As concerns escalated about a second China shock, with China exporting products like solar panels and electric vehicles at bargain prices to countries worldwide, including the U.S. and Europe, Saudi Arabia surprisingly defended China.
According to the Financial Times (FT), on the 22nd (local time), Amin Nasser, CEO of Saudi Aramco, the state-owned oil company of Saudi Arabia, spoke in favor of China during a speech at the 26th World Energy Congress in Rotterdam, Netherlands.
CEO Nasser stated, “China has been a great help in reducing the cost of solar power production,” and “The reason a lot has happened with solar panels is because China has done a lot to reduce prices.”
He added, “We can see the same phenomenon with electric cars,” and “Chinese electric car prices are 33% to 50% cheaper than elsewhere.”
He emphasized, “We need more globalization and cooperation to achieve our energy goals by 2050.”
His argument suggests that the world needs China’s help and cooperation to achieve carbon neutrality in response to climate change. This starkly contrasts with the increasing global response to China’s low-cost offensive.
Due to the ongoing economic downturn since last year, China has been exporting its products at bargain prices due to sluggish domestic demand and a surge in inventory. In response, U.S. President Joe Biden recently announced plans to triple tariffs on Chinese steel and aluminum from 7.5% to 25%. Former President Donald Trump also threatened to impose tariffs of over 60% on all Chinese imports.
The European Union (EU) also started investigating subsidies for Chinese solar companies earlier this month.
CEO Nasser’s defense of China’s low-cost exports is believed to be due to the ongoing cooperation between Saudi Arabia and China. As the consumption of fossil fuels, including oil, reduces in the West, Saudi Arabia continues to rely on China, its largest market, for cooperation.
According to FT, Aramco announced on the same day that it will acquire a 10% stake in China’s private petrochemical company, Hengli Petrochemical. This move allows Saudi Arabia to secure another oil supply. Last year, Aramco invested $3.6 billion to acquire a 10% stake in Rongsheng Petrochemical and collaborated with two other companies to build a refining and petrochemical complex.
Aramco aims to convert 40% of its daily oil production, or 4 million barrels daily, into petrochemical products through China.
CEO Nasser also criticized the West for misjudging the energy consumption forecasts of developing countries when setting climate goals. He claimed, “Many Western policymakers do not fully understand how energy transition happens and what is needed for it,” and “Currently, oil and gas consumption is 40% in the northern hemisphere and 60% in the southern hemisphere, but by 2050, the southern hemisphere will account for 80%.”
In this context, Aramco plans to achieve net zero emissions by 2050 but has no plans to reduce oil and gas production.
Meanwhile, Aramco expressed a negative view of hydrogen.
CEO Nasser said, “If we introduce hydrogen to the market, it will help with the energy transition,” but also stated, “To do this, we need contracts that last for 15 to 20 years, and it was difficult to secure contracts at the hydrogen price ($200 to $400 per barrel) we proposed.”
He also criticized the global discussion on climate goals as “very emotional and chaotic” and stated, “We need to focus on reducing emissions.”
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