The People’s Bank of China and Saudi Arabia’s Central Bank recently signed a local currency swap deal worth 50 billion yuan ($6.93 billion), or 26 billion Saudi riyals, both banks said on Monday, as bilateral relations continued to are reinforced.
Saudi Arabia, the world’s top oil exporter, and China, the world’s biggest energy consumer, have worked to advance relations beyond hydrocarbon ties in recent years, expanding cooperation in areas such as security and technology.
The swap agreement, which will be valid for three years and can be extended by mutual agreement, “will help to strengthen economic cooperation… expand the use of local currencies… and promote trade and investment,” between Riyadh and Beijing. said a statement from China’s central bank.
China imported $65 billion worth of Saudi crude in 2022, according to Chinese customs data, accounting for about 83 percent of the kingdom’s total exports to the Asian giant.
Russia remained China’s top oil supplier in October despite higher Russian crude prices, with Saudi Arabia’s imports falling 2.5 percent from the previous month as it continued to tighten supply.
Chinese President Xi Jinping told Gulf Arab leaders last December that China would work to buy oil and gas in yuan, but has yet to use the currency for oil purchases from Saudi Arabia, traders said.
Beijing is believed to have the largest network of currency swap agreements in the world, with at least 40 countries, but rarely discloses the broader terms of its agreements.
“China seems to be using swap lines in a very different way than the US,” said Weitseng Chen, an associate professor at the National University of Singapore. “(China) uses it as a line of credit, so it’s on an ongoing basis, rather than a one-time, one-time thing during an economic crisis.”
Published in The Express Tribune, November 21St2023.
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