Industry Trend Analysis - Diversification To Benefit From China Partnership - SEPT 2017


BMI View: The recent establishment of a Saudi - China investment fund r eflects the growing alignment of the two countries ' economic and geopolitical interests , adding a measure of upside to our construction sector outlook for Saudi Arabia and the country ' s ability to deliver on its ambitious infrastructure investment programme.

We look favourably upon the recent establishment of a Saudi-China backed USD20bn investment fund, as it benefits the strategic and economic interests of both countries. The fund will serve to diversify Saudi Arabia's funding base as it seeks to implement its Vision 2030 scheme (of which infrastructure investment is a central pillar), while China will solidify its geopolitical influence in an increasingly important trading partner along the maritime 'Road' of its wider 'Belt and Road' initiative. The focal point of the fund will be infrastructure investment, with Saudi Arabia and China sharing the costs and investment proceeds on a 50 - 50 basis. Initial reports indicate that renminbi may be used to finance projects.

Fund To Help Offset Fiscal Crunch

Chinese Cash Infusion Key Amid Lower Oil Prices
Budget Balance, % Of GDP & Brent, USD/bbl
f = BMI forecast. Source: National Sources, BMI

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