The Prince’s Smile in China

The Gulf Cooperation Council’s Investment in China

The Gulf Cooperation Council’s investments in China have significantly expanded in recent years as a result of precise planning and strategic foresight.

The Gulf Cooperation Council’s investments in China have notably increased over the past few years due to strategic partnerships and mutual economic interests.

This expansion is not a mere coincidence but the result of precise planning and strategic foresight.

For Saudi Arabia and other Gulf Cooperation Council member countries, continuing diverse economic diversification programs is a top priority in their policy planning. China and many Asian countries are considered vital components of these visionary programs that are being realized.

The six Gulf Cooperation Council member countries – Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates – collectively and individually with a total trade volume of $315.8 billion in 2022, are among China’s largest trading partners in the Middle East. The combined Gross Domestic Product of the Gulf Cooperation Council countries is $24 trillion, while China has reached $17.7 trillion.

The countries of the Gulf Cooperation Council are the ninth largest economy in the world, while China is the second largest economy, leading cooperation between the two regions for the global economy.

Comprehensive strategic participations, multilateral action plans, joint initiatives, and possibly soon a China-Gulf Cooperation Council free trade agreement will strengthen this upward trajectory.

During the China-Gulf Cooperation Council Summit held in Xiamen on May 23, 2024, President Xi Jinping stated that deepening industrial and investment cooperation between the Gulf Cooperation Council countries and China will help enhance harmony between the Belt and Road Initiative and the development strategies, visions, and plans of the Gulf Cooperation Council countries.

Chen Weiqing, the Chinese Ambassador to Saudi Arabia, stated that about 90% of the terms of the free trade negotiations between the Gulf Cooperation Council member countries and China have been agreed upon.

Both sides have made progress on this agreement, and the first session of the China-Gulf Cooperation Council Economic and Trade Ministers’ Meeting took place in Guangzhou in October 2023 after ten rounds of meetings and technical negotiations.

In addition, the value of ownership and investment of Persian Gulf companies in China has increased by over 1000% annually and reached $53 billion in 2023, with most of this growth seen at the level of joint petrochemical companies and projects.

It was mentioned at the tenth Arab-China Business Conference held in Riyadh in June 2023 that China is expected to receive between $1 to $2 trillion in investments from the Sovereign Wealth Funds of the Gulf Cooperation Council countries by 2030, as they look towards Asia and specifically China. In this regard, Saudi Arabia’s Minister of Investment, Khalid Al-Falih, emphasized at the conference that economic relations between China and the Arab world, especially with Saudi Arabia, are growing, and there is room for further growth, especially in capital market relations between Beijing and Riyadh.

Ownership by Gulf Cooperation Council countries in China increased to over $23 billion in 2023, which was $100 million more than the previous year. Sheikh Mohammed bin Zayed Al Nahyan, the Crown Prince of the United Arab Emirates, visited China on May 30, 2024, to participate in the Arab-China Cooperation Forum.

This visit took place in the framework of comprehensive strategic cooperation between the UAE and China on the occasion of the fortieth anniversary of the establishment of diplomatic relations between the two countries.

The number of institutions in the Persian Gulf applying for and receiving QFII qualification certificates for foreign institutional investors increased from three to nine in 2021-2022, following the gradual and upward trend of previous investments by the GCC Public Investment Funds in China.

Although the Saudi Arabian Public Investment Fund entered the Chinese stock market in 2016 through its participation with Soft Bank due to its ambitions and global reach, it is now starting to directly establish its presence in China.

In February 2022, the Saudi Arabian Public Investment Fund (PIF) opened an office in Hong Kong, demonstrating its intention to deepen its relations with Beijing. The Saudi group Tadawul, which oversees the Saudi stock exchange, is said to have initiated preliminary discussions regarding mutual listings with the Hong Kong, Shanghai, and Shenzhen stock exchanges next year.

Such agreements may facilitate access for Gulf Public Investment Funds and other government and private funds based on the GCC Cooperation Council to the Chinese stock market.

These efforts indicate a more comprehensive trend in which Gulf countries are diversifying their investment portfolios and reducing their dependence on fossil fuels. The goal is to place investments in sectors with high growth potential, and these investments are not only seeking financial returns but also aim to strengthen innovation and economic diversity in both regions.

The ambitions of the Gulf Cooperation Council to develop clean energy opportunities in the region are increasingly linked to China, as Beijing is a major global player in the clean energy supply chain, with a significant share in lithium battery production and wind energy.

According to United Nations statistics, lithium battery exports from China to the Gulf Cooperation Council increased by 99% between 2021 and 2022, and saw a 26% growth in the first three quarters of 2023.

Market opportunities in renewable energies stem from national perspectives and the Gulf Cooperation Council’s efforts towards economic diversification.

Chinese companies, by shifting from traditional government project models to public-private partnerships, claim that their involvement in Gulf countries like Saudi Arabia creates significant social benefits.

The determination of the Gulf Cooperation Council countries to expand their trade and economic relations with China will undoubtedly be influenced by their relations with the United States and the Gulf Cooperation Council. However, despite the current US proposals suggesting that expanding relations between the Gulf Cooperation Council and China could have consequences, the Gulf Cooperation Council countries will continue to develop their relations with China.

In fact, the growing economic relations between the Gulf and China indicate a path of growth in global investment patterns, where traditional Western investment strategies are complemented by Asian and Middle Eastern participation. It is expected that these collaborations will play a significant role in shaping the economic outlook of both regions in the years to come.

However, investments by Gulf countries in China should not be perceived as a strategic axis to distance themselves from other regions but rather as an effort to enhance the Gulf countries’ focus on Asia.

This trend is evident with mutual interest in economic diversity and high-growth sectors. The logic behind these investments is not just investing in the potential strong growth markets of Asia, especially China, but also strengthening a mutually beneficial bilateral relationship.

This approach allows Gulf investors to quickly take advantage of new opportunities in rapidly developing industries and strengthen innovation and economic growth on both sides.

While there has always been a gradual upward trajectory in the scale and diversity of Gulf fund investments and increasing interaction with the Chinese stock market, especially in technology and other emerging sectors aligned with Gulf interests, it should be noted that this does not indicate a transformation in China-Gulf relations.

Instead, the increasing complexity of their economic relations indicates a broader global shift towards Asia as a vital economic center.

Gulf countries’ investments in China, rather than just demonstrating strategic alignment, signify a natural progression towards deepening economic ties with regions that are increasingly influential in the global economy.

In general, Gulf countries’ investments in China demonstrate a pragmatic approach to leveraging growth opportunities in Asia while maintaining a balanced global investment strategy, paving the way for hopeful futures in global economic relations.