China plans to issue government bonds worth up to 14 billion yuan in Saudi Arabia. Analysts say this move could challenge U.S. influence in the Middle East as financial ties between Beijing and Riyadh deepen.
On Wednesday, the Chinese Ministry of Finance announced that it will issue dollar-denominated bonds worth 14.04393 billion yuan (approximately $2.7 billion) in Riyadh from November 11 to 17.
Details, including interest rates and maturities, will be disclosed soon.
Despite efforts to curb bond issuance, China faces mounting fiscal pressures due to demographic challenges, making increased borrowing inevitable. The projected deficit for this year stands at 4.6 trillion yuan (about $893.5 billion).
This initiative is significant as it opens Chinese government bonds to foreign investors. Saudi Arabia’s oil-rich sovereign wealth funds, including the Public Investment Fund (PIF), are likely targets for these new bonds.
As of July, these funds collectively manage assets worth $925 billion. China aims to deepen its financial ties with Saudi Arabia through various channels, including cross-listing exchange-traded funds (ETFs).
This collaboration gained momentum following Chinese President Xi Jinping’s visit to Saudi Arabia in December 2022. Since then, both countries have signed agreements between their stock exchanges and listed ETFs on each other’s markets.
Analysts suggest that China’s strategy goes beyond securing oil money. Its goal is to expand its political and diplomatic influence in the Middle East. The Nikkei reported that these strengthened financial ties could challenge America’s long-standing influence over Saudi Arabia.
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