US$5.6 billion deal among agreements signed during two-day summit
Investment in Saudi Arabia will benefit Chinese firms facing heated competition at home, East China University of Science and Technology professor says
Human Horizons’ agreement with Saudi’s investment ministry comes amid a push by Riyadh to develop a domestic EV manufacturing industry
By Kinling Lo in Riyadh, Saudi Arabia
June 12, 2023
China is the Arab countries’ largest trading partner, Saudi Foreign Minister Faisal bin Farhan said during the opening ceremony of the Arab-China Business Conference in Riyadh on Sunday. Photo: Xinhua
A two-day business conference between China and the Arab world has ended in Riyadh with investment deals worth US$10 billion, more than half of which came in a partnership signed by Chinese electric car maker Human Horizons and Saudi Arabia’s investment ministry.
The joint-venture will conduct “automotive research, development, manufacturing and sales” as part of a US$5.6 billion deal.
The conference, which followed a high-profile visit to Saudi Arabia by Chinese President Xi Jinping last December, saw deals being signed by Chinese firms from sectors such as technology, renewable energy, agriculture, real estate, metals, tourism and healthcare. The conference, which has been hosted by Riyadh for the first time, is now in its 10th year. This year’s edition drew more than 3,500 attendees.
“Chinese companies now have a better chance of building infrastructure, assembling electric vehicles [EVs], running new-energy projects and developing technology businesses in Saudi Arabia now that the Middle Eastern country embarks on its Vision 2030 strategy,” said Yan Jinglan, a professor of foreign studies at the East China University of Science and Technology in Shanghai. “Investment and production in the Kingdom will benefit some Chinese firms, particularly manufacturers who face heated competition at home.”
Saudi’s Vision 2030 strategy is a development plan aimed at reducing the country’s reliance on oil and transforming its economy.
China has vowed to support Saudi Arabia’s vision to diversify its economy, despite oil dominating current economic ties between the two countries. Beijing’s growing interest in the region was underlined by Xi’s visit in December, when he attended the China-Arab Countries summit and the China-Gulf Cooperation Council summit.
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His co-hosting of the China-Arab Countries Summit and first visit to the region since 2016 were widely seen as attempts to increase Beijing’s influence in a region that, in common with China, has an increasingly frayed relationship with the United States.
The vast majority of deals signed during the summit are for projects in Saudi Arabia or by Saudi firms and government entities.
Shanghai-based Human Horizons’ deal comes amid a push by Riyadh, which has been seeking growth in its technology and green-energy sectors, including the development of a domestic EV manufacturing industry, as part of its Saudi Vision 2030 plan.
The carmaker develops autonomous driving technology and produces EVs under its high-end HiPhi brand, which also aims to enter the European market this year.
“Premium or luxury EV models might sit well with the Saudi market,” said David Zhang, a visiting professor at Huanghe Science and Technology College. “Human Horizons is the right pioneer to test the market with its expensive models before other Chinese EVs foray into Saudi Arabia.”
The carmaker currently assembles two luxury EV models, with the cheapest version of the cars sporting a price tag of US$80,000. HiPhi, however, does not feature in lists of China’s top 15 EV makers in terms of monthly sales.
The HiPhi EVs developed by Human Horizons. Photo: Handout
Among other deals signed during the summit, AMR ALuwlaa Company and Zhonghuan International Group signed a US$533 million deal to establish an iron factory in Saudi Arabia, and Saudi ASK Group and China National Geological and Mining Corporation signed a US$500 million cooperation agreement on copper mining.
Chinese state-owned rolling stock manufacturer CRRC Corporation, building materials company Sunda International Group, home appliances group Haier and Atlas Renewable Energy were among other companies that signed deals with the Saudi ministry. The details of these deals have not yet been made public.
Shanghai-based Octopus Online Tour Development signed an agreement with the ministry to explore tourism opportunities between the two countries.
Chinese building materials company Sunda is among firm that signed agreements with the Saudi ministry of investment during the two-day summit. Photo: Kinling Lo
“The aim is to establish mutual interest and we will follow up by exploring how to boost tourism both ways,” Yuan Dong, Octopus Online’s vice-managing director, told the South China Morning Post.
“Arab countries will work with China to seize the opportunities for broader economic integration of the two sides,” Khalid al-Falih, the Saudi investment minister, said during the opening of the conference on Sunday. He noted that China’s outward foreign direct investment had grown by 20 per cent annually over the past decade, but said that “there is still potential to increase investment flows in the other direction to take advantage of China’s large and prosperous market”.
While China’s outbound investments grew only 0.9 per cent last year, outbound mergers and acquisitions activity continued to slow and recorded a value drop of 52 per cent year on year, according to a report by accounting firm EY in February this year.
China’s ministry of commerce, however, said the country recorded a 35.7 per cent year-on-year growth in overseas direct investment in the first two months of this year, after Beijing abandoned its strict Covid-19 control policies after three years.
Beijing is the Arab countries’ largest trading partner with a volume of commerce worth a record US$430 billion last year, Saudi Foreign Minister Prince Faisal Bin Farhan said when he kicked off the conference on Sunday. Saudi Arabia alone made up a quarter of the volume, with bilateral trade rising 30 per cent in 2022 to US$106.1 billion.