China’s Role in Saudi Arabia’s Renewable Energy Industry: A Geopolitical and Economic Perspective
20/03/2025 - Written by Michal Bilinski
Introduction
Saudi Arabia’s ambitious Vision 2030 reached a halfway point this year, as the Kingdom seeks to reduce its dependence on fossil fuels by ensuring that 50% of its energy mix comes from renewable sources by the end of the decade. With limited time remaining and uncertain progress, Saudi Arabia must seek external help in achieving this transformation. With a limited industrialised society, Saudi Arabia has to cooperate with states producing renewable energy resources, from wind turbines to solar panels. China has seized the momentum of the shift towards renewables and over the past decade, and became the world’s largest producer of solar panels.
As Saudi Arabia intensifies efforts to diversify its energy portfolio to meet this self-imposed goal ahead of Vision 2030, the bilateral relationship between itself and China has deepened. China’s current role in the Saudi economy is geared towards supplying advanced technology, infrastructure, and investment towards this shift.
The growing energy partnership between Beijing and Riyadh whilst economic in its nature, carries significant geopolitical implications for the formation of the future of the Middle East. As the Kingdom looks eastward for its partnerships in labour and infrastructure, this also creates questions regarding energy security and strategic technological leverage which China now possesses over Saudi Arabia in a rapidly evolving global order.
Contextual Analysis
For decades, Saudi Arabia has relied on oil exports as the backbone of its economy, as 50% of its GDP stems from the oil and gas industries. However, fluctuating oil prices, a weakened position of OPEC in the light of conflict in the region and increasing global pressure for climate action have prompted the Kingdom to explore alternative energy sources. The aim of this policy is to counteract the impending long-term transition of Europe towards more sustainable energy resources by 2030. Furthermore, the diversification efforts are prevalent not only in the energy sector, as the Kingdom expands its targets in the Vision 2030 to incorporate economic development of infrastructure alongside defence industry and work with further investment partners across the globe. A striking example of this would be the European Union setting a region-wide target of achieving 42.5% of its energy to come from renewable sources. Therefore, Saudi Arabia’s energy industry is focused on modernisation to appeal to Western capital.
The Saudi government has announced plans to develop its renewable energy sphere by 2030, with a strong focus on solar and wind power. This focus pertains to the geographical conditions of the Arabian Peninsula, with 3400 hours of sun coverage annually. Projects such as the Sudair Solar Plant, commissioned in 2023 and currently operational, present the strive of the Kingdom to exploit this natural advantage and achieve the goals of Vision 2030. Currently, it is one of the largest solar farms in the world which is poised to develop a solid foundation for Saudi Arabia to build upon.
China’s involvement within the success of Sudair Solar Plant is crucial to the longevity of the project and its original construction. China is responsible for producing nearly 80% of the world’s solar panels. With control of significant portions of the supply chain, from raw materials to manufacturing, China elevated itself above its European competition and created a strong monopoly over the renewable energy production market. Chinese firms such as LONGi and Trina Solar have strong backing from the Chinese Communist Party, and are considered as major exporters of solar technologies. With them supplying critical components to Saudi Arabia’s renewable energy initiatives, the ties between the Gulf country and China have strengthened.
Renewable energy collaboration further cements economic interdependence, providing Saudi Arabia with access to cost-effective and advanced solar technology in exchange for economic growth to Chinese companies. Nevertheless, Saudi Arabia’s approach must balance its priorities with the United States and western partnerships in the political realm whilst simultaneously deepening economic ties with China. In light of global tensions surrounding supply chain vulnerabilities and trade disputes, redefining global energy frameworks will play a crucial role for Saudi Arabia, with China poised to become a key partner in this endeavour.
China isn’t merely supporting only Saudi Arabian transitions towards cleaner energy. The investments of its capital groups in energy infrastructure projects across the six Gulf Cooperation Council (GCC) states have positioned Beijing as a key partner in the region’s energy transition. It plays into China’s overarching positioning to become a dominant major force in the region as a whole. The partnership aligns with China’s Belt and Road Initiative, strengthening Beijing’s influence in the Gulf region. Therefore, focusing upon one of the largest economies of the region will serve Chinese foreign policy purposes of creating a stronghold within the Middle East.
Key Players and Stakeholders
Saudi Arabia: Saudi leadership must ensure that energy diversification efforts align with national security interests and economic sustainability. Key decision-makers, including Crown Prince Mohammed bin Salman and the Saudi Ministry of Energy, must balance economic diversification whilst handling geopolitical risks of alienating western partners due to increased Chinese involvement in the sector.
Saudi Arabian PIF: Several key financial and energy-related institutions play a pivotal role in funding and executing Saudi Arabia’s renewable energy projects. The sovereign Public Investment Fund (PIF) wealth fund drives massive investments in renewable projects, including solar energy infrastructure where it has partnered with Chinese producers. Moreover, PIF’s current engagement with China allowed for developers such as ACWA Power to collaborate with Chinese firms on renewable projects.
Chinese Private Companies and Investment Funds: As previously mentioned, China is currently leading in the solar panel supply chain, being the main provider of the technology and infrastructure to Saudi Arabia through firms such as LONGi and Trina Solar. Further Chinese companies, such as TCL Zhonghuan and JinkoSolar, both of which also bare connections to the Chinese Communist Party, are set to build a $3 billion solar farm in Saudi Arabia. Underpinning the entire move to the Middle East are Chinese financial institutions which have invested between 2005 and 2024 around 53.85 billion USD into infrastructure projects across the Gulf. Chinese support for infrastructure projects creates political leverage to be utilised by Beijing in its engagement with Riyadh, while also signalling a shift away from traditional European trade partners and diversifying.
China: Beijing views Saudi Arabia as a strategic partner and its Vision 2030 initiative as integral to the Belt and Road Initiative, leveraging renewable energy as a tool to expand economic and diplomatic influence in the region. In 2014 President Xi Jinping announced the “1+2+3” formula strategy at the China-Arab States Cooperation Forum. This approach identifies energy as a core means of cooperation and it is supported by infrastructure construction, trade, and investment as a layered approach to the states cooperation.
United States: The United States has historically been a dominant energy partner for Saudi Arabia’s fossil fuels industry, providing security for the Saudi establishment and economic opportunities. Whilst the current administration sees an advent of a multipolar world, and thus scaled back on its influence in the region, the future remains uncertain in terms of interest in the highly lucrative renewables sector. American concerns over China’s increasing influence in Saudi energy infrastructure could erupt later on. These could lead to policy shifts or counter-investments in the region.
Opportunities and Risks
Opportunities:
Saudi Arabia through its cooperation with the Chinese private sector will be able to diversify its energy mix and reduce long-term reliance on fossil fuels, ensuring compliance with its own goals of Vision 2030.
Expansion of the renewable sector would be able to entrench Saudi Arabia’s potential as a leader in the sustainability sector in the Middle East, further reinforcing a positive image across towards its Western partners, incentivising foreign investment.
Deeper Saudi-China cooperation will lead to investments and cooperation in areas such as technology and infrastructure, creating further economic growth and expanding the labour market - all contributing to the Vision 2030 initiative.
Risks:
A reliance on Chinese solar technology could make Saudi Arabia vulnerable to supply chain disruptions or geopolitical pressures from China itself. The shift from economic dependence on fossil fuels, if the renewable sector isn’t made autonomous, could prove disastrous to the socio-economic situation of the Kingdom.
Increased collaboration with China in energy may strain Saudi-United States relations, affecting broader economic and military agreements for the security of the region, especially as the US strengthened its resolve to support Israel.
Policy Recommendations
Saudi Arabia should seek to diversify its renewable energy partners in both production and procurement by engaging with European and American renewable energy firms to mitigate risks associated with dependence on a single supplier. To fully establish autonomy over the process, potential investments into local manufacturing of solar panels and batteries are in order to strengthen domestic production capacity.
Implementation of clear energy governance frameworks outside of Vision 2030 to regulate foreign interference and investments into critical energy infrastructure will be able to minimise the risk of dependence upon Chinese partners. Establishment of strategic energy reserves and contingency strategies will allow for the mitigation of supply chain disruptions.
Maintenance of ties with China as a priority due to Beijing’s rising influence in the Middle East region as a whole. However, keeping the United States happy and maximising benefits received from the security and economic cooperation in fossil fuels will allow Riyadh to leverage geopolitics effectively, perhaps utilising GCC as a platform for such manoeuvres.
Conclusion
China’s role in Saudi Arabia’s renewable energy transition represents both a strategic opportunity and a geopolitical challenge. While Beijing’s dominance in solar panel manufacturing has fundamentally allowed Riyadh to pursue an accelerated course in clean energy ambitions, the implications for energy security and technological dependence must be carefully managed. As Saudi Arabia navigates its path toward Vision 2030, maintaining a diversified and balanced approach to renewable energy partnerships will be crucial for ensuring long-term sustainability and geopolitical stability, especially with its Western powers to which the ESG framework is meant to appeal to.