Saudi Edition 
Egypt Edition 
UAE Edition 
MENA <> India Corridor 
Logistics (MENA) 
Climate (MENA) 
Share
Saudi Arabia and China signed a bilateral local currency swap agreement worth CNY 50 bn (c. SAR 26 bn), statements by two countries’ central banks read (here and here). The move comes as Riyadh and Beijing look to take ties to the next left — and reflect their shared interest in partially diversifying their non-oil trade away from the greenback.
Neither the Saudi Arabian Monetary Authority (SAMA) nor Beijing’s central bank were loquacious about the three-year swap. SAMA said only that the agreement “reflects closer ties between the two banks in fields of common interest.” The People’s Bank of China said separately that the swap will “help strengthen financial cooperation” and “facilitate more convenient trade and investment” between the two countries.
Why this matters: China is our largest trade partner, with bilateral trade between the two countries hitting USD 87.3 bn in 2021. The move reflects Crown Prince Mohamed bin Salman’s emphasis on building deeper economic ties with China, where we are already one of that country’s top oil suppliers. We’re also shifting away from the USD as the de-facto currency for oil payments. Business ties with Beijing have grown in recent years as we’ve worked to attract investment in the Kingdom by Chinese tech companies and oil giant Aramco has poured bns of USD into China’s petrochemicals sectors.
It’s not only economy: Riyadh and Beijing have shared geopolitical interests, with China helping broker a historic reestablishment of ties between Riyadh and Tehran earlier this year. Beijing was also the starting point of a visit yesterday by a Middle East delegation led by Foreign Minister Faisal bin Farhan Al Saud for talks on a ceasefire in Gaza.
An easier “I do?” to BRICS? Saudi was one of six countries invited in August to join the BRICS group of nations. We’re expected to join in January with allies including Egypt and the UAE.
What’s on Beijing’s mind: “China seems to be using swap lines in a very different way to the US,” Weitseng Chen, associate professor at the National University of Singapore told Reuters.
“[China] uses it as a credit line, so it’s on a constant basis, instead of a one-time, one-off thing during a financial crisis,” Chen said.
