China and Saudi Arabia have signed a series of agreements during King Salman’s state visit to China. The agreements are aimed at strengthening their economic ties, which the two countries say could generate deals totalling over US$65 billion. 

Saudi Arabia's King Salman arrived in Beijing on March 16, with the aim of drumming up investment in Saudi Arabia and building relationships between Saudi and Chinese companies. Beijing's Belt and Road initiative and the Saudi Vision 2030 plan give plenty of scope for cooperation.

The Saudi economy is currently going through a major restructuring as the Kingdom grapples with the problem of lower oil revenues. Under its Vision 2030 plan it wants foreign involvement in its privatization programme, as well as investment in new projects in sectors such as power generation, petrochemicals and housing.

Saudi Arabia also has a strategy of working closely with Chinese state-owned oil companies in order to hold onto oil export contracts, at a time when Russian oil and gas companies are strengthening their links with China.

King Salman was hosted by President Xi Jinping in the Great Hall of the People. The two leaders expressed their wish for closer ties and more economic cooperation. Defence and security issues were also high on the agenda.

A number of memoranda of understanding (MoU) were signed between the two governments. Alongside these, Saudi and Chinese companies signed their own contracts. It was deputy foreign minister Zhang Ming who estimated that the various deals could be worth US$65 billion.

An MoU with state-run China North Industries Group will examine building refinery and chemical projects in China.

Saudi Basic Industries Corp (Sabic ) and Sinopec have agreed to develop more petrochemical projects in China and Saudi Arabia. Sinopec and Sabic already have a 50-50 joint venture, Sinopec Sabic Tianjin Petrochemical Co (SSTPC), which was set up back in 2010. It owns petrochemical plants in the Tianjin Binhai New Area.

The Saudi National Transformation Program (NTP) was approved in the summer of 2016, and as part of sweeping economic reforms it wants to double foreign direct investment by 2020. The NTP forms part of the Vision 2030 initiative.

Under the NTP, each Ministry has been given a set of strategic goals. The Ministry of Energy, Industry and Mineral Resources has the strategic objective of increasing non-oil commodity exports. It aims to create an attractive environment for both local and international investors, and will establish specific zones with competitive advantages to enhance investments.

The Ministry of Housing will improve the performance of the real estate sector, and increase its contribution to GDP, while enabling citizens to obtain a suitable home. Last year the Saudi housing minister signed an MoU with China for cooperation on the construction of 100,000 homes in al-Ahsa province, which is located in eastern Saudi Arabia.

There is also likely to be interest from China with regard to airport privatizations. The General Authority for Civil Aviation has plans to privatize all 27 of its airports between now and 2020.

King Salman was also in Japan, Malaysia and Indonesia during his month-long tour of Asia. While he was in Kuala Lumpur, state-owned oil company Saudi Aramco and Malaysian oil company Petronas signed a deal for Saudi investment in an oil refining and petrochemicals plant.

While in Japan, Prime Minister Shinzo Abe made a pitch for Saudi Aramco to consider the Tokyo Stock Exchange for its planned initial public offering. This could raise US$100 billion, making it the largest IPO ever; exchanges around the world are jostling to be considered for the listing. Saudi Aramco and Tokyo Stock Exchange put out a statement saying that they were looking at setting up a study group for a possible listing.

Saudi Aramco already has close ties to China, which are being developed further. It holds a stake in the Fujian Refining & Petrochemical Company. Sinopec is a joint venture partner with Aramco in the YASREF refinery on the Red Sea Coast. This facility, which is the key anchor project in the Yanbu Industrial City, is one of the most important elements of Aramco's downstream refining portfolio.