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China has dropped a plan to impose higher tariffs on Saudi Arabia’s petrochemicals exports because of alleged dumping of its market, a senior Saudi official was quoted on Wednesday as saying.
The new decision followed extensive talks between the two sides and Riyadh’s denial of claims by Chinese companies about dumping, said Mohammed bin Hamad Al Kathiri, Saudi Ministry of Trade and Industry Undersecretary.
His statements came a day after another Saudi official said the Kingdom could take legal action against China for opening investigation into the dumping allegations and a possible plan to impose higher tariffs on Saudi Arabia’s methanol exports to the southeast Asian nation.
“This thorny file has been closed as a result of efforts taken by Saudi Arabia and inline with the strong relationship between the two countries and their leadership’s keenness to further enhance this relationship,” Al-Kathiri told the Saudi Arabic language daily Alriyadh.
“This decision will have good economic effects on the Saudi industries and its exports to other markets, mainly China which is one of the world’s largest petrochemical markets given its high growth rates.”
Methanol and butanediol make up between 10 and 15 per cent of the Kingdom’s $two billion annual petrochemicals exports to China.
China has strong political and economic ties with Gulf countries and has become a key importer of oil from the region. Its reliance on Gulf oil supplies is set to steadily increase in the coming years as its own crude wealth is eroding and the most populous nation on earth is recording rapid growth in energy consumption.
Between 1999 and 2008, GCC-Chinese trade jumped by at least 40 per cent annually to reach around $70bn in 2008, including nearly $42bn worth of exports by the GCC countries and $28bn worth of imports.
Saudi Arabia, the top oil supplier to China, has remained the largest trading partner of Beijing, with exports of around $31bn and imports of $11bn.
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