Significant developments are taking place in the Middle East, where intense but covert global competition between the US and China continues. The long-awaited visit by Chinese President Xi Jinping to Saudi Arabia is of great importance to regional powers trying to maintain a balance and hedging in the face of fierce competition.

While Chinese companies signed investment agreements with Saudi Arabia in various fields (34), these agreements cover a wide range of sectors, including green energy, information technology, cloud services, transportation, logistics, medical industries, housing and construction factories.

The Saudi investment minister spoke of agreements worth around $50 billion. Trade between China and Saudi Arabia exceeded $80 billion in 2021, and Chinese companies have invested more than $36 billion in Saudi Arabia since 2005. With a total investment of $106 billion, Saudis are at the top of China's list of regional assets.

On the other hand, at the beginning of 2022, Aramco decided to build a $10 billion refinery and petrochemical complex in northeastern China. The project, expected to become operational in 2024, will have a refinery capacity of 300,000 barrels per day. In addition, Sinopec, a Chinese company, also owns 37.5% of the Yanbu refinery, with a daily capacity of 400,000 barrels, on the Red Sea coast.

While Saudi media interpreted the visit as raising Arab-China relations to "a new level," Chinese media also emphasized that the visit was "epoch making." This shows that Saudi Arabia is divorcing its ties with the US, which has long served as the guarantor of regional security.

The main concern for the Saudis is to avoid becoming a battleground in the competition between the US and China. Therefore, the Saudis are adopting diversified diplomacy and developing a classic risk-avoidance (hedging) approach that aims to balance between rival great powers. This strategy could gain weight in the Middle East.

The Saudis are looking for ways to engage with China cautiously in this turbulent multipolar period. Such engagement, though, is unlikely to be welcomed by the US, which plays a "determining" role in the region's security. Therefore, it is safe to say that the Saudis have embarked on a "dangerous but opportunity-rich" path.

It is reasonable to recollect US Vice President Joe Biden's critical statements during his July visit to Riyadh: "We will not walk away and leave a vacuum to be filled by China, Russia, or Iran. The United States is not going anywhere.”

Despite such bold statements, the US has experienced a decline in global and, therefore, regional influence. On the other hand, China, which acts with "a weak hegemonic motive" shows great interest in the Middle East to secure its energy needs and use the geopolitical position of trade routes.

Geopolitical stability and security are vital for China. The US's regional security architecture currently being built also serves China's interests. Therefore, China is a strategic actor that invests in the existing status quo but also keeps an eye on opportunities.

A comprehensive strategic partnership agreement was signed during Chinese President Xi Jinping's much-discussed visit to Saudi Arabia. A comprehensive strategic partnership is an essential level in China's foreign policy, which follows the principle of non-interference in the internal affairs of other countries. However, this is not an alliance.

In the Middle East, China is creating an unique position for itself. It has the ability to develop $400 billion deals with Iran, a UAV factory with Saudi Arabia, and port partnerships with Israel. Due to its flexibility, China has a lot of room for manoeuvre, which puts its Middle East strategy in a "grey zone."

Therefore, the proposal to make oil payments in yuan and the summits held during the visit indicates both a strategic preparation for China's Middle East policy and the signs of a foreign policy transformation in Saudi Arabia.

In an article published in Saudi Arabia's Al Riyad newspaper, entitled "Carrying Forward Our Millennia-old Friendship and Jointly Creating a Better Future" Chinese President Xi Jinping emphasized that the two countries are working together for the prosperity of the world within the framework of "Vision 2030" and the Belt and Road Initiative.

It is possible to argue that China placed a specific emphasis on the idea of "comprehensive strategic cooperation." No political or security-related remarks were made. Xi places a lot of emphasis on the rule of not meddling in others' domestic affairs. Coordination of strategies and cooperation in the economy and energy are the key focal topics.

Meanwhile, the Saudi Press Agency also published a joint statement of about 4,000 words. In this statement, both sides reaffirmed the principle of non-interference in internal affairs, and Saudi Arabia reiterated its commitment to the "one-China" principle. Energy issues, particularly the peaceful use of nuclear energy and the development of artificial energy, were highlighted.

At the same time, it was announced at the conference that a 'harmonization plan' was signed between Saudi Arabia's 2030 Vision and China's Belt and Road Initiative. Regarding political issues, the two sides confirmed their full support for efforts to find a political solution to the Yemen crisis.

It received little notice, but there was an agreement to deepen collaboration to safeguard the peaceful character of Iran's nuclear programme, which might place China in a balancing role between Saudi Arabia and Iran.

The two sides also discussed developments in the Palestine issue and emphasized the need to focus efforts on achieving a comprehensive and fair solution to the Palestinian-Israeli conflict. The need to focus efforts on achieving a political solution in Syria that preserves the country's territorial integrity, restores security and creates the necessary conditions for the voluntary return of refugees was also emphasized.

Chinese President Xi Jinping made similar statements at the China-Arab States Summit and the China-Gulf Cooperation Council Summit. In summary, the following points stand out:

  • ·        Cooperation in the energy sector
  • ·        Harmonization with the Belt and Road
  • ·        Payments in yuan
  • ·        Efforts on Iran and the nuclear issue
  • ·        Harmony on the Palestine issue
  • ·        Confirmation of the One China principle

In a report titled "China-Arab Cooperation in the New Era", published by the Chinese Ministry of Foreign Affairs on December 3, China specifically stated that it would strengthen its monetary cooperation with the central banks of Arab countries and discuss expanding cross-border local currency settlement and exchange.

Still, progress is not expected in this regard at this stage. However, the participation of Saudi banks in China's international payment system, CIPS, is on the agenda.

Meanwhile, let's remember that about 80% of global oil sales are traded in dollars, and Saudi Arabia has committed to trading oil only in dollars since 1974, in an agreement with the Nixon government for security guarantees for the country.

The US government is dissatisfied with Chinese President Xi Jinping's visit and China's efforts to increase its influence in the Middle East. When US National Security Council spokesman John Kirby says, "We are mindful of the influence that China is trying to grow around the world. The Middle East is certainly one of those regions where they want to deepen their level of influence," he seems to be referring precisely to this.

From the US perspective, the rapprochement between China and Saudi Arabia is probably very confusing, as it defines the global power struggle in the new era as a competition between democracies and autocracies. Mike Pompeo, former US Secretary of State, unhappy with the Biden administration's policies towards the region, says that Chinese President Xi Jinping's visit to Saudi Arabia is a "result of bad American policy."

The Biden administration, which has been constantly confused about whether to withdraw from the region and has been heavily criticized for the events that occurred when it withdrew from Afghanistan, is having coordination problems in forming and managing strategy.

There are approximately 65,000 US soldiers on permanent bases in the region. The US, which donates $10 billion to the Middle East every year, is struggling with the problem of how it can further settle in the region without incurring additional costs in global competition due to developments such as the Ukraine issue and the situation with Iran.

For China, the US that is struggling with Ukraine, Iran and the Middle East, will always be a preferred option because it will allow the global competition to spread over a wider area, while the resolution of sensitive issues such as Taiwan will be postponed to a later date and the status quo will continue.

Amid all this commotion, Saudi Arabia is trying to optimize its interests and eliminate the risks that may arise from global competition. Saudi Arabia's Foreign Minister's statement, "Collaboration with China does not mean non-collaboration with the US. We do not believe in polarization or choosing between one or the other," expresses such a concern.

By adopting such an approach, Saudi Arabia is calculating how to minimize the costs of great power competition. One of the most prominent trends in the new era is the increase in efforts by countries to avoid a strong alliance and detachment, which gives China's strategic partnership model a serious attractiveness. This way, mid-sized states try to hedging from the pressure to choose sides by showing multifaceted conformity.

The focus of the China-Saudi Arabia relationship is primarily based on energy. Saudi Arabia is the country that exports the most oil to China and China is very sensitive to energy security. According to official figures from China, 72% of oil consumption and 44% of natural gas demand are obtained from abroad.

China is trying to take advantage of the tensions between Riyadh and Washington in recent times in its deepening competition with the US. However, despite these efforts, it is not likely that the US engagement in the region, which continues with its military presence, will suddenly disappear.

Dr.Hüseyin Korkmaz. The author is a researcher focusing on China and geopolitics in the Asia, primarily related to the US-China relations.