- The agreement is valid for three years and is extendable.
- China to import Saudi crude worth $65 billion in 2022.
- China’s approach to currency exchange involves 40 countries.
In a move indicative of their growing bilateral ties, the People’s Bank of China and the Saudi Central Bank recently signed a local currency swap agreement worth 50 billion yuan ($6.93 billion) or 26 billion Saudi riyals.
Valid for three years and extendable by mutual agreement, the agreement aims to enhance financial cooperation, expand the use of local currencies and promote increased trade and investment between Riyadh and Beijing.
China, the world’s largest energy consumer, and Saudi Arabia, the leading oil exporter globally, are diversifying their ties beyond hydrocarbon ties.
The currency swap agreement is in line with their efforts to deepen cooperation in areas such as security and technology. While China imports Saudi crude worth $65 billion in 2022, a significant portion of the kingdom’s exports to China, the agreement is expected to contribute to further broadening their economic engagement.
China’s approach to the currency swap arrangement, which involves at least 40 countries, differs from that of the US, which uses it as an ongoing credit line rather than a one-time solution during a financial crisis.
This strategic move, combined with China’s commitment to buy oil and gas in yuan, underscores the country’s growing role in the global financial partnership.