China’s investment footprint in Saudi Arabia has expanded dramatically, with the country’s greenfield foreign direct investment (FDI) inflow into the Kingdom skyrocketing to $16.8 billion in 2023. This marks an astounding 1,020 percent increase compared to the figures from the year prior.
The United States and the United Arab Emirates closely trail behind China, with their greenfield FDI contributions reaching $2.7 billion and $2.67 billion, respectively. Kuwait and Hong Kong also made significant investments, claiming the fourth and fifth positions with $937 million and $796 million, respectively.
Greenfield FDI refers to the process where a company launches a new venture by building new facilities from the ground up in a foreign country.
As part of its long-term economic strategy, Saudi Arabia aims to attract over $100 billion in FDI by 2030. This move is aligned with the Kingdom’s efforts to diversify its economy and reduce its reliance on the oil sector.
A significant portion of the Chinese investments, totaling $5.6 billion, is directed towards the automotive original equipment manufacturing industry. This is largely attributed to a deal between Human Horizons and Saudi Arabia’s Ministry of Investment, which was sealed at the Arab-China business conference in June 2023.
Under the agreement, Human Horizons is expected to establish an extensive automotive facility encompassing research, development, manufacturing, and sales operations within Saudi borders.
Further Chinese investments include $5.26 billion to the metals sector and $4.26 billion to the semiconductor industry, reinforcing China’s diverse economic interests in Saudi Arabia.
The report also indicates that total greenfield FDI inflows into Saudi Arabia surged by 110 percent year-on-year, reaching $28.78 billion in 2023, which surpasses the 2018 peak yet falls short of the 2008 record.
Riyadh received the lion’s share of greenfield FDI, amounting to $8.18 billion, followed by Ras Al-Khair and Dammam, with significant contributions of $4.23 billion and $772 million, respectively.
The tourism sector in Saudi also showed promising developments, with investments totaling $227 million. Notable ventures include Radisson Hospitality’s new 223-room hotel at the Riyadh Convention and Exhibition Center, costing an estimated $112 million, and Liechtenstein-based Olayan Investment Co. Establishment’s commitment to construct The Mondrian Riyadh Al-Malga Hotel and Residences, a project also valued at around $112 million and slated for completion in 2026, to be operated by UK’s Ennismore.