In an attempt to boost the yuan’s role in global energy markets, Chinese President Xi Jinping told Gulf Arab leaders on Friday (December 9) that China would prefer to buy oil and gas in the Chinese currency. China is pressing to achieve its ambition of establishing its currency in the international market with the ultimate aim of weakening the United States currency’s grip on world trade.
Xi completed his historic trip to Saudi Arabia where both nations agreed to work together on issues of mutual interest. This was Xi’s third visit outside China since the coronavirus (COVID-19) pandemic began in late 2019.
Saudi Crown Prince Mohammed bin Salman hosted two Arab summits in the presence of the Chinese leader. The summits enshrined Saudi’s ambition of courting partnerships beyond close ties with the West.
Both China and top oil exporter Saudi Arabia sent strong messages to the West. The visit came at a time when Riyadh and Washington’s relationship is fragile, with the US calling out Saudi over issues, including human rights, energy policy and indirect support to Russia.
A massive impact will be caused if countries like China and Saudi Arabia ditch the dollar, especially in the oil trade. It can happen as Riyadh has already said it amid possible US legislation exposing OPEC members to antitrust lawsuits.
Experts have noted that the US should be alarmed over China’s rising influence in the Gulf. During Xi’s visit, both nations agreed to deepen their economic ties.
Robert Mogielnicki, a senior resident scholar at the Arab Gulf States Institute in Washington, told Reuters: “Energy concerns will remain front and centre of relations.”
Mogielnicki added, “The Chinese and Saudi governments will also be looking to support their national champions and other private sector actors to move forward with trade and investment deals. There will be more cooperation on the tech side of things too, prompting familiar concerns from Washington.”
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