The visit of Deputy Crown Prince Mohammed bin Salman to Asia has been a resounding success.
The three-day visit to China generated genuine excitement among his hosts. He and his high-powered delegation met all important Chinese government members including Chinese President Xi Jinping. There were also top-level meetings with the bosses of every top corporation in the world’s second largest economic power. At every turn, Prince Mohammed was given a warm, even enthusiastic welcome.
The 15 agreements inked in Beijing are only the tip of a commercial iceberg. They also presage a growth in Chinese diplomatic cooperation with the Kingdom. Both countries embrace the principle of non-interference. One of the strengths of relations between Riyadh and Beijing is that they share no differences. Rather there is a common understanding of international priorities. And they seek to use their influence positively.
In Beijing this week the Chinese government backed the Saudi-generated Arab Peace Initiative for Palestine. They agreed on the need to prevent the spread of weapons of mass destruction. Beijing also backed the Saudi-led operation Decisive Storm in Yemen. It supports the independence of that country under its legitimate government. Likewise Beijing joined with Prince Mohammed in pressing for an urgent peaceful settlement in Syria.
Saudi Arabia is China’s major energy supplier. It sends it a reliable flow of one million barrel a day. Meanwhile Chinese investors appreciate the huge opportunities that have been opened up by the Vision 2030 plan.
Saudi Arabia is the dominant regional economy. Its industrial cities have space and facilities. Chinese manufacturers can locate production here and distribute their goods throughout the region. The Kingdom’s world-class universities, in particular KAUST, offer unrivaled research facilities for industry.
Among the many significant links made during Prince Mohammed’s visit was that between the Council of Saudi Chambers and the China Council for the Promotion of International Trade (CCPIT). Chambers of commerce play an often-unseen but hugely valuable role.
During meetings in Beijing, a number of leading Saudi companies, including the Al-Ajlan Group, Al-Jabr Holding and Al-Jeraisi Group inked deals with Chinese counterparts. Deep foundations have been laid. It will be business forums like the chambers of commerce that will help build tall upon them.
Bilateral relations between Saudi Arabia and Japan have experienced a quantum leap and are growing steadily in all areas. The two countries signed seven memorandums of understanding (MoUs) in a number of areas during the ongoing visit. Japanese Premier Shinzo Abe commended Saudi Vision 2030 during his meeting with Prince Mohammed.
Japanese companies have long experience of the Kingdom’s markets. Every day, 1.2 million barrels of Saudi oil arrive at Japanese refineries. Japanese trading companies are highly active here. They have already studied Vision 2030. They have seen that the transformation of the non-energy sector offers extraordinary business possibilities.
The visit of Prince Mohammed will have solidified their appreciation. It is not unusual for governments to produce lofty economic plans which are never carried through. The problem is generally a lack of political will. But Prince Mohammed has traveled in person to brief the Japanese on Vision 2030. There could be no better demonstration of political will. There could be no greater level of “comfort” for businessmen, acutely sensitive to risk as well as opportunity.
The opportunities for Chinese and Japanese financial institutions are also considerable. Funding major non-oil projects undertaken within Vision 2030 will be a profitable operation. And the risks will be low, because many schemes will carry at least an implicit government guarantee. Fund managers in China and Japan can back the Saudi ventures of their national companies with a high degree of confidence.
The deputy crown prince is gearing up for the G20 summit in Hangzhou, which has much in common with the ambitions of Vision 2030. It is home to many thrusting high technology companies, including e-commerce group Alibaba, one of China’s largest companies.
Amid a global economic slowdown, the G20 will be anxious to consider fresh options. The transformation of the Kingdom’s non-oil economy is one of the most alluring international initiatives. Prince Mohammed’s message will be that Saudi Arabia is open for business. But the message actually goes further than that. This is a time when many governments have chosen policies of austerity. The Kingdom has taken the opposite route. While enforcing strict budget discipline, it is investing for growth in a key economic area which has been overshadowed by the country’s main income generator. It seems certain that his presentation will be listened to carefully by fellow G20 members.