As bilateral relations continue to pick up steam, 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, both banks announced on Monday.
China, the largest energy consumer in the world, and Saudi Arabia, the largest oil exporter in the world, have attempted in recent years to move their cooperation beyond hydrocarbon ties and into fields like technology and security.
According to a statement from China’s central bank, the swap agreement “will help strengthen financial cooperation… expand the use of local currencies… and promote trade and investment” between Riyadh and Beijing. Its three-year validity can be extended mutually.
Chinese customs data indicates that China imported $65 billion worth of Saudi crude in 2022, which made up approximately 83% of the kingdom’s total exports to the Asian powerhouse.
Despite rising oil prices, Russia continued to be China’s main supplier of oil in October; Saudi Arabia’s imports decreased by 2.5% from the previous month as a result of supply restrictions.
Although Chinese President Xi Jinping promised Gulf Arab leaders last December that his country would try to purchase petrol and oil in yuan, traders have noted that China has not yet used the money to buy Saudi oil.
With at least 40 countries involved, Beijing is believed to have the largest currency swap network in the world in place, but it rarely discloses the full scope of these agreements.