Two very different sources come to similar conclusions regarding the meaning of the recent Sino-Saudi Summit.
The first, TIfSR, is a Marxist/Gramscian group of think tanks leavened with a soupçon. of Frankfurt School.
The other is Pepe Escobar, a journalist with a special focus on the landmass from Libya to Pakistan and the Great Game geopolitics of same. He seems to show up in conflict zones from Ukraine to Afghanistan and though he is a leftist, is not a Marxist/Gramscian leavened with a soupçon. of Frankfurt School. He coined the term Pipelineistan.
Additionally the U.S. government has put some of the sites on which Escobar publishes on their pro-Russia watchlists/blacklists.
First up, from Tricontinental: Institute for Social Research, December 15:
On 9 December, China’s President Xi Jinping met with the leaders of the Gulf Cooperation Council (GCC) in Riyadh, Saudi Arabia to discuss deepening ties between the Gulf countries and China. At the top of the agenda was increased trade between China and the GCC, with the former pledging to ‘import crude oil in a consistent manner and in large quantities from the GCC’ as well to increase imports of natural gas. In 1993, China became a net importer of oil, surpassing the United States as the largest importer of crude oil by 2017. Half of that oil comes from the Arabian Peninsula, and more than a quarter of Saudi Arabia’s oil exports go to China. Despite being a major importer of oil, China has reduced its carbon emissions.
A few days before he arrived in Riyadh, Xi published an article in al-Riyadh that announced greater strategic and commercial partnerships with the region, including ‘cooperation in high-tech sectors including 5G communications, new energy, space, and digital economy’. Saudi Arabia and China signed commercial deals worth $30 billion, including in areas that would strengthen the Belt and Road Initiative (BRI). Xi’s visit to Riyadh is only his second overseas trip since the COVID-19 pandemic; his first was to Central Asia for the summit of the Shanghai Cooperation Organisation (SCO) in September, where the nine member states (which represent 40% of the world’s population) agreed to increase trade with each other using their local currencies.
At this first China-GCC summit, Xi urged the Gulf monarchs to ‘make full use of the Shanghai Petrol and Gas Exchange as a platform to conduct oil and gas sales using Chinese currency’. Earlier this year, Saudi Arabia suggested that it might accept Chinese yuan rather than US dollars for the oil it sells to China. While no formal announcement was made at the GCC summit nor in the joint statement issued by China and Saudi Arabia, indications abound that these two countries will move closer toward using the Chinese yuan to denominate their trade. However, they will do so slowly, as they both remain exposed to the US economy (China, for instance, holds just under $1 trillion in US Treasury bonds).
Talk of conducting China-Saudi trade in yuan has raised eyebrows in the United States, which for fifty years has relied on the Saudis to stabilise the dollar. In 1971, the US government withdrew the dollar from the gold standard and began to rely on central banks around the world to hold monetary reserves in US Treasury securities and other US financial assets. When oil prices skyrocketed in 1973, the US government decided to create a system of dollar seigniorage through Saudi oil profits. In 1974, US Treasury Secretary William Simon – fresh off the trading desk at the investment bank Salomon Brothers – arrived in Riyadh with instructions from US President Richard Nixon to have a serious conversation with the Saudi oil minister, Ahmed Zaki Yamani.
Simon proposed that the US purchase large amounts of Saudi oil in dollars and that the Saudis use these dollars to buy US Treasury bonds and weaponry and invest in US banks as a way to recycle vast Saudi oil profits. And so the petrodollar was born, which anchored the new dollar-denominated world trade and investment system. If the Saudis even hinted towards withdrawing this arrangement, which would take at least a decade to implement, it would seriously challenge the monetary privilege afforded to the US. As Gal Luft, co-director of the Institute for Analysis of Global Security, told The Wall Street Journal, ‘The oil market, and by extension the entire global commodities market, is the insurance policy of the status of the dollar as reserve currency. If that block is taken out of the wall, the wall will begin to collapse’....
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And from The Cradle, December 16:
It would be so tempting to qualify Chinese President Xi Jinping landing in Riyadh a week ago, welcomed with royal pomp and circumstance, as Xi of Arabia proclaiming the dawn of the petroyuan era.
But it’s more complicated than that. As much as the seismic shift implied by the petroyuan move applies, Chinese diplomacy is way too sophisticated to engage in direct confrontation, especially with a wounded, ferocious Empire. So there’s way more going here than meets the (Eurasian) eye.
Xi of Arabia’s announcement was a prodigy of finesse: it was packaged as the internationalization of the yuan. From now on, Xi said, China will use the yuan for oil trade, through the Shanghai Petroleum and National Gas Exchange, and invited the Persian Gulf monarchies to get on board. Nearly 80 percent of trade in the global oil market continues to be priced in US dollars.
Ostensibly, Xi of Arabia, and his large Chinese delegation of officials and business leaders, met with the leaders of the Gulf Cooperation Council (GCC) to promote increased trade. Beijing promised to “import crude oil in a consistent manner and in large quantities from the GCC.” And the same goes for natural gas.
China has been the largest importer of crude on the planet for five years now – half of it from the Arabian peninsula, and more than a quarter from Saudi Arabia. So it’s no wonder that the prelude for Xi of Arabia’s lavish welcome in Riyadh was a special op-ed expanding the trading scope, and praising increased strategic/commercial partnerships across the GCC, complete with “5G communications, new energy, space and digital economy.”
Foreign Minister Wang Yi doubled down on the “strategic choice” of China and wider Arabia. Over $30 billion in trade deals were duly signed – quite a few significantly connected to China’s ambitious Belt and Road Initiative (BRI) projects.
And that brings us to the two key connections established by Xi of Arabia: the BRI and the Shanghai Cooperation Organization (SCO).
The Silk Roads of Arabia
BRI will get a serious boost by Beijing in 2023, with the return of the Belt and Road Forum. The first two bi-annual forums took place in 2017 and 2019. Nothing happened in 2021 because of China’s strict zero-Covid policy, now abandoned for all practical purposes.The year 2023 is pregnant with meaning as BRI was first launched 10 years ago by Xi, first in Central Asia (Astana) and then Southeast Asia (Jakarta).
BRI not only embodies a complex, multi-track trans-Eurasian trade/connectivity drive but it is the overarching Chinese foreign policy concept at least until the mid-21st century. So the 2023 forum is expected to bring to the forefront a series of new and redesigned projects adapted to a post-Covid and debt-distressed world, and most of all to the loaded Atlanticism vs. Eurasianism geopolitical and geoeconomic sphere....
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