Cooperation with China on investment opportunities looks bright, experts say

With environmental sustainability emerging as a key theme in their mutual engagement, China and Saudi Arabia can identify new opportunities for cooperation under the Belt and Road Initiative in order to promote green investments, analysts said.

The prospects for such investments are looking brighter after the Saudis announced a campaign to tackle climate change and curb carbon emissions. And, with China's endorsement of the plan, the ground is set for an enhanced partnership between the two sides.

In a phone call with Chinese President Xi Jinping on April 20, Saudi Arabia's Crown Prince Mohammed bin Salman said his country is willing to work with China to cement the strategic synergies between Vision 2030 and the BRI. Xi, in turn, said China supports Saudi Arabia's proposals and stands ready to take their partnership to new levels.

The greener future stressed by Saudi and Chinese leaders "is expected to guide their countries' cooperation on the BRI", said Norafidah Ismail, a senior lecturer and Middle East expert at the School of International Studies at Universiti Utara Malaysia.

But the two countries, she said, will also need to identify and create more opportunities in the BRI so that "the win-win effects could be maximized".

Henelito Sevilla, Jr, associate professor and West Asia Coordinator at the Asian Center of the University of the Philippines, said China and Saudi Arabia, as two major regional powers, felt that they have a shared responsibility to mitigate climate change.

The Saudi Green Initiative and the Middle East Green Initiative-roadmaps to meet emission targets, enhance environmental protection and boost efforts toward renewable energy production-are seen as an extension of Saudi Vision 2030, a socioeconomic blueprint that aims to transition the Arab nation's economy and reduce its reliance on oil. The two green initiatives were unveiled on March 27.

The plan to make the Middle East region environmentally sustainable is in recognition of the shared understanding among Gulf countries that dependence on crude oil is not sustainable in the long run, Sevilla said.

Research and publishing firm Oxford Business Group reported that in 2020, renewables accounted for 57 percent of China's total investment in energy infrastructure, an increase from the 2019 figure of 38 percent.

Sevilla said that although the pandemic may have temporarily slowed China's BRI engagement with the Middle East region, with COVID-related assistance taking up attention, the Gulf region will remain a critical component in the success of the Belt and Road program.

Climate governance

Moreover, Sevilla said China and Saudi Arabia have shown readiness in terms of capital investments. Cooperation in promoting global climate governance and sustainable development, in keeping with the objectives of the Paris climate accord, has always been part of their agenda.

Maya Senussi, a senior economist for the Middle East at research and analysis group Oxford Economics, notes that Saudi Arabia has embarked on reforms designed to diversify its economy away from oil, including through investments into clean-energy technologies.

The BRI program's accelerating investment in alternatives, like solar capacity, would allow the Asian giant "to 'green' the initiative, addressing concerns over potential climate threat, and aid the post-COVID recovery", Senussi said.

The economist added: "Both countries recognize the need to adapt to fit with the transition to a low-carbon future."

In 2019, China and Saudi Arabia signed 35 economic agreements worth $28 billion, which included the renewable energy sector, with consultation and cooperation on investment development in wind turbines and wind generators.

Clemens Chay, a research fellow at the Middle East Institute of the National University of Singapore, said the goal of China-Saudi Arabia cooperation has always been to deepen and diversify the relationship, with expected green initiatives likely to support such efforts.

Chay said China's commitment to green goals stems more from its desire to embrace the ideals of the international community, although "sustainability has increasingly taken center stage", he said.