During the last decade or so Saudi Arabia’s trade ties with foreign countries have gone through a marked change which is reflective of prevailing global realities. While countries such as the United States, Japan, Britain and France continue to maintain considerable political and economic clout, new power centers are equally important. Hence Saudi Arabia’s strengthening of trade relations with China, India, Brazil, South Korea, South Africa and other such emerging economies makes sense.

Custodian of the Two Holy Mosques King Abdullah’s visit to China and India in January 2006, just a few months after his ascending the throne, was seen as a strategic shift in the country’s foreign policy. Dubbed as “look east” policy, it has produced the desired result with China emerging as the second largest source of imports to the Kingdom and ranking fifth as a destination for Saudi exports.

China

Saudi Arabia and China established diplomatic ties in 1990 and in 10 years time their mutual trade has seen rapid growth. According to a report of the Saudi Fransi Bank (SFB), Chinese exports rose by 167 percent from SR1.66 billion in 1990 to SR4.44 billion in 2000. During the same period Saudi Arabia’s exports to China increased by 3,463 percent from SR158 million to SR5.63 billion. Today more than 70 Chinese companies are doing business in the Kingdom, of which 62 are construction firms employing some 16,000 Chinese people.

Saudi Arabia has granted China Petroleum and Chemical Corp. (Sinopec) a SR1.1 billion concession to explore and produce natural gas in a 38,000-km concession area. Sinopec owns 80 percent of a special-purpose company and Saudi Aramco the remaining 20 percent. Although Sinopec has less experience in natural gas exploration, the concession is symbolic of the reciprocal hydrocarbon relationship between the two countries. China’s main exports to Saudi Arabia are garments, mechanical and electronic products, air-conditioning units and textiles, while its main imports from the Kingdom are crude oil, liquefied petroleum gas and primary plastics.

In April 2006, Chinese President Hu Jintao announced his country’s intention that bilateral trade volume between the two countries should reach SR150 billion by 2010. “It seems that this was achieved by 2008, as we estimate that Saudi Arabia’s exports reached SR116.25 billion and imports from China reached SR40.12 billion. Also in 2008, the Saudi trade surplus witnessed an increase of 180 percent due to the rise in oil prices, as well as an increase in oil export volumes as the Kingdom exported to China the equivalent of 720,000 barrels per day,” says the SFB report.

India

After China, King Abdullah’s visit to India was equally significant. India is the 4th largest trading partner for Saudi Arabia and also the fourth largest recipient of Saudi oil after China, the United States and Japan. Today, Saudi Arabia meets around 26 percent of India’s crude requirements annually and that is projected to double in the next twenty years. As with Saudi Arabia and China, energy infrastructure investment is a major component in the development of Saudi-Indian relations. During the state visit, King Abdullah and Indian Prime Minister Manmohan Singh signed the “Delhi Declaration” calling for a wide-ranging strategic partnership, putting energy and economic cooperation on overdrive, and committing to cooperate against terrorism.

Two-way trade between the two countries amounted to SR80 billion last year, according to Mustafa Sabri, secretary-general of Jeddah Chamber of Commerce and Industry (JCCI).

Main Indian exports to Saudi Arabia are basmati/non-basmati rice, tea, hand-made yarn, fabrics, made-ups, cotton yarn, primary and semi-finished iron and steel, chemicals, plastic and linoleum products, machinery and instruments. Main Saudi exports to India are petroleum and petrochemical products.

According to the Saudi Arabian General Investment Authority, during the last two years, it has issued 82 new licenses to Indian companies for joint ventures or 100 percent owned entities, which are expected to bring total Indian investment to $467.18 million in Saudi Arabia.

On the other hand, Saudi Arabia is the 22nd biggest investor in India with investments during 1991-2004 amounting to $228.8 million. At present, there are 49 Indo-Saudi joint ventures or Saudi-owned companies in India. An estimated 1.4 million Indians are at present working in the Kingdom and making immense contributions to the Saudi economy.

Brazil

Brazil is another emerging economy that cannot be overlooked. Saudi Arabia established diplomatic relations with the South American country in 1968 but until recently, their bilateral relations lacked enthusiasm. However, of late growing trade and investment between the two countries have proven to be the most significant aspect of their mutual relations. Bilateral trade went from $1.5 billion in 1997 to $5.5 billion in 2009. The list of products exported by Brazil continues to be dominated by food-related items, especially meat and sugar-based products. In the past five years Saudi Arabia has made important acquisitions of mid-size aircraft produced by Brazil’s aerospace company, Embraer. In 2008, trade between the two countries topped 2007 figures by 71 percent, reaching SR12.6 billion. The increase in trade revenues came from major exports by the Kingdom to Brazil, including sulfur, liquefied propane, aviation fuel, scrap aluminum, fertilizers, polyethylene and crude.

South Korea

Saudi investment to South Korea has increased at a steady pace. The bilateral trade volume has leaped from $4.2 billion in 1991 to $39 billion in 2008 with $28.6 billion of the trade balance in favor of Saudi Arabia. The Kingdom is South Korea’s largest oil supplier, making up one third of its total oil import. Korean exports to the Kingdom in 2008 reached $5.2 billion, mainly consisting of automobiles, ships, iron and steel products, electronics and machinery products. The yearly average of Saudi imports of Korean vehicles has reached almost $1 billion.

South Korean companies have returned to Saudi Arabia after almost two decades of absence.

Currently, around 100 Korean companies are operating in Saudi Arabia. Construction companies such as Hyundai Construction, Doosan Heavy Industry, Samsung Engineering, Hyundai Heavy Industry, Daelim, GS Construction and Hanwha Construction have been deeply engaged in major projects in petrochemical, desalinization, power plants and so forth. Furthermore, companies such as Samsung Corp. Daewoo int’l, SK Networks, LG Electronics, Samsung Electronics and Daewoo Electronics are also operating for trading commodities.

South Africa

Saudi Arabia played an important role during the anti-apartheid movement in South Africa. Following the end of white minority rule, the two countries have enjoyed close political and economic relations. Bilateral ties between the two countries are promoted within the framework of a joint commission that focuses on a bid to strengthen trade, investment and bilateral relations. The Saudi Arabia-South Africa Joint Commission has identified a number of sectors for cooperation, including trade, investment, agriculture, fisheries, mining and energy, developmental cooperation, tourism, science and technology, education, transport and ICT. Also, the South Africa-Saudi Arabia Business Council discussed their program of action.