Markets

How China Became Saudi Arabia’s Largest Trading Partner

Published

2 years ago

February 19, 2023

Ehsan Soltani

Featured Creator

Article/Editing:

Freny Fernandes

Saudi Arabia turns to China for trade

Saudi Arabia’s Trade With China Surpasses the West

Over the past two decades, the economic presence of China has been growing significantly around the world.

The country has already surpassed the U.S. as the largest trading partner of developed nations such as Japan and the European Union.

But the world’s second largest economy is making significant inroads in the Middle East as well. This graphic by Ehsan Soltani uses data from the World Trade Organization (WTO) to chart Saudi Arabia’s trading history with the EU, the U.S, and China.

Evolving Trade Relations

With China’s imports from and exports to Saudi Arabia now exceeding the major oil-producing country’s combined trade with the U.S. and the EU, China has become Saudi Arabia’s dominant trading partner.

Saudi Arabia Net Trade by Year	With China ($B)	With U.S. ($B)	With EU-27 ($B)
2021	$87.3B	$25.1B	$53.1B
2020	$67.2B	$20.6B	$43.8B
2019	$78.1B	$28.3B	$57.4B
2018	$63.5B	$38.2B	$62.7B
2017	$50.1B	$36.0B	$52.6B
2016	$42.9B	$36.0B	$49.1B
2015	$51.8B	$43.2B	$56.9B
2014	$69.1B	$67.1B	$73.0B
2013	$72.2B	$72.1B	$75.2B
2012	$73.3B	$75.3B	$74.3B
2011	$64.3B	$62.7B	$70.0B
2010	$43.2B	$44.1B	$47.4B
2009	$32.6B	$34.0B	$38.2B
2008	$41.8B	$69.5B	$58.4B
2007	$25.4B	$47.6B	$47.3B
2006	$20.1B	$40.9B	$46.2B
2005	$16.1B	$35.7B	$39.9B
2004	$10.3B	$27.8B	$30.5B
2003	$7.3B	$24.1B	$24.4B
2002	$5.1B	$18.7B	$20.5B
2001	$4.1B	$19.2B	$19.6B

Back in 2001, Saudi Arabia’s trade with China was a mere fraction—just one-tenth—of its combined trade with the EU and United States. While the total value of trade was modest at this time, it’s been increasing consistently almost every year since.

By the year 2011, China had surpassed the U.S. for the first time in bilateral trade value with Saudi Arabia. Then by 2018, trade between China and Saudi Arabia surpassed the Middle-Eastern country’s trade with the entire EU.

Fast forward to today, and China has emerged as a larger trading partner with Saudi Arabia than the rest of the West combined.

The Perfect Match?

China’s status as Saudi Arabia’s biggest trading partner makes sense considering its recent economic growth and focus.

China is the largest buyer of crude oil in the world, and it buys more from the Saudi Arabia than anywhere else. Almost half of the $87.3 billion bilateral trade between the two nations in 2021 was comprised of China’s crude oil imports. This accounted for 77% of China’s total imports from Saudi Arabia, which also included goods like plastic—a petroleum product.

Saudi Arabia, meanwhile, imported over $30 billion worth of goods including technological equipment, telephones, and light fixtures.

To see what other countries China has become the largest trading partner of, check out How China Overtook the U.S. as the World’s Major Trading Partner.

This article was published as a part of Visual Capitalist's Creator Program, which features data-driven visuals from some of our favorite Creators around the world.

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Markets

Visualizing S&P 500 Returns After Interest Rate Cuts

In the past 50 years, S&P 500 returns following interest rate cuts have varied widely, from +36.5% to -36% a year later.

Published

7 hours ago

September 18, 2024

Dorothy Neufeld

S&P 500 Returns After Interest Rate Cuts

This was originally posted on our Voronoi app. Download the app for free on iOS or Android and discover incredible data-driven charts from a variety of trusted sources.

Today, weaker-than-expected economic data and easing inflation has strengthened the case for U.S. interest rate cuts for the first time since 2020.

Although S&P 500 firms were largely protected from rising rates due to locking in lower rates in 2020 and 2021, many loans are up for renewal in 2025. While S&P 500 returns have typically been positive after rate-cutting cycles, these dynamics may present a unique scenario for corporate America. Sectors that benefited from securing low rates, such as manufacturing, may be most exposed to refinancing risks.

This graphic shows S&P 500 performance after interest rate cuts since 1973, based on data from PinPoint Macro Analytics.

How Does the Stock Market React to Interest Rate Cuts?

Below, we show how the S&P 500 has performed after the first rate cut over the last five decades:

Year of first rate cut	Three months after first rate cut	Six months after first rate cut	One year after first rate cut
1973	-10.2%	-6.2%	-36.0%
1974	-14.7%	-15.3%	+7.5%
1980	+15.0%	+28.9%	+30.3%
1981	-11.0%	-7.9%	-17.8%
1982	-4.8%	+17.4%	+36.5%
1984	-1.2%	+7.2%	+10.5%
1987	+0.1%	+1.7%	+7.5%
1989	+7.4%	+7.5%	+11.9%
1995	+5.1%	+8.0%	+13.4%
1998	+17.2%	+26.5%	+27.3%
2001	-16.3%	-12.4%	-14.9%
2007	-4.4%	-11.8%	-7.2%
2019	+3.8%	+13.3%	+14.5%
Average	-1.1%	+4.4%	+4.9%

Historically, the S&P 500 returns 4.9% on average one year after the first interest rate cut, seeing positive returns nearly 70% of the time.

In the three months following a rate cut, the market often dips, but typically rebounds by the six-month mark. This aligns with conventional wisdom that lower interest rates stimulate economic activity by reducing borrowing costs for businesses and consumers, which tends to benefit the stock market.

However, S&P 500 performance following rate cut cycles can vary significantly. For instance, U.S. equities saw double-digit declines after the first rate cuts in 1973, 1981, and 2001. On the other hand, the S&P 500 surged 36.5% one year after the 1982 rate cut cycle. In the most recent rate cut cycle, the S&P 500 jumped by 14.5% in the following year.

In this way, interest rate cuts don’t show the whole picture. Instead, positive earnings growth may offer a more reliable indicator of S&P 500 performance in the following year. When earnings growth is positive, the market averages 14% returns one year after. In contrast, when earnings decline during periods of falling interest rates, the S&P 500 increased by 7%, on average.