After the historic Saudi-Iranian agreement under Chinese auspices: A new dawn in the Arab-Chinese partnership
After the historic Saudi-Iranian agreement under Chinese auspices: A new dawn in the Arab-Chinese partnership
By Ali Mahmoud El Abdallah, President of the Lebanese Chinese Business Association
The Saudi-Iranian announcement of resuming diplomatic relations after “seven difficult years,” under Chinese mediation, marked a surprising positive development for many countries worldwide a historic step on both the Middle Eastern and global geopolitical stage, especially amid the growing international tension. While global crises intensify and international relations worsen due to the war in Ukraine with worsening economic and financial conditions in the United States and Europe the Saudi-Iranian agreement signed in Beijing stands as a strategic global move in the right direction toward international stability and peace.
There is no doubt that, if the agreement proceeds positively, it will represent a great opportunity for both nations and for all regional countries to reduce tensions on one hand and enhance economic relations on the other. It is therefore essential to examine the potential benefits of this accord for Saudi Arabia, Iran, and China, as well as its positive implications for the Arab world, especially since this agreement represents a new dawn in Arab-Chinese partnership and a long-awaited driver for peace, stability, and global security.
Stabilizing Oil Markets
To begin with, the agreement carries several crucial economic benefits. Iran and Saudi Arabia are two major oil-producing countries, and any cooperation between them could directly influence global oil markets and, consequently, the global economy. It is worth noting that both countries are members of OPEC+, which plays an increasingly important role in the global oil system under Riyadh’s leadership, especially with Russia’s participation, a nation with one of the world’s largest oil reserves.
In numbers, the significance becomes even clearer. According to the latest reports, Saudi Arabia ranks second after Venezuela in proven oil reserves with about 267.1 billion barrels, while Iran holds 208.6 billion barrels, according to OPEC. Combined, their reserves account for over one-third of OPEC’s declared total reserves.
This restoration of diplomatic ties could therefore pave the way for greater cooperation in managing oil production levels and stabilizing global oil prices. According to the International Energy Agency (IEA), global oil demand is expected to increase by 1.6 million barrels per day this year. Any steps taken to stabilize markets would thus be vital for the already strained global economy.
Furthermore, renewed relations may lead to increased trade and investment between the two nations, especially if Iran and the United States reach a new nuclear deal. Reports indicate that bilateral trade between Iran and Saudi Arabia did not exceed a few million dollars annually in recent years a “tragic” figure given Saudi Arabia’s GDP of around one trillion USD, according to its General Authority for Statistics. The potential for growth is immense in sectors such as agriculture, petrochemicals, tourism, and other key industries. The agreement could therefore serve as a platform for future cooperation, offering vast opportunities for businesses and investors not only in both countries but across the entire Middle East.
Protecting Chinese Interests
The deal also has significant implications for China’s interests in the region. As the world’s second-largest economy and largest importer of Middle Eastern oil, China has deep strategic stakes in the region. It has invested heavily in infrastructure, energy, and transportation, and any instability could directly affect its economy. By mediating this deal, China reinforces its commitment to peace, stability, and the protection of its economic interests.
If the agreement continues to progress, its economic ripple effects could extend far beyond Saudi Arabia, Iran, and China. The Middle East and North Africa (MENA) region holds the potential to become an economic powerhouse, with the combined GDP of Arab countries reaching 3.4 trillion USD in 2022, according to the Arab Investment & Export Credit Guarantee Corporation (Dhaman). However, regional conflicts and political instability have long hindered growth. Renewed Saudi-Iranian relations could mark a turning point toward regional economic integration and cooperation, opening new doors for the private sector both inside and outside the region.
Moreover, this rapprochement could positively impact regional and global peace. Stable relations between Iran and Saudi Arabia may reduce regional conflicts and prevent their escalation. This is crucial in a Middle East long plagued by instability and war. It could also promote stronger ties between Iran and other Gulf countries, fostering a broader atmosphere of stability and cooperation.
Globally, the Saudi-Iranian rapprochement could alter the balance of power, as both nations are key regional players. Any reconciliation between them inevitably affects the international strategic landscape particularly as China’s global role grows heavier. Beijing’s diplomatic success here demonstrates its commitment to fostering stability and cooperation, and this may have wider implications for its relations with other major powers, including the United States and Russia.
However, caution is warranted. Normalizing relations will not immediately solve every regional conflict in Syria, Iraq, Lebanon, Yemen, and elsewhere where the two countries’ interests often clash. Deep political differences and mutual distrust remain, and external forces opposed to the deal could attempt to disrupt or undermine it. This is a delicate phase that demands careful observation of major powers’ reactions.
China’s Expanding Role
To fully understand this agreement, one must examine China’s strategic interests in the Arab world. China and the Arab world celebrated the 66th anniversary of diplomatic relations last year, which began with Egypt in 1956. Since then, China-Arab economic ties have expanded rapidly, driven by China’s energy demand and Arab nations’ need for investment and economic diversification.
According to China’s Ministry of Foreign Affairs, China-Arab trade reached about 330 billion USD, with China-Saudi relations representing a central pillar. Saudi Arabia remains China’s top oil supplier, accounting for 18% of total Chinese oil imports, averaging 1.77 million barrels per day during the first ten months of 2022. In 2021, China imported 43.9 billion USD worth of Saudi oil, while overall Chinese imports from Saudi Arabia totaled 57 billion USD, and Saudi imports from China reached 30.3 billion USD.
Yet the relationship extends far beyond oil. China’s economic ties with Arab countries span infrastructure, telecommunications, and finance. Chinese companies have participated in major regional infrastructure projects ports, highways, railways, and more. For instance, China is investing heavily in the Red Sea Economic Zone in Saudi Arabia, aiming to create a global trade and investment hub. Chinese telecom giant Huawei has also signed several agreements with Arab states including Saudi Arabia, Egypt, and the UAE to develop communication networks.
Financially, cooperation is also deepening. The China-Arab States Cooperation Forum, established in 2004, has enhanced economic collaboration, including the creation of a China-Arab Investment Fund to finance infrastructure and other projects in the region.
Strong Ties and Shared Vision
Trade between China and the Arab world has grown from 37 billion USD in 2004 to over 330 billion USD in 2022. According to research centers, Chinese investments in Arab countries exceeded 213.9 billion USD between 2005 and 2021, making China the largest foreign investor in the Arab world.
China has also established strategic partnerships with 12 Arab countries, signed Belt and Road Initiative agreements with 20 Arab nations, received support from 17 for the Global Development Initiative, and welcomed 15 Arab members into the Asian Infrastructure Investment Bank (AIIB). Moreover, 17 cooperation mechanisms have been established under the China-Arab Cooperation Forum.
Under the Belt and Road Initiative, China has invested hundreds of billions of dollars in ports, roads, and railways to boost trade with dozens of countries particularly Arab ones. Reports indicate that Saudi Arabia accounts for 21% of China’s total investments in the Arab world, followed by the UAE (17%), Iraq (14%), and Egypt and Algeria (12% each).
Conclusion
This historic Saudi-Iranian agreement, viewed in the context of strong and growing Arab-Chinese relations, paves the way for deeper Chinese and Arab diplomatic efforts to strengthen regional ties and promote stability.
China, now a global power alongside the United States, is assuming its natural constructive role in shaping a more peaceful and secure world. We stand before a historic turning point, one that, if sustained, could lead to long-term growth, cooperation, and stability across the region.
May the seven difficult years of division truly be behind us and may China’s active engagement in resolving regional and global disputes mark the rise of a new economic and political force capable of reshaping history.