On Tuesday, May 14th, sources revealed to Reuters that negotiations for a free trade agreement between the Chinese Communist Party (CCP) and the Arab bloc known as the “Gulf Cooperation Council” (GCC) have reached a deadlock. The reason being Saudi Arabia’s concern that cheap Chinese imports could undermine its plan to become an industrial powerhouse.
Over the past two years, Saudi Arabia has been a staunch supporter of the Gulf Arab States Cooperation Council, which includes member countries such as Saudi Arabia, the United Arab Emirates, Kuwait, and Qatar, aiming to reach a long-term cooperation agreement with China.
However, five sources familiar with the negotiation situation stated that the talks have stalled due to Saudi Arabia’s reservations about the list of goods on which the CCP government proposed exempting import tariffs in the Gulf region.
According to reports from Reuters, these sources expressed that Saudi Arabia is worried that a large quantity of low-cost Chinese products may pose unfair competition to domestic products it aims to produce, thus posing a threat to its industrial development prospects.
As the world’s largest oil exporting country, Saudi Arabia possesses a growing manufacturing sector. As part of a broader economic transformation plan, the Saudi government aims for the industry to produce a wide range of products from computer chips to tires in the future.
Under the leadership of Saudi Arabia’s de facto ruler, Crown Prince Mohammed bin Salman, the country is investing trillions of dollars in economic development in line with the plan known as “Vision 2030.”
China is a major buyer of energy from Gulf countries. According to Chinese customs data, in 2023, bilateral trade between China and Gulf countries reached $286.9 billion, with Saudi Arabia accounting for nearly 40% of the total trade between Gulf countries and China.
Experts believe that apart from establishing trade relations, the CCP also harbors political ambitions in the Middle East with regards to Saudi Arabia.
In December 2022, ahead of the first China-Arab States Summit, the Chinese Foreign Ministry released a White Paper titled “New Era of China-Arab Cooperation Report,” indicating that amid the escalating rivalry between the US and China, the CCP views Arab countries as a key in shaping a new international united front.
Columnist Wang He of the Epoch Times previously published a commentary stating, “After the CCP’s theft of the country, it has been actively wooing Arab countries, thereby gaining significant political benefits. For example, in 1971, when the CCP usurped China’s seat in the United Nations, 13 Arab countries voted in favor.”
In recent years, the economic cooperation between the CCP and Gulf countries has deepened, attracting the attention of the United States, which has long been a core security partner of the Gulf Arab countries.
The US is concerned that Middle Eastern countries such as Saudi Arabia and the UAE could serve as channels for the CCP to acquire advanced technology. The US has demanded that UAE AI giant G42 divest Chinese technology in exchange for continuing to use American systems that support AI applications. Chief Executive Officer of investment fund Alat, Amit Midha, also stated that if the US requires it, they will divest from China.