Invest Hong Kong announced on July 16 that it has signed a memorandum of understanding with the Abu Dhabi Chamber of Commerce and Industry of the United Arab Emirates (UAE), pledging cooperation on investment promotion exchanges and support. The deal will help the two sides promote mutual investment and encourages interested local companies to set up or expand their businesses within the area of the other’s jurisdiction.
The move is an important milestone in Hong Kong’s international outreach, which goes toward consolidating its status as a global financial and investment hub. The UAE, on the other hand, is an emerging hub, whose leaders have invested to diversify their economic portfolio away from oil exports. This is a trend that is mirrored across all the energy rich Persian Gulf states, including Kuwait, Qatar, and Saudi Arabia, all of which have positioned themselves as some of the world’s largest sources of investment capital.
I believe that Hong Kong’s future economic success is premised on fostering relationships with such countries, especially in consideration of tensions with the West. Rather than depending on the existing markets, which are becoming subject to political uncertainties, the special administrative region should focus on creating new ones and cultivating new sources of capital, especially in non-Western countries, and therefore consolidating its place as a truly global financial center beyond the West’s sphere of influence. This is also complementary and supportive of China’s foreign policy goals in general.
First, we should understand that it has been the agenda of the United States, projecting its interests through the mainstream media, to try and degrade Hong Kong as an international financial center as part of its broader economic war against China. This has involved relentlessly pushing the narrative that the national security laws implemented in Hong Kong make the city “unsafe” to do business and invest in, aiming to discourage Western capital and institutions from being there. Media rhetoric pushes baseless and exaggerated fears of “arbitrary” arrest and interference in business activities, claiming the rule of law has been undermined, while attacks on China as a country aim to undermine the investment environment.
There is no appetite for Hong Kong to thrive, save it is on political terms the West permits and controls. In other words, the Western capital that Hong Kong has thrived upon, as it did during the British era, should be subsequently under their control, with the city acting as a conduit for their interests, which is what is really meant here by “democracy”. In this case, it is expedient for the Hong Kong Special Administrative Region to subsequently diversify its sources of international capital and focus on alternative and emerging markets. This is in line with China’s broader goals of fortifying its ties with the Global South through initiatives such as the Belt and Road Initiative. Hence, as tensions with the US-led West have grown, China’s exports to the non-West markets have surged.
Hong Kong of course, while enjoying a high degree of autonomy, is nonetheless part of China and therefore it is expected to utilize its own unique resources, expertise, and conditions in conjunction with China’s national development strategy in the name of national interest. Therefore, the onus is on the city to continue to enhance economic ties with these alternative markets accordingly. It should not be overlooked that the Persian Gulf states are utilizing enormous sovereign wealth funds to diversify their economies for a post-oil future. These states are politically stable and geopolitically balanced. Saudi Arabia for one has been more than willing to invest in China and has made significant investments in the West. There is no reason they would not engage in Hong Kong. The city should be opening offices in every single one of those countries.
Beyond the Middle East, Hong Kong should deepen its financial ties with critical Southeast Asian economies such as Thailand, Indonesia, and Vietnam. In South Asia, it should focus on Bangladesh. The Bangladeshi economy is the most successful in the South Asian region, with GDP per capita having overtaken India and Pakistan. With a huge population, it is set to be a critical market and manufacturing hub. Hong Kong is also at an advantage due to having a Bangladeshi diaspora through the shared British Empire legacy. In Central Asia, Hong Kong should deepen ties with Kazakhstan and Uzbekistan, which are emerging financial centers attracting Western interest amid the geopolitical struggle. In the Western Hemisphere, prospective and reliable economies that Hong Kong should also seek to engage are Mexico, Chile, and Ecuador, which can serve as conduits to the US. As to the rest of the Global South, owing to their fiscal volatility, the city should align with the Chinese mainland in cultivating economic and trade development for poorer countries in Africa and Latin America.
Overall, the UAE-Hong Kong investment promotion deal is just one small step on a large checklist of recommendations the SAR should follow as part of a much-needed strategy to diversify its economic ties with the world. We should expect the situation with the West to worsen, especially if Donald Trump returns to the White House, and more importantly, Hong Kong must transition away from its historical reliance on “Western capital” to become a source of “global capital” in line with the emerging multipolar world, desperately seeking a post-US-dollar arrangement.
The author is a British political and international-relations analyst.
The views do not necessarily reflect those of China Daily.
