Hedging at the Crossroads: Saudi Arabia’s Strategic Dilemma Between U.S. Security Ties and Chinese Economic Engagement

Executive Summary
The Kingdom of Saudi Arabia (hereafter referred to as Saudi Arabia)’s foreign policy has traditionally been centered on its strategic partnership with the United States (U.S.), focusing on military cooperation, energy security, and economic interdependence. However, with the rise of great power competition, and particularly the intense rivalry between the United States and China, Saudi Arabia’s current approach of hedging between these two powers is becoming increasingly unsustainable. The Kingdom’s growing engagement with China – particularly in sectors like infrastructure, technology and energy – has allowed it to diversify its foreign relations. However, as U.S.-China competition is set to intensify, Saudi Arabia’s position as a balancing power risks placing it in a difficult position where it may be forced to choose between two competing global powers. This dynamic, coupled with the rise of multilateralism and shifting geopolitical alignments, makes Saudi Arabia’s current hedging strategy vulnerable in the long run.

To mitigate these risks and ensure its strategic autonomy, Saudi Arabia must reassess its foreign policy approach. The Kingdom should focus on strengthening domestic defense capabilities through expanded investment in Saudi Arabian Military Industries (SAMI), reducing dependency on external security actors. Additionally, securing technological sovereignty by investing in critical areas like artificial intelligence, cybersecurity, and digital infrastructure will enhance Saudi Arabia’s independence in the face of rising great power competition. The Kingdom must also focus on its economic diversification through investments in renewable energy and high-tech manufacturing, positioning itself as a leader in global energy transitions. By taking these steps, Saudi Arabia can better navigate the complexities of great power competition while preserving its strategic autonomy and global influence.

Context and Importance of the Problem
Saudi Arabia stands at a critical point in its foreign policy trajectory, faced with the pressing challenge of balancing its long-standing strategic alliance with the United States against the rapidly deepening economic and diplomatic engagement with China. This dual alignment approach is central to Saudi Arabia’s broader grand strategy, particularly as the Kingdom strives to achieve its ambitious Vision 2030 agenda, aimed at economic diversification away from oil, modernization, and regional leadership (Melkumyan, 2024). However, navigating this geopolitical balancing act amidst intensifying U.S.-China competition presents complex risks and uncertainties that could undermine Saudi Arabia’s national security, economic resilience, and strategic autonomy (Surkov, 2022).

The root of the issue lies in the shifting dynamics of global power, where the rise of China as a major economic and political force challenges the traditional dominance of the United States, particularly in the Gulf region. For Saudi Arabia, this presents both an opportunity and a dilemma. On the one hand, China offers substantial economic incentives, including infrastructure investment, technology transfer, and energy market stability – key components necessary for the success of Vision 2030 (Sajadi and Ahmad, 2025). On the other hand, the United States remains Saudi Arabia’s principal security guarantor, providing advanced military equipment, intelligence cooperation, and political support, particularly in counterbalancing regional threats from Iran and non-state actors (Blanchard, 2023). Indeed, Saudi Arabia imports around eighty percent of its arms from the U.S., accounting for fifteen percent of U.S. arms exports (Wezeman et al., 2023).

This dual engagement strategy, often described as strategic hedging, has enabled Saudi Arabia to maximize the benefits of both partnerships without fully committing to either side (Salman, Pieper and Geeraerts, 2015; Chaziza, 2015). Nevertheless, as geopolitical tensions between the United States and China are potentially set to escalate – especially in sectors such as technology, defense, and energy – Saudi Arabia risks being caught in the crossfire. The lack of a clearly articulated framework to manage these competing interests exposes Saudi Arabia to potential diplomatic strains, economic sanctions, and reduced strategic flexibility (Surkov, 2022). In particular, deeper involvement with China in sensitive areas, such as telecommunications infrastructure or arms cooperation could trigger a recalibration of U.S. support, including a potential reassessment of defense commitments (Chivvis, Miller and Geaghan-Breiner, 2023).

As such, the policy implications of this issue are far-reaching. At stake is not only Saudi Arabia’s ability to safeguard its national security and economic growth, but also its role as a key actor in a rapidly evolving regional and global order. Failure to recalibrate its approach could diminish the Kingdom’s influence, compromising its security framework and derail its economic transformation. This is an alarming prospect, particularly as Saudi Arabia seeks to maintain its regional dominance against Iran, which continues to expand its own strategic alliances and influence across the Middle East (Melkumyan, 2024). Conversely, a more nuanced and strategically coherent engagement with both powers could reinforce Saudi Arabia’s autonomy, secure its developmental goals, and enhance its standing as a regional leader (Sun, 2024). Immediate attention and strategic policy action are therefore essential to ensure that Saudi Arabia can navigate this complex geopolitical landscape effectively and sustainably.

Saudi Arabia’s Strategic Engagement with the U.S. and China
Saudi Arabia’s long-standing partnership with the United States has been characterized by extensive security cooperation, economic interdependence, and geopolitical alignment in the Middle East. For decades, the Kingdom relied on the U.S. as its primary security guarantor, receiving advanced military equipment, counterterrorism cooperation, and diplomatic backing (Kenner and Al-Ahmad, 2021). Key policy frameworks, such as the 1945 Quincy Agreement and subsequent arms deals cemented this relationship. In return, Saudi Arabia ensured energy stability for global markets, particularly by coordinating oil production through OPEC to align with U.S. interests (Surkov, 2022). While occasional frictions arise, both countries prioritize maintaining and strengthening their strategic cooperation and bilateral relations (Amal and Rahayu, 2024).

Under Vision 2030, Saudi Arabia has increasingly sought to reduce its dependence on oil and pursue a more diversified foreign policy. One major shift has been its deepening economic and technological ties with China. The Saudi-Sino relationship has expanded across multiple domains, including energy cooperation, infrastructure development, and military partnerships. Notably, China has become Saudi Arabia’s largest trading partner, with more than 40% of Saudi crude oil exports going towards China (Sajadi and Ahmad, 2025). The Kingdom has also joined China’s Belt and Road Initiative (BRI), leveraging Chinese investment for infrastructure and digital projects such as NEOM – the futuristic smart city that is a cornerstone of Vision 2030 (Fulton, 2020).

Additionally, Saudi Arabia has increasingly sought Chinese cooperation in defense and technology sectors. In 2022, reports emerged that China was assisting Saudi Arabia in developing its domestic ballistic missile production capabilities, marking a significant shift in Saudi defense policy (Surkov, 2022). China has also provided advanced surveillance technologies to Saudi Arabia, including artificial intelligence-driven security systems, which the Kingdom has integrated into its domestic governance frameworks (Chivvis, Miller and Geaghan-Breiner, 2023).

This shift is not without risks. While Saudi Arabia benefits from China’s economic and technological support, it remains uncertain whether it can replace the U.S. as a security guarantor. The United States continues to provide advanced weaponry, intelligence-sharing and regional deterrence mechanisms that China has yet to match. Moreover, Saudi Arabia’s balancing act between the U.S. and China risks alienating both powers if perceived as opportunistic rather than strategic (Melkumyan, 2024).

Limitations of the Current Approach
Despite Saudi Arabia’s strategic hedging between the U.S. and China, its current approach presents significant vulnerabilities. One key issue is the uncertainty of security assurances. While China has expanded its economic and technological footprint in Saudi Arabia, it has shown little interest in replacing the U.S. as a security provider (Garlick and Havlová, 2020; Felton, 2020). Unlike the U.S., China lacks a history of military intervention or security commitments in the Gulf, making it an unreliable alternative in times of crisis (Melkumyan, 2024). This limitation was underscored during the 2019 Aramco attacks, where despite increasing Chinese investment, it was the U.S. that provided intelligence and defensive support to Saudi Arabia (Surkov, 2022).

Another shortcoming is the economic risk of over-reliance on Chinese investments. While China has become a critical trade and investment partner, its economic engagement often comes with strategic dependencies. Saudi Arabia’s participation in the BRI, while promising in terms of infrastructure development, could lead to excessive financial and technological reliance on China, potentially undermining its economic sovereignty.

Furthermore, Saudi Arabia’s attempt to navigate the U.S.-China rivalry could backfire diplomatically. The U.S. has already signaled concerns over Saudi Arabia’s growing defense cooperation with China, with U.S. officials warning against potential security implications (Blanchard, 2023). If the U.S. perceives Saudi Arabia as shifting too closely towards China, it may reduce arms sales or security cooperation in the long run, leaving the Kingdom vulnerable. At the same time, China’s support remains pragmatic and transnational, lacking the deep security ties Saudi Arabia has historically enjoyed with the U.S.

Lastly, Saudi Arabia’s engagement with China in sensitive technology sectors, including artificial intelligence and telecommunications could invite Western pushback. The U.S. has already pressured allies to limit Chinese tech influence, particularly in areas like 5G infrastructure (Velliet, 2022). If Saudi Arabia continues expanding Chinese technology integration, it risks straining relations with the U.S. and potentially facing restrictions on future U.S. technological partnerships. In sum, while Saudi Arabia’s strategy of balancing between the U.S. and China offers short-term economic and political benefits, its long-term sustainability is questionable. The Kingdom’s security dependence on the U.S., economic vulnerabilities with China and the geopolitical risks of mismanaging great power competition present significant challenges that require strategic recalibration.

Policy Recommendations
Saudi Arabia’s current approach to balancing between the United States and China, while yielding economic and diplomatic benefits, remains largely reactive, exposing the Kingdom to vulnerabilities in an increasingly competitive global landscape. To solidify its position as a regional leader and a global economic powerhouse, Saudi Arabia must transition from ad-hoc balancing strategies to a more structured, long-term strategic framework that ensures security, economic diversification, and technological advancement while maintaining flexibility in its diplomatic engagements. The following recommendations provide proposed measures that will allow Saudi Arabia to maximize its geopolitical leverage, enhance its strategic autonomy and mitigate potential risks coming from great-power competition.

One of the most pressing priorities for Saudi Arabia is ensuring its strategic autonomy by developing a structured foreign policy framework that ensures a balanced and proactive engagement with major global powers. To achieve this, Saudi Arabia should establish a National Strategic Coordination Council under the existing Saudi National Security Council. This body would oversee and assess Saudi Arabia’s engagements with global actors, ensuring that foreign policy decisions are not made in isolation but rather in alignment with broader national security and economic priorities. The council should compromise representatives from key government ministries, including Foreign Affairs, Defense, Economy, and Energy, to ensure that all aspects of foreign engagement – military, trade, investment, and diplomacy – are managed within a coherent strategic vision. Saudi Arabia should also adopt a tiered engagement model that categorizes its relationships based on their strategic value. The Kingdom will strongly benefit from remaining the key security partner of the U.S., even if it means limiting its economic engagement with China. In parallel, since Saudi Arabia needs a strong economic relation with China, it must clarify its intentions in pursuing a long-term economic cooperation independently of its security alliance with the United States. Economic ties with China should be expanded cautiously, focusing on non-sensitive sectors such as infrastructure and renewable energy, while ensuring that Chinese influence does not extend into critical areas such as cybersecurity, digital surveillance, and military cooperation. Additionally, Saudi Arabia should strengthen its security and political relations by expanding and diversifying its international partnerships, adapting to the growing multipolarity in global politics. In order to avoid excessive dependence on either the U.S. or China, Saudi Arabia must expand its diplomatic engagements with the European Union (EU) and middle powers such as India, Japan, and South Korea, fostering trade and security partnerships that offer alternative sources of investment, technology, and strategic cooperation.

In parallel with diplomatic recalibration, Saudi Arabia must strengthen its domestic defense capabilities to reduce its reliance on external security guarantees. While U.S. military support remains a cornerstone of Saudi security policy, the Kingdom must take decisive steps to develop its own indigenous defense industry to ensure long-term security autonomy. According to the International Trade Administration (2022), the Saudi Arabian Military Industries (SAMI) initiative aims to localize fifty percent of defense procurement by 2030. This should be significantly expanded to include the development of advanced drone technology, missile defense systems, and electronic warfare capabilities. Partnerships with South Korea’s Korea Aerospace Industries (KAI) and Turkish defense firms could help co-develop military technologies that enhance Saudi self-sufficiency. Furthermore, cybersecurity and electronic warfare capabilities must be developed under the Ministry of Defense, given the growing threat of cyber-attacks from both state and non-state actors. Saudi Arabia should invest in domestic digital security infrastructure, limiting its reliance on foreign cybersecurity technologies, particularly those from China, which could expose the Kingdom to surveillance risks.

Beyond security, economic diversification remains a central pillar of Saudi Arabia’s long-term strategy, particularly as global energy markets shift toward renewable sources. While oil remains a key pillar of the Saudi economy, the Kingdom must take decisive steps to ensure continued economic dominance while also preparing for a post-oil future. One way to achieve this is by negotiating long-term energy security agreements with both China and the U.S., ensuring that Saudi oil remains key to both economies. China can be offered preferential long-term oil contracts, securing stable demand for Saudi oil, while U.S. and European energy firms could be granted exclusive stakes in Saudi Aramco’s petrochemical projects, ensuring continued Western investment in the Kingdom’s energy sector. In addition to energy diplomacy, Saudi Arabia must use its Public Investment Fund (PIF) to drive economic diversification, allocating higher amounts of money toward advanced manufacturing, AI, and biotech industries. Such investments should prioritize partnerships with U.S. and European firms in sectors such as artificial intelligence, pharmaceuticals, and space technology, preventing excessive reliance on Chinese capital.

Another crucial aspect of Saudi Arabia’s long-term strategy should involve technological development, particularly in the areas of artificial intelligence, cybersecurity, and digital infrastructure. As the Kingdom commits to an ambitious digital transformation under Vision 2030, it must navigate the risks of technological dependencies, particularly in the fields of 5G, cloud computing, and AI-driven surveillance systems. To ensure technological sovereignty, Saudi Arabia should establish a National AI and Cybersecurity Hub, tasked with developing independent digital infrastructure while ensuring that Chinese and U.S. tech companies do not gain excessive control over Saudi digital networks. This initiative should include a minimum of five billion dollars investment into AI and cybersecurity research and development, fostering the growth of domestic tech startups that can compete with global firms. Furthermore, Saudi Arabia should adopt a dual-use technology strategy, expanding cooperation with China in civilian applications such as smart cities and renewable energy, while restricting China’s involvement in sensitive sectors such as cybersecurity and defense technologies. Simultaneously, exclusive agreements should be signed with U.S. and EU companies to secure partnerships in critical technology areas such as quantum computing and digital security infrastructure, ensuring that Saudi Arabia remains aligned with the West in the most sensitive technological domains.

In conclusion, Saudi Arabia’s ability to navigate the increasingly complex landscape of great-power competition will depend on its capacity to develop a strategic foreign policy, build an independent defense sector, expand economic diversification efforts, secure technological sovereignty, and assert regional leadership. The Kingdom should move beyond reactive balancing strategies and adopt a structured, forward-looking approach that allows it to maximize the benefits of its relationships with both the United States and China while preserving its long-term strategic autonomy. If properly implemented, this can enable Saudi Arabia to strengthen its global standing, secure its national interests, and ensure sustained economic and geopolitical resilience within an evolving world order.

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