China and the Middle East: More Than Oil

While China’s heavy dependence on Middle Eastern oil is an established fact, less is known about China’s early efforts to establish broad energy ties with the Middle East. Back in 1983, before the Chinese economy really took off, the overseas construction arm of China National Petroleum Corporation (CNPC) moved into the Kuwaiti market and later won an oil storage reconstruction project in 1995. Beijing also signed the Strategic Oil Cooperation agreement with Saudi Arabia in 1999, which laid the foundation for Saudi Arabia to become and remain China’s largest oil supplier. In exchange for stable crude supply, China has courted Saudi investment for expanding its refining capacity. One example is China Petroleum and Chemical Corporation’s (SINOPEC) meeting with Saudi Aramco to discuss a stake in a $1.2-billion refinery in the Chinese city of Qingdao. The two sides further joined hands in a $3.5-billion venture in Fujian province that included greater refinery capacity.4