(Bloomberg) — Chinese and Saudi companies signed investment pacts for green hydrogen and solar energy during a a visit of Chinese President Xi Jinping to the kingdom.
Xi’s in Saudi Arabia to meet Crown Prince Mohammed bin Salman and other Arab leaders for a trip which marks the region’s deep and growing ties with Beijing, as US ties come under pressure.
There were no further details on the energy pacts announced on Saudi state news agency SPA. It said 34 investment agreements in total had been signed, including in other sectors such as information technology, cloud services, transportation, logistics, medical industries, housing and construction.
Saudi Arabia is the world’s largest oil exporter, and China its top customer, making their relationship key to the crude market. But both are looking to gradually diversify their energy mix.
Saudis Roll Out Red Carpet for Xi Jinping as Gulf Looks Past US
Saudi Arabia has started work on a large facility for green hydrogen in Neom, a Red Sea city under construction. The green hydrogen, a fuel seen as crucial to the global transition to cleaner energy, will be generated using solar and wind power.
“The Kingdom enjoys a strategic geographical location linking three continents” and overlooks some of the most important water crossings and energy resources, Saudi Investment Minister Khalid Al-Falih said, according to SPA.
Xi’s trip comes two months after Saudi Arabia angered the US by orchestrating a big oil-production cut by the OPEC+ cartel and cast itself as an emerging power capable of standing up to pressure from Washington. China praised this stance.
Saudi Arabia to Start Building Green Hydrogen Plant in Neom
The two countries will strengthen collaboration at the UN, the G20 and the Shanghai Cooperation Organization, Xi wrote in an editorial in Saudi newspaper Al Riyadh.
“It suits both Riyadh and Beijing to highlight they have other options to the US, or important partnerships on the world stage that do not include the west,” said Raffaello Pantucci, a senior fellow at the S. Rajaratnam School of International Studies at Nanyang Technological University in Singapore. China’s engagement with the region shows China illustrating that “an alternative world order” can exist, he added.
—With assistance from Rebecca Choong Wilkins.