Chinese electric vehicle (EV) manufacturer Human Horizons has confirmed a huge £4.5 billion partnership agreement with Saudi Arabia's investment ministry, marking a significant milestone in the economic relations between the two countries. The deal was announced during the Arab-China Business Conference, a two-day event held in Riyadh that showcased the growing ties between China and the Arab world. It heralds the kind of project that BRICS-aligned nations will be able to deliver in the near future.
The conference, now in its 10th year, witnessed the signing of numerous investment deals worth a total of US$10 billion, with Chinese firms across various sectors participating, including technology, renewable energy, agriculture, real estate, metals, tourism, and healthcare. The event drew over 3,500 attendees and was hosted by Riyadh for the first time, underscoring the increasing cooperation between China and Saudi Arabia.
The joint-venture between Human Horizons and Saudi Arabia's investment ministry will focus on automotive research, development, manufacturing, and sales, leveraging the expertise and resources of both parties. The collaboration aligns with Saudi Arabia's Vision 2030 strategy, a comprehensive development plan aimed at reducing the country's reliance on oil and diversifying its economy.
“The Middle Eastern country's commitment to Vision 2030 opens up new opportunities for Chinese companies to participate in infrastructure development, electric vehicle assembly, new energy projects, and technology businesses in Saudi Arabia,” noted Yan Jinglan, a professor of foreign studies at the East China University of Science and Technology. “This move will particularly benefit Chinese manufacturers who face intense competition in their home market.”
The bilateral investment deal between Human Horizons and Saudi Arabia comes as part of a broader commitment by China to support Saudi Arabia's economic transformation efforts. Despite their existing economic ties primarily revolving around oil, China has pledged its backing for Saudi Arabia's diversification agenda. This support was highlighted during Chinese President Xi Jinping's visit to Saudi Arabia in December, where he attended the China-Arab Countries summit and the China-Gulf Cooperation Council summit.
Moreover, in a significant move that defied Washington's objections, Saudi Arabia also signed a substantial deal with Chinese telecommunications giant Huawei during the summit. These developments demonstrate the deepening ties between China and Saudi Arabia and China's growing interest in the Middle East region.
Human Horizons' collaboration with Saudi Arabia aligns with Riyadh's ambition to foster growth in its technology and green energy sectors, including the establishment of a domestic EV manufacturing industry. The Shanghai-based automaker specializes in autonomous driving technology and produces EVs under its high-end HiPhi brand. The company aims to enter the European market later this year with an initial model expected to be close to £80,000.
“Given the preferences of the Saudi market, premium or luxury EV models are likely to be well received,” stated David Zhang, a visiting professor at Huanghe Science and Technology College. “Human Horizons is the ideal pioneer to test the market with its upscale models before other Chinese EVs venture into Saudi Arabia.”
However, despite Human Horizons' ambitious plans, the company does not currently rank among China's top 15 EV manufacturers in terms of monthly sales. Nevertheless, the partnership with Saudi Arabia presents an opportunity for the company to expand its market presence and capitalize on the Kingdom's commitment to EV adoption.
Khalid al-Falih, the Saudi investment minister, emphasized the potential for increased investment flows between China and Saudi Arabia. He highlighted that China's outward foreign direct investment has experienced a steady annual growth rate of 20% over the past decade. However, there is still untapped potential for Chinese businesses to leverage China's prosperous market and enhance investment in Saudi Arabia.
While China's outbound investments experienced minimal growth in 2022, with outbound mergers and acquisitions activity declining by 52%, the country's ministry of commerce reported a remarkable 35.7% year-on-year growth in overseas direct investment in the first two months of 2023. This positive trend follows the relaxation of China's strict COVID-19 control policies.
Saudi Arabia is already China's largest trading partner in the Gulf, with bilateral trade reaching £85 billion in 2022, a 30% increase from the previous year. Last year, China-Gulf trade volume hit a record high of £340 billion, and Saudi Arabia accounted for a quarter of that volume, further solidifying the economic ties between the two nations.
Additionally, it is worth noting that Saudi Arabia holds a majority stake in US EV manufacturer Lucid Motors. However, the value of the country's share has experienced a significant decline, dropping from £21 billion in 2021 to £14 billion in 2022, and now resting at just over £6 billion. Despite this setback, Lucid Motors is on track to commence production of up to 155,000 EVs annually, with the Saudi government itself poised to place an order for the initial 10,000 vehicles, a move that is expected to create around 30,000 non-oil related jobs.
The partnership between Human Horizons and Saudi Arabia represents a significant step towards strengthening economic ties between China and Saudi Arabia. As both countries continue to pursue their respective economic strategies, this collaboration is expected to contribute to the development of the EV industry and drive the transformation of Saudi Arabia's economy, aligning with the Vision 2030 plan.
