Located at the heart of the Belt and Road Initiative’s land and sea routes, the Middle East, North Africa and Turkey, the so-called MENAT region, is increasingly strategic in China’s bid to revive the ancient Silk Road, with many new prospects on the horizon.
“I would like to suggest that people get curious and excited about the BRI. There’s so much in MENAT that’s going on that’s relevant to China,” explains Mukhtar Hussain, Head of Belt & Road Initiative, Asia-Pacific at HSBC.
These synergies were represented earlier this year with the China-Arab cooperation conference in Beijing and President Xi Jinping’s visit to the United Arab Emirates, when a raft of trade, business and financial agreements were signed. It was the first visit by a Chinese leader to the Gulf state in nearly three decades.1
“It led to the crystallisation of a number of MOUs or memoranda of understanding at a governmental level. Now the level of discussion that is going on in the private sector today has never been more promising,” says Mr Hussain.
“What excites me about the MENAT region and BRI is these are two great opportunities that are meeting at exactly the right time.”
The MENAT region is looking to diversify its economic base, specifically beyond energy supplies. It also wants to be more balanced in its outlook between East and West. This comes at a time when China is gaining momentum with the BRI. The Asian giant has already offered loans, aid and funding totalling USD23 billion, linking stability and growth in the Arab World to the Belt and Road.2
The strong relationship built on the sale of Saudi Arabian oil to China is now expanding into other trade and commercial sectors. There is also a lot of interest around Saudi Vision 2030. This is a plan to reduce the country’s dependence on petroleum, diversify its economy, and develop public service sectors such as health, education, infrastructure, recreation and tourism.3
“If you look at something like Saudi Vision 2030 and the way that it will really transform an economy, it is unparalleled really in the world today,” says James Cameron, Co-head of Infrastructure and Real Estate Group for Asia Pacific, Global Banking at HSBC.
Elsewhere, there is a significant focus on boosting connectivity within the MENAT region, this involves enhancing large infrastructure projects, such as ports, airports and railways, so that the region can continue to be a key part of global supply chains.
Beijing has ramped up its engagement with MENAT in recent years, with various nations playing an increasingly important role in President Xi Jinping’s BRI and foreign policy initiative to boost trade routes linking China. 4
“Chinese companies that we’re talking to also recognise that some of the transformation programmes and the large infrastructure spend creates opportunities for them. When you look at some of the skills, expertise and capital that they will need, our Chinese clients are very well placed to be able to provide that,” decries Mr Cameron.
“Some of the challenges will be the sheer scale of the ambition. To deliver on that, there is going to be significant changes required in terms of legislation and regulation within the MENAT region, as well as changes in the mindset for foreign ownership and investment. But it is an area where we see the right momentum.”
To demonstrate its seriousness about supporting the Belt and Road Initiative, HSBC became the first international bank to set up a dedicated office. Headed up by Mukhtar Hussain, the unit oversees HSBC’s strategy in supporting its clients – whether Chinese or global – by helping them to finance and invest in projects and companies involved with the revitalised Silk Road.
- Xi's visit to UAE highlights China's rising interest in Middle East, Reuters
- For China, the Belt and Road run through the Middle East, South China Morning Post
- Saudi Vision 2030, Saudi Arabian Government
- China's Xi pledges $USD20 billion in loans to revive Middle East, Reuters
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