Gulf-Asia Relations as “Post-Rentier” Diversification? The Case of the Petrochemical Industry in Saudi Arabia

Abstract

: As the Gulf states embark on industrial diversification away from oil, their relationship with Asia is in the process of undergoing a significant transformation from uniform producer-consumer relations in the petroleum sector to a more complex multi-sectoral interaction. This article examines Saudi Arabia's relations with China and Japan in the petrochemical sector, the oldest and most competitive manufacturing sector in the Gulf economy, in order to provide insight for what Gulf-Asia “post-rentier” relations will be like in the future. China and Japan show mutually distinctive patterns of interaction with Saudi Arabia. China is in a horizontal relationship with Saudi Arabia, providing export and investment opportunities, but also increasingly competing in trade. Japan is in a vertical relationship, benefiting Saudi Arabia with technology transfer through inward investment and aid. Such varying patterns reflect their different levels of development, suggesting the need to discern “Two Asias”, and urging studies on Gulf-Asia relations to refocus on the roles played by advanced economies in Asia as well as those by China and India in the Gulf economy.