The Saudi-Chinese Business Council Opens Up Prospects For Building Bilateral Trade and Investment Partnerships

Although the global economy has been affected by the decline in oil prices, and the new Coronavirus (Covid-19) epidemic, several sectors in the Kingdom hold opportunities. To build bilateral trade and investment partnerships between Riyadh and Beijing, which is being strengthened by the Saudi-Chinese Business Council.

It comes on top of these investment opportunities within the Kingdom; The real estate field, which is targeted by the real estate sector institutions in the Kingdom, especially the Real Estate Development Fund, the Ministry of Housing, and the Saudi Arabian Monetary Agency within the framework of the 2030 Vision for the development of the sector.

The Kingdom of Saudi Arabia is witnessing a large urban movement, especially in major cities, and real estate investment, brokerage and asset management has a wide profit margin, and it has huge opportunities for growth, according to specialists.

And what enhances Chinese investment opportunities in the real estate field in the Kingdom is that several Saudi companies signed cooperation agreements with their Chinese counterparts, during a visit by the Custodian of the Two Holy Mosques King Salman bin Abdulaziz, in the first quarter of 2017.

A Chinese delegation also visited Saudi Arabia in July 2019; To discuss investment opportunities in the Kingdom, especially the real estate field.

At that time, Liu Xinhua, head of the Chinese Council for the Advancement of South-South Cooperation (affiliated with the Chinese Ministry of Foreign Affairs), indicated that large infrastructure projects had acquired China’s investments in the Kingdom.

He stressed the importance of attracting small and medium-sized companies to invest in the Kingdom, thus promoting the rapid development of bilateral economic and trade relations.

The volume of Chinese direct investment in the Kingdom in the first half of last year, which is all non-financial, amounted to more than $1.1 billion, according to previous press statements by Chen Weicheng, the Chinese ambassador to the Kingdom.

Similar to real estate investment, the Saudi capital market remains one of the leading financial markets in the Middle East. Investing in the stock market is one of the most popular means for investors in the Kingdom, as it provides all the factors of attraction in the money market, whether for citizens or foreigners.

The Saudi capital market aspires to become the focus of attention and a starting point for Chinese investment in securities and the purchase of shares, and for this it seeks to attract investors, especially Chinese, whether in the export market or direct trading, and hopes that the proportion of foreign investment will exceed 15% of the market capitalization.

According to the strategic plan for the financial market (Financial Leadership Program 2019-2021), the Kingdom aspires for the number of companies listed in the main and parallel market to exceed 250 listed companies, and to achieve liquidity rates that achieve the goals of the participants in the financial market.

Likewise, taking advantage of the capital flowing as a result of the inclusion of the Saudi market in the emerging international indicators, in order to contribute to achieving the goals of the Kingdom’s Vision 2030.

Initiatives were designed to enhance dealers’ confidence in the financial market, by reducing its volatility and enhancing means of stability, protecting investors from any irregular and unfair acts, compensating those affected, and imposing deterrent penalties for violating the financial market system.

The financial market seeks to attract foreign investments by enacting legislation that gives investors confidence in preserving their material rights, as well as providing high and attractive returns, while the influx of foreign capital increases the volume of liquidity.

The Kingdom’s Vision 2030 aims to become the main Saudi financial market in the Middle East and one of the ten most important financial markets in the world.

Being the largest financial market in terms of liquidity and market value in the Middle East; The Saudi Stock Exchange Company (Tadawul) provides investors with opportunities that enable them to develop their capital with confidence, by facilitating the trading of various securities, such as stocks, debt instruments, and ETFs.

Bank deposits are one of the best investment methods that can be resorted to in the Kingdom, as it is a safe, low-risk investment method.

Saudi banks are distinguished by the fact that they provide their customers with various bank deposits, which can be chosen on the basis of the term of the deposit and its minimum value.

Recently, China expanded its use of direct investment opportunities in Saudi Arabia through the banking sector, after the Saudi Council of Ministers approved early this year to grant a license to the “Bank of China Limited”, to start practicing its work inside the country, starting from the date it was granted.

The Bank of China Limited is the second Chinese bank to enter the sector inside the Kingdom, after the Industrial and Commercial Bank of China, the largest in the world, which obtained a license to operate in June 2015.

With this license, the banking sector in the Kingdom will contain 30 banks, 13 of them Saudi and 17 Gulf and foreign banks.

The establishment of branches of Chinese banks in the Kingdom will contribute to finding financial facilities for Chinese companies that deal with the Saudi market, in addition to participating in strategic projects in the Kingdom.

Last May, bank deposits in Saudi Arabia recorded a growth of 10 percent during the first quarter of this year, and about 166.12 billion riyals on an annual basis, bringing deposits to the level of 1.81 trillion riyals, compared to about 1.64 trillion for the same period last year.

And 25 banks operate in Saudi Arabia, including 11 Saudis and 14 foreign banks. They are branches of foreign banks, headed by the “Industrial and Commercial Bank of China.”

For China, the Kingdom is an important gateway through the new Silk Road, and the presence of Chinese bank branches in it will increase the volume of cooperation and investment opportunities in an Arab country whose banking system has not been affected by any financial crises, whether in 2008 or the current Corona pandemic crisis, unlike other major financial systems.

In addition to Chinese investments in the Kingdom, the “Saudi-Chinese Business Council” addresses investment opportunities for small and medium-sized companies in the Kingdom in the fields of technology, industrial products, medical and life supplies, in light of the distinguished economic movement between the two Asian giants, under the umbrella of the Kingdom’s Vision 2030 and the Chinese Belt and Road Initiative.

China ranks first among the ten largest importers of the Kingdom; As the percentage of what China imports from the Kingdom represents 12.1% of the Kingdom’s total exports to the countries of the world, and it ranks first among the ten largest exporting countries to the Kingdom, and the Kingdom’s imports from China represent 14.1% of the Kingdom’s total imports from the countries of the world.

The value of contracts in the field of industry between China and Saudi Arabia during the past year 2019 amounted to nearly $ 6.7 billion, registering a 129 percent jump, compared to 2017.

In its war against the Coronavirus pandemic, China dazzled the world with technologies that appeared for the first time; As it was considered the country in which technology was most used to monitor the population during the containment of the epidemic.

Beijing is counting on emerging tech companies, which are a reliable economic nerve. Because of the ease of establishing these companies and adopting them on the Internet, which greatly serves small and medium companies.

In recent years, China has attracted a lot of tech talent; As the proportion of China in the global employment of talented people in the field of technology 19%, while the proportion of the United States and Britain, 35% and 5%, respectively, followed by Japan, France and Indonesia, according to press reports.

And earlier this month, a special survey showed, the growth of Chinese factory activities at the fastest pace in nearly ten years last July, which proves that the epidemic has become largely under control.

Internet services and related sectors in China also achieved strong growth in business revenues during the first half of this year, amid the Corona pandemic, according to what was reported by the New China News Agency (Xinhua).

Beijing is also seeking to attract more foreign investment in the manufacturing and production services sectors, months after the passage of the Foreign Investment Law, which entered into force and implementation early this year.

The law has received great attention. As it aims to provide better protection for the interests of foreign investors in the country, according to which foreign-funded companies will have access to the government procurement market on the basis of fair competition, and it will also prohibit the use of administrative licenses and penalties to force foreign investors and companies to transfer technology.

Foreign companies will be interested in equitable participation, like their local counterparts, in formulating and reviewing national, industrial and local standards on an equal footing and in line with the rules of the law, as well as the ability to propose recommendations related to standards and undertake tasks such as setting these standards.