Two economic initiatives to diversify and modernize the Chinese and Saudi Arabian economy have more in common than meets the eye
China and Saudi Arabia have always been geographically and culturally distant. The Saudi monarchy has always rejected Beijing’s friendship with Tehran, its historic rival in the Mideast region. In turn, China has kept its distance from Saudi Arabia whose religious rigor can be felt through all levels of government. Aside from Iran and Pakistan, Beijing has never established close diplomatic ties in the Middle East.
But globalization has turned the table. China and Saudi Arabia have been doggedly promoting two projects to restructure their respective economies: “China 2025” and “Arabia Vision 2030”.
The goal of Arabia Vision 2030 is to transform Saudi Arabia into a financial power in the middle east while reducing its dependence on oil revenues. The project was presented by King Salman, but the plan is, in fact, a result of the Crown Prince Mohammed Bin Salman, the intellectual force behind the Riyadh’s recent economic reforms and technology push.
Vision 2030 hopes to bolster Saudi Arabia’s economy in light of several opposing forces: the crackdown on oil prices, the reopening of international trade with Iran, and a period of economic stagnation that brought the state’s deficit to record heights. The resources for the first Vision 2030 push will be siphoned off energy company Aramco.
King Salman notes, “Vision 2030 is a plan that will bring development in all sectors and in all areas of the country”
Saudi Arabia’s oil revenues currently account for 90% of its GDP. In an effort to diversify the economy, Prince Mohammed Bin Salman is looking to new economic sectors, following in the footsteps of the UAE. Incentives and priority will be given to private capital and tech research, alternative and renewable resources, and an efficient extraction of mineral resources such as gold and uranium.
Saudi Arabia also plans to leverage tourism to the country, highlighting Mecca and the Medina for Muslim religious devotees, and luxury shopping and desert excursions for the international jet set.
The Crown aims to modernize its bureaucratic institutions with digital technology, and also plans to reform visa and residence permits to facilitate investment and travel for foreign entrepreneurs. It also plans to reform its teaching and vocational training to modernize schools and universities across the country.
As Saudi Arabia strives to diversify its economy, China provides an example of the economic transition from a manufacturing hub to center of technological excellence
One of the most important plans of the Chinese government is “中国 制造 2025”, also known as “Made in China 2025”, or just “China 2025”. The initiative aimed at transforming Chinese industry and economy using the same model carried out by Germany and Japan. China 2025 aims for automation and increased global value for Chinese exports. Many analysts and economists believe that Beijing was an inspiration for Riyadh.
Despite the difference in the countries’ backgrounds, the goal and strategy to get there remain the same. Saudi Arabia aspires to move beyond its status as the “gas station of the world”, and China wants to leave behind its reputation as the “factory of the world”.
Analysts predict that within 20 years, China will fill the gaps that separate it from Western powers. Research laboratories in Guangzhou, Beijing, and Shenzhen were established to create the tech and policies needed to close the divide. But beyond manufacturing, China 2025 is a cross-sector initiative that hopes to modernize every facet of its economy, and in doing so, to attract foreign investors and know-how.
Technology gives birth to a new China that boasts ‘Internet Plus’ development programs, 5G, and growth in aerospace and engineering
According to McKinsey, China has one of the most active digital investment ecosystems in the world. Beijing’s hallmark “Internet Plus, 互联网 +” program meshes mobile 5G internet, cloud computing, big data and Internet of Things with traditional sectors including manufacturing, finance, healthcare, government, and agriculture.
Although just launched in 2015, the results of Internet Plus are palpable. China’s tech industry currently boasts 40 unicorns within its borders. A modern and robotic industrial sector, to improve efficiency and reduce costs, is on the horizon. Beijing is active in the new industry sectors such as nanotechnology, composite materials, and is developing a modern aerospace sector. Robotic landings, orbiting stations, and laboratories are top goals of the central government, which hopes to cooperate with Jeff Bezos and Elon Musk’s Blue Origin and SpaceX initiatives.
As the history of industrialization shows, modernizing economies suffer from extreme pollution, and China is no exception. Its march toward a low-carbon economy will bring more opportunities than risks, according to the State Council’s plan for environmental reform. Renewable resources are a real business in modern China and present many opportunities for foreign partners to participate in its green revolution.
Bilateral relations between Riyadh and Beijing have intensified in recent years due to shared understanding
Some analysts believe China’s true adversary in the race to technological domination is Saudi Arabia since both countries strive to develop hi-tech sectors that are competitive at the international level. Although the results of China’s 2025 program are beginning to be apparent, the results of Vision 2030 will take several more years to manifest in the global economy. The first step will be for Saudi Arabia to align itself with foreign strategic partners beyond the royal family.
Beijing seems to be unphased by its potential Mideast competitor. In addition to playing a crucial role in the belt and road initiative by providing a strategic harbor, Saudi Arabia is a potential hub for Chinese investments – in tech and minerals alike. However, the new paths undertaken by China and Saudi Arabia are just beginning. For foreign companies, especially in the West, interesting opportunities and partnerships are emerging. Staying abreast of China 2025 and Vision 2030 will prove crucial to global investors and initiatives.
Cifnews International will be in attendance at the ArabNet Digital Summit, a conference bringing the biggest players in e-commerce to Dubai. Our very own Guido Ghedin, CMO of Cifnews International will present on Mideast and Chinese synergies.
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