The Middle East is not only a key region of the ancient Silk Road but also an important part of the modern Belt and Road Initiative (BRI). The development strategies of many Middle Eastern countries, such as Saudi Arabia’s Vision 2030, echo with the BRI in traditional fields such as infrastructure, energy, trade and investment, as well as in emerging areas including renewable energy, the digital economy, and the green economy.
Over recent years, Hong Kong has been actively exploring opportunities for cooperation with the Middle East region. I joined a delegation led by Financial Secretary Paul Chan Mo-po to attend the Future Investment Initiative in Riyadh, Saudi Arabia, in late October. Comprising over 110 representatives from the financial and innovation sectors, we promoted Hong Kong’s strengths and witnessed the signing of a number of collaborative agreements between the two places.
Chief Executive John Lee Ka-chiu’s 2024 Policy Address set out that the Hong Kong Special Administrative Region government would step up efforts to expand aviation networks by supporting Hong Kong International Airport in exploring new destinations and flights, particularly those enhancing cooperation with civil aviation counterparts from BRI-participating countries. On Oct 28, Cathay Pacific resumed direct passenger flights between Hong Kong and Riyadh. I attended the launch ceremony with the delegation and witnessed how Hong Kong is leveraging the opportunities brought by our country’s “Air Silk Road” initiative. This is the airline’s 28th destination in BRI-participating countries, further expanding Hong Kong’s air routes to the Middle East region. My round-trip flights were fully-booked. I talked to some of the passengers and observed a diverse customer base for the route.
The relaunched airline service symbolizes the growing ties between Hong Kong and the Middle East region, further enhancing unimpeded trade between Hong Kong and countries along the Belt and Road, including Saudi Arabia. In 2023, total bilateral trade between Hong Kong and the member states of the Gulf Cooperation Council reached HK$169.2 billion ($21.74 billion), representing an increase of over 50 percent compared with five years ago. This highlights the significant potential for economic and trade cooperation between the two sides. In 2023, the total trade between Hong Kong and Saudi Arabia amounted to HK$10.6 billion. A closer look at the trade categories revealed that over half of the trade with Saudi Arabia consisted of telecommunications equipment and parts, totaling HK$5.1 billion. Other major categories, such as jewelry, watches and clocks, amounted to HK$850 million. Most of these goods are transported by air, and the launch of direct flights between Hong Kong and Riyadh is expected to further boost trade between the two places.
The Middle East, a key link in the BRI, has been actively promoting economic diversification in recent years and providing enormous opportunities for both the BRI and global markets. The HKSAR government has facilitated businesses and the community to connect with the Middle East — through direct flights, ETFs, the investment fund between the HKMA and the PIF of Saudi Arabia, partnerships between HKSTP and the Middle East, as well as the Belt and Road scholarship
As stated in the Policy Address, Hong Kong will strive to collaborate with large-scale sovereign wealth funds in BRI regions such as the Middle East, in financing the setting up of funds to invest in assets in the Chinese mainland and other regions. During the visit to Riyadh, the Hong Kong Monetary Authority (HKMA) signed a memorandum of understanding with the Public Investment Fund (PIF) of Saudi Arabia to jointly establish a $1 billion investment fund. This fund will focus on investing in sectors such as manufacturing, renewables, fintech and healthcare, so as to promote the development of enterprises in Saudi Arabia that are connected to Hong Kong and other Greater Bay Area cities. In 2023, the PIF invested $31.5 billion in a wide range of assets worldwide, making it the most active sovereign investment fund that year.
In addition, the delegation witnessed the listing of the first two exchange-traded funds (ETFs) tracking Hong Kong stocks on the Saudi exchange, which means that the Saudi Arabian capital can indirectly trade Hong Kong stocks through these two funds. The two ETFs were launched by a pair of Hong Kong asset management companies in partnership with various local collaborators, each featuring distinct characteristics. One of the funds is designed to track Shariah-compliant companies on the Hang Seng Index. A local asset management professional shared his personal experience with me during one of the ETF listing ceremonies, saying that investments based on Islamic principles would be well-received locally. Both ETFs are characterized by their low entry threshold, starting at just 10 Saudi riyals ($2.67), allowing local residents to capture the growth opportunities of the Hong Kong stock market, which facilitates financial integration and embodies the “small yet smart” concept.
The delegation also made significant progress in promoting innovation and technology. The Hong Kong Science and Technology Parks Corp (HKSTP) signed a cooperation agreement with Beta Lab, a venture capital firm; and a number of Hong Kong technology startups signed partnership agreements with Middle Eastern enterprises in areas such as fintech, artificial intelligence and low-altitude economy.
The Middle East, a key link in the BRI, has been actively promoting economic diversification in recent years and providing enormous opportunities for both the BRI and global markets. The HKSAR government has facilitated businesses and the community to connect with the Middle East — through direct flights, ETFs, the investment fund between the HKMA and the PIF of Saudi Arabia, partnerships between HKSTP and the Middle East, as well as the Belt and Road scholarship. Looking ahead, we hope that businesses and the community will leverage these links to enhance collaboration and co-development with the Middle East.
The author is the Commissioner for Belt and Road of the HKSAR government.
The views do not necessarily reflect those of China Daily.
