The Saudi Central Bank (SAMA) and the People’s Bank of China (PBC) announced on Monday the signing of a local currency swap agreement valued at 50 billion yuan ($6.93 billion) or SAR26 billion.
This development reflects the strengthening bilateral relations between the two countries.
While Saudi is renowned as the leading global oil exporter, China stands as the largest consumer of energy worldwide.
In recent years, both nations have endeavored to broaden their collaboration beyond the realm of hydrocarbons, venturing into domains like security and technology.
Read more: Saudi Aramco sees China as an important market for decades to come
According to a statement from China’s Central Bank, the recently signed swap agreement between the PBC and SAMA will serve to enhance financial cooperation, facilitate the broader utilization of local currencies, and stimulate trade and investment between Riyadh and Beijing.
The agreement has an initial validity of three years, with the possibility of extension through mutual consent. In 2022, China’s import of Saudi crude amounted to $65 billion, as reported by Chinese customs data, representing approximately 83 percent of the Kingdom’s total exports to China.
Furthermore, traders revealed that the Chinese President Xi Jinping conveyed to Gulf Arab leaders in December of the previous year that China intended to procure oil and gas using the yuan currency. However, as of now, the yuan has not been employed for purchasing Saudi oil, as per the traders’ observations. It is widely believed that Beijing possesses the most extensive network of currency swap agreements globally, with at least 40 countries, although the specific details of these arrangements are seldom disclosed.
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