How Saudi Arabia and China Could Partner on Solar Energy

Last May, Chinese solar panel manufacturer LONGi signed an agreement with Saudi trading company El Seif Group to establish large-scale solar manufacturing infrastructure in Saudi Arabia. The deal came several months after the Trump administration's imposition of global tariffs on imports of Chinese solar panels and cells.

The big picture: Uneasy about its oil dependence and lack of domestic manufacturing capabilities, Saudi Arabia has long looked to partner with China to develop its burgeoning green industries. But while the U.S.–China trade war has given the kingdom a chance to fortify that collaboration, it also puts Riyadh in the tough position of choosing between the world's largest solar manufacturer and its most important geopolitical ally.

Background: China laid out its industrial investment policy for the Greater Middle East in a 2016 white paper, highlighting the importance of exporting industrial capacity in nuclear, traditional and renewable energy. Saudi Arabia's goal of developing 60 gigawatts of solar power by 2030, together with its dearth of indigenous competition, makes the country an attractive manufacturing destination for Chinese firms, which have already sought to deepen their cooperation with their Saudi counterparts.