Middle East and China forge ties over oil

2012-11-15

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."

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.

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.

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