Saudi Arabia and China have taken significant steps to deepen their financial collaboration, marking a strategic shift that could reshape both nations’ economic landscapes and influence the global financial system. On August 1, Saudi Arabia’s Public Investment Fund (PIF), the world’s fifth-largest sovereign wealth fund, signed memorandums of understanding (MOUs) worth a total of $50 billion with six major Chinese financial institutions.
These agreements aim to promote two-way capital flows between the two countries through both debt and equity investments. The move signals an enhancement of bilateral cooperation in the financial sector, reflecting a mutual interest in strengthening economic ties.
The new deals follow the recent successful debut on the Chinese mainland stock market of two exchange-traded funds (ETFs) that track Saudi Arabia’s largest companies, including oil giant Saudi Aramco. This highlights the growing interconnectedness between the financial markets of China and the Middle East. Additionally, plans are underway to launch an ETF tracking Hong Kong’s benchmark Hang Seng Index, further broadening financial ties between Saudi Arabia and China’s markets.
For Saudi Arabia, diversifying its economy is a top priority. Historically reliant on oil, the kingdom’s Vision 2030 plan seeks to expand its economic base. Strengthening ties with China’s robust financial markets offers Saudi Arabia a pathway to reduce its oil dependency and foster growth in sectors such as technology, renewable energy, and infrastructure. This collaboration provides Saudi Arabia with access to Chinese expertise, technology, and capital, aligning with its strategic goals.
From China’s perspective, deepening financial relations with Saudi Arabia enhances its engagement in the Middle East, promotes the Belt and Road Initiative, and opens new avenues for investment and cooperation.
The enhanced financial synergy between Saudi Arabia and China represents a significant development in international finance, potentially reshaping traditional economic alliances and contributing to a more interconnected global financial system.
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Saudi PIF's new deals turbocharge financial synergy with China
cgtn.com
