Over the last three decades, China has been the world‘s fastest growing economy with annual growth over 9 %. China could be the world‘s largest economy and is likely to be some way ahead of the U.S. by 2030. The country now is the second largest oil consumer.

According to the International Energy Agency (IEA), in 2010 the country‘s oil demand reached about 9.1 million barrels per day (IEA, July 2011), China only produced about 45 % of the oil consumed (Ibid). The rest was imported, and about half of it has come from the Middle East (almost 20 % of Saudi Arabia‘s alone), (Wang Qian, 2010). China, where demand has surged over the past decade, will contribute 36 % to the projected growth in global energy use, its demand rising by 75 % between 2008 and 2035 (IEA, March 2011). By 2035, China is projected to account for 22 % of world demand, up from 17 % today and could overtake the United States to become the largest oil consumer in the world (Ibid).

China views Saudi Arabia with great importance for three reasons: (a) Saudi‘s history as a reliable partner with all of its customers; (b) With current crude oil production capacity to around 12 million barrels per day, Saudi Arabia is the world‘s largest petroleum exporter. That is a capability unmatched in the industry; (c) The Kingdom has a vast amount of oil which China desires. China realizes that nearly 20 % of the world‘s proven oil reserves are located in the Saudi Arabia (BP Statistical Review, 2011: 6), and nearly 60 % of the world‘s proven oil reserves are located in the Middle East (Ibid); (d) Saudi Arabia is the largest economy among the Arab;

At the same time, Saudi Arabia also has strong political, economic, and security relations with the United States. Thus, this study is the first attempt to discuss the evolution of oil relationship between China and Saudi Arabia within the framework of the interdependence model and the Trade Expectations Theory (TET). It wishes to set energy in a broader framework of strategic and regional change, particularly the implications for the U.S. Furthermore, it is hoped that this study will inspire further research in relation to the issue of the political economy, especially with regard to China‘s new role in the Middle East.

1.2 Problem Statement

Does economic interdependence between China and Saudi Arabia increase or decrease the probability of conflict between the U.S. and China in the Middle East? With the growing of China‘s role on the global stage, there is heated debate about the impact of China‘s ―rise‖ on the global system in general and the Middle East in particular. There are explanations provided by liberals and realists, but both fail to show the conditions under which high energy interdependence between China and Saudi Arabia, in particular, will lead to a pacific or belligerent China.