mentioned the scale of oil trade between the two countries and a good foundation for cooperation. Promoting and consolidating cooperation between the two sides in the oil field is in line with the common interests of China and Saudi Arabia. Both sides emphasized the importance of stability in the global oil market. China welcomed Saudi Arabia's role in supporting the balance and stability of the global oil market and welcomed Saudi Arabia as the main reliable source of Chinese crude oil.
Before this China-Saudi Summit, whether the two countries can reach an agreement on the use of RMB settlement for some crude oil trade is the focus of attention of all walks of life. However, so far, there is no information on substantial breakthroughs.
Comprehensive communication between reporters of " Finance " and relevant oil and gas and trade experts, the demand for settlement of using different currencies is related to the trade structure of the two countries. The RMB obtained by Saudi Arabia's sale of crude oil can be used to settle other products imported from China. This requires the agreement between the two countries to be denominated and paid in RMB in the basic contract of economic and trade cooperation, and it also needs to be supported by RMB payment and clearing system. At present, these two conditions are basically mature. adopts RMB settlement, which is also conducive to reducing settlement costs, improving settlement efficiency, expanding trade cooperation between the two countries, and promoting the internationalization of RMB .
But on the other hand, oil trade is deeply influenced by geopolitics, and RMB settlement will challenge the status of the US dollar. Under the current complex geopolitical situation, it is not easy to make breakthroughs. On the other hand, both China and the United States have also expressed their desire to manage bilateral relations rationally.
In addition to continuing to deepen cooperation in oil trade, under the global carbon neutrality wave, China and Saudi Arabia have also emphasized cooperation in the field of clean energy. In a joint statement, the two sides stated that the two sides agreed to jointly explore investment opportunities in the petrochemical field, develop promising projects in the field of petrochemical technology, strengthen cooperation in the development of renewable energy sources such as electricity, photovoltaics, and wind energy, innovative utilization of hydrocarbon , energy efficiency, energy products and related industrial chain localization, strengthen cooperation in the field of peaceful use of nuclear energy, and cooperation in the field of modern technology development such as artificial intelligence and energy industry innovation .
Currently, Saudi Arabia's primary energy structure is mainly oil and gas. According to data from the BP Energy Statistics, in 2021, 99.93% of Saudi Arabia's energy comes from fossil energy, mainly oil and natural gas, and only a small amount of photovoltaics provide some renewable energy.
In October 2021, Saudi Crown Prince Salman announced that Saudi Arabia promised to achieve carbon neutrality by 2060 while maintaining its status as a major producer of oil and natural gas. Therefore, Saudi Arabia has proposed a net zero path for the "carbon circular economy", that is, adopting carbon capture, storage and utilization technologies.
In terms of responding to climate change, China welcomes the "Green Saudi Arabia" and "Green Middle East " initiatives initiated by Saudi Arabia and supports Saudi Arabia's efforts in the field of climate change, including the implementation of the carbon circular economy plan initiated by Saudi Arabia and recognized by the G20 leaders. Both sides emphasized the importance of the principles established in the " United Nations Framework Convention on Climate Change" and its " Paris Agreement ", and should focus on sourceless emissions to implement relevant agreements in the field of climate. The two sides agreed to continue to strengthen energy policy coordination, use the carbon circular economy to manage emissions to achieve climate goals, and urge developed countries to face up to their historical responsibilities, earnestly fulfill their commitments, significantly reduce emissions in advance, and effectively help developing countries improve their ability to respond to climate challenges through financial, technical support and capacity building.
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