In what can only be described as a masterful play to entice Saudi Arabia to list shares of Aramco in Hong Kong (assuming the kingdom follows through with the listing, which is reportedly in jeopardy) Chinese state media reported Friday that Chinese President Xi Jinping pledged to strengthen the relationship between China and Saudi Arabia as the latter tries to reform its economy.
According to the South China Morning Post, Xi vowed to strengthen cooperation between the two states at a time when the Middle Eastern kingdom is facing a political shake-up at home, and heightened tensions with Lebanon and Iran. Xi’s vow of friendship came with the crucial qualifier that the relationship between the two countries wouldn’t be affected by shifting international circumstances.
No matter how the international and regional situation changed, China’s determination to deepen strategic cooperation with Saudi Arabia would not change, President Xi Jinping told Saudi King Salman in a telephone conversation, according to a report by China’s state broadcaster CCTV.
“China supports Saudi in its efforts to safeguard its sovereignty and achieve greater development,” Xi was quoted as saying.
Of course, that’s an implicit threat that China might come to KSA’s aide if the simmering hostilities between the kingdom and Iran explode out into a military conflict between the two regional rivals. However, the SCMP also stresses that China has a strong relationship with Iran as well.
Hong Kong is reportedly still in consideration to host the Aramco IPO.
And while China will presumably play the dual role of investor and adviser as the Kingdom seeks to diversify its economy into other industries besides energy, including technology and manufacturing, KSA has in returned promised to assist Xi’s “one belt, one road” economic reform program.
King Salman told Xi that Saudi Arabia was willing to become China’s “important partner” in the Gulf. The kingdom also intended to play a role in China’s “Belt and Road Initiative” and cooperate with Beijing in the energy and financial sectors, he said
Though Chinese media reports didn’t delve into too much detail about the recent purge orchestrated by Crown Prince Mohammed bin Salman, the call between the two leaders obviously follows an event two weeks for KSA, where its leaders reportedly pressured Lebanese Prime Minister Saad Hariri to resign. Hariri had to go, allegedly, because he was deemed too soft on Hezbollah, the shiite militant group that’s affiliated with Iran and is also an important powerbroker in Lebanon.
Two weeks ago, dozens of Saudi princes and officials were detained on corruption charges, a move that is believed to have helped Crown Prince Mohammed bin Salman to consolidate his power. And yesterday the Financial Times exposed the “corruption crackdown” for what is truly is: A naked cash grab meant to refill KSA’s foreign currency reserves while allowing it the financial flexibility to help ensure the Aramco IPO is executed at the best possible price.
Lebanese President Michel Aoun this week accused Saudi authorities of “detaining” Hariri, but Riyadh said he was free to leave the kingdom “when he pleases”. Hariri was reportedly supposed to arrive in France on Friday.
Saudi Arabia was also seen as a protagonist in leading 11 other nations to sever diplomatic ties with Qatar earlier this year, a move meant to punish KSA’s tiny neighbor for having too close a relationship with Iran.
Despite Xi’s promise, China also maintains warm relations with Iran, meaning the likelihood that China would become involved in a military struggle against either Iran or Saudi is probably low.
According to the SCMP, China has bolstered its presence in the region by forging closer ties with both countries. Of course, Saudi has plenty to gain from closer relations with China, including expanding its foothold in the world’s largest import market for crude.
During King Salman’s first official trip to China in March, the two countries signed deals, including some in the oil sector, worth a combined US$65 billion, the SCMP noted.
However, if the feud between Saudi Arabia and Iran intensifies - and that looks likely - the threat of a geopolitical conflict will become impossible to ignore.
What then?