China and the US may not be an either-or option for Saudi Arabia, at least for now
Holding the China card in hand can offer the oil-rich Kingdom more room when fostering its traditional alliance with the US. For now, it’s a test for the two superpowers to court the Gulf state.
China raised US$2 billion in Riyadh, Saudi Arabia, in November through its first dollar-denominated sovereign bond sale in three years - it also marks the first time such bonds were issued in the Arab Gulf state. What is particularly music to the ears of the advocates for deepening tie-ups within the developing world is that the issuance was almost 20 times oversubscribed, according to China’s Ministry of Finance.
Hong Kong, New York, and London have long been the preferred hubs for China's dollar-denominated sovereign bond issuances. This debt sale in Saudi Arabia is widely regarded as the latest indication of growing ties between the world’s second-largest economy and the oil-rich Kingdom amid escalating geopolitical rifts, most recently fueled by US President-elect Donald Trump’s “America First” policy agenda.
Positioned at the intersection of Europe, Asia, and Africa, the Middle East region is naturally a focal point of the China-led “Belt and Road Initiative” - a massive overseas investment and infrastructure program launched in 2013. With a vision to gain clout in the Global South and promote the international use of the Chinese currency, the renminbi, the Belt and Road Initiative has so far involved more than 150 countries and over 30 international organizations that have signed cooperation documents, according to Chinese official data.
Beijing’s ambitious project also dovetails with Riyadh’s “Vision 2030” blueprint, which seeks to diversify its oil-reliant economy that requires sprawling investment across sectors.
Last year, Asia's first exchange-traded fund (ETF) that tracks Saudi Arabian equities debuted on the Hong Kong Stock Exchange. Through the ETF, investors in Hong Kong can trade Saudi stocks, including Saudi Aramco and Saudi National Bank, in Hong Kong dollars or Chinese yuan. In return, Saudi Arabia launched its inaugural ETF this year tracking Hong Kong-listed shares, most of which are Chinese mainland companies.
If all this looks rosy for the China-Saudi friendship, well, so it should. Yet we must not lose sight of the fact that it does not necessarily mean a serious pivot away from the West given the Gulf state’s deep-seated affiliation with the US.
Economically, Saudi Arabia’s oil sales are conducted in US dollars and its currency is pegged to the greenback. Besides, a recent Bloomberg report revealed that Saudi Arabia's holdings of US Treasuries, as a share of the foreign assets managed by its central bank, rose in October to the highest level in four years. Specifically, US Treasuries accounted for nearly 35% of total foreign assets held by the Saudi Central Bank, SAMA.
Bloomberg reported that larger Saudi holdings of US Treasuries could strengthen the kingdom’s relationship with the incoming administration of President Donald Trump, although this increase occurred prior to the US presidential election in November.
In the meantime, defense cooperation is also indicative of the unshakable alliance between Washington and Riyadh. According to the Washington Institute for Near East Policy, US-Saudi military collaboration has grown to encompass a range of military drills over the past decades. While large numbers of US troops were never formally or permanently stationed in Saudi Arabia, the US military has maintained a continuous presence in the kingdom.
Additionally, the US has long been Saudi Arabia's primary supplier of weapons, training, and military support. In 2023, Riyadh allocated US$69 billion to defense, consistently ranking among the highest defense budgets in the world. Saudi Arabia is also the largest customer of America’s Foreign Military Sales program, with deals amounting to US$140 billion under this arrangement, according to the think tank.
When it comes to the bigger picture of a multipolar world, it’s reasonable to say Riyadh is hedging its bets between the West and the developing world: Saudi Arabia has not yet formally responded to the invitation to join the expanding BRICS club, which already includes the United Arab Emirates, another Gulf state. Saudi Arabia’s de facto ruler, Crown Prince Mohammad bin Salman, skipped the annual BRICS summit held in Kazan, Russia, this October, where Chinese President Xi Jinping, Russian President Vladimir Putin, and other leaders from developing economies gathered to discuss shifting away from the West-led global order.
In a nutshell, China and the US may not be mutually exclusive options for Saudi Arabia, at least at this stage. Holding the China card in hand can provide the oil-rich Kingdom with more leeway in fostering its traditional alliance with the West. For now, it is the time for the two superpowers to work out plans to court the Gulf state, which strives to strike a balance.
 | A guest post by
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For many years, the US was the biggest buyer of oil. A larger percentage of Americans drove cars than other large countries, and much of American commerce travels by truck, not rail. So the OPEC nations desperately needed US business and did what the US told them to do.
But fracking means the US is now a net exporter (not by much, but still, a net exporter) and now many Chinese families have a car, and that's a lot of cars, and now many Chinese villages without a railway station have trucks moving their commerce in and out. So now the PRC is the biggest importer of oil, which means that, when the PRC ordered Saudi and Iran to be friends, they shook hands as ordered.
If one measures an economy by the US dollar equivalent of trade, the US is still the largest economy, but by PPP the PRC economy is largest.
Brics is hard bricked. Arabia belongs in a reformed and refreshed, strong Non-Aligned Movement, not in a tralala monetary organisation which includes Nazi China. Especially them.