Chinese experts: Saudi-China special economic zone enhances complementary advantages between the two countries

Saudi Arabia recently announced the establishment of the Saudi-China Special Economic Zone at the World Logistics Forum, and construction is expected to begin in 2025, focusing on the development of manufacturing, logistics and commercial industries.

According to the People’s Daily, Lan Qingxin, director and professor of the BRICS Research Center at the University of International Economics and Business (UIBE), and Tian Geng, a doctoral student at the School of International Economics and Business, University of International Economics and Business (UIBE), wrote an analysis article in the Global Times recently, noting that the Saudi-China Special Economic Zone will be located within King Salman International Airport and will cover three main functional areas: First, the logistics and light industrial zone, which aims to promote the establishment and improvement of the local supply chain in Saudi Arabia and enhance the local industrial production capacity. Second, the international business park, which is committed to providing integrated services for established enterprises, simplifying the process of settling enterprises, reducing operating costs, and providing commercial convenience. Third, the living support zone, which mainly provides living facilities and services for employees of established enterprises in the region and their families.

In the future, the Saudi-China special economic zone will provide more possibilities for the two countries to deepen economic and trade cooperation, meet each other’s needs and complement each other’s advantages.

China and Saudi Arabia are important trading partners of each other, which is an important foundation for the establishment of special economic zones. Since 2013, China has remained Saudi Arabia’s largest trading partner, and the trade interdependence between the two sides has continued to increase. The bilateral trade volume between China and Saudi Arabia reached $107.23 billion in 2023, among which China’s exports to Saudi Arabia reached $42.86 billion, and imports reached $64.37 billion. The trade volume between the two sides also exceeded $50 billion in the first half of 2024.

For a long time, crude oil has accounted for the “bulk” of Saudi Arabia’s exports to China. At the same time, Saudi Arabia also has strong demand for Chinese mechanical and electrical products, transportation equipment, metals and their products.

The trade volume between China and Saudi Arabia has been steadily expanding over the past decade, laying a solid foundation for the establishment of a special economic zone between Saudi Arabia and China. The establishment of the special economic zone will provide a more convenient and free operating environment for Chinese enterprises to enter the Saudi market, and improve trade efficiency. Therefore, the establishment of the Saudi-China special economic zone is in line with the development paths of both parties and will effectively promote the high-quality development of trade between China and Saudi Arabia.

The acceleration of the diversified transformation of the Saudi economy and the rapid development of new productive forces in China are the main driving forces for the establishment of special economic zones. In order to get rid of its heavy dependence on oil, Saudi Arabia has been actively carrying out industrial restructuring in recent years, focusing on the development of the digital economy, green energy, infrastructure and manufacturing.

In these areas, China has made progress in key technologies such as big data, artificial intelligence, and quantum communications through forward-looking planning for advanced industries and future industries. China occupies an important position in the world in green energy, photovoltaic products, electric vehicles and other industrial chains, combined with Saudi Arabia’s rich renewable energy resources, such as light and tides, complementing the digital blue ocean market, creating favorable conditions for joint cooperation in the green digital supply chain.

In addition, China has vigorously promoted the digital transformation of traditional manufacturing industries and promoted investment cooperation between Chinese and Saudi enterprises through the establishment of special economic zones, which can not only reduce production costs for Chinese enterprises and improve their international competitiveness, but also promote the accelerated development of Saudi Arabia’s manufacturing industry, improve its industrialization level, and achieve mutual benefit and win-win cooperation. Saudi Arabia’s “Vision 2030” is closely aligned with China’s “Belt and Road” Initiative, which represents the conceptual support for the establishment of special economic zones. First, participating in the joint construction of the “Belt and Road” has effectively enhanced Saudi Arabia’s role as a regional power. Based on the joint construction of the “Belt and Road” Initiative, China and Saudi Arabia have adhered to multilateralism, strengthened cooperation in international and regional affairs, achieved many results, and become an important force in the global governance system. Second, the joint construction of the “Belt and Road” has given the Kingdom a direction as an investment power. Saudi Arabia has strong investment capabilities, and the joint construction of the “Belt and Road” Initiative not only makes trade and investment smoother between China and Saudi Arabia, but also helps Saudi Arabia become a key point in the western part of the “Belt and Road”, enhancing Saudi Arabia’s role in cooperation between China and the Gulf countries.

Finally, the joint construction of the “Belt and Road” can add fuel to Saudi Arabia’s efforts to become a global hub connecting economic and trade exchanges between Asia, Africa and Europe. The integrated infrastructure layout of “land, sea, sky and network” formed by the joint construction of the “Belt and Road” Initiative will effectively promote the realization of Saudi Arabia’s concept of becoming a pillar of connectivity.

Therefore, the “Saudi Vision 2030” is largely consistent with China’s “Belt and Road” Initiative, providing strong conceptual support for the future sustainable development of the Saudi-China Special Economic Zone.

Specifically, the Saudi-China Special Economic Zone will have three major direct impacts on enterprises in both countries:

First, forming industrial clustering effect and promoting the optimization of industrial and supply chains

The establishment of the Saudi-China Special Economic Zone will promote the implementation of various cluster industries, where enterprises in all aspects of raw material procurement, production, processing, sales and exports will come together here, and improve the coordinated development capabilities of industrial chains and upstream and downstream supply chains. Chinese enterprises in Saudi Arabia will be able to establish production bases in special economic zones, reduce production costs by integrating local natural resources, and take advantage of local transportation advantages to improve transportation efficiency and make regional supply chain movement more flexible.

Second, enhancing the competitiveness of emerging industry products in the international market

After the establishment of the Saudi-China Special Economic Zone, Chinese products will be able to enter the Saudi market at a lower cost, thus forming comparative advantages in quality, price and service. At the same time, given that the industries in China and Saudi Arabia are highly integrated, the “local production and local sales” business model of Chinese enterprises in Saudi Arabia will help products deeply integrate into the Saudi market, enhance brand recognition, and will be beneficial to the long-term operation of enterprises.

Third, play a leading role in economic and trade cooperation between China and countries in West Asia, Eastern Europe and Africa Saudi Arabia is located on the China-Central Asia-West Asia economic corridor, and is an important point in the joint construction of the “Belt and Road” communication infrastructure. The establishment of the Saudi Arabia-China special economic zone will build a new communication bridge for economic and trade cooperation between China and other countries in Asia, Africa and Europe, and will play an important role in promoting the comprehensive and high-quality development of the Belt and Road Initiative.