"In the past two years, I have deeply felt the heat of China-Arab economic and trade exchanges, and both sides have made joint efforts to continuously inject new vitality into practical cooperation between China and Arab countries," said Huang De, Vice President of the Shanghai Renminbi Trading Business Headquarters of Bank of China.

On the evening of October 10th, the First Financial and Bank of China jointly held the "2024 Shanghai Global Asset Management Forum International Special Session - Join Hands to Promote High-Quality Financial Cooperation between China and Arab Countries." Tao Changsheng, Deputy Director of the Financial Committee Office of the Shanghai Municipal Committee, attended the forum and delivered a speech.

"The asset management industry has great potential in promoting the transformation of high-end industries, digital economy, and green industry development," said Muhanaad Nakbi, Consul General of the United Arab Emirates in Shanghai.

At the forum, financial services and trade investment institutions from China and Arab countries also conducted in-depth discussions and outlooks on hot topics of high concern in both markets, such as the current status and investment trends of the Chinese and Middle East markets, financial cooperation enabling industrial development, and opportunities and strategies for China-Arab financial cooperation.

China-Arab cooperation has entered the fast lane of development. In the past two years, China-Arab financial cooperation has entered the fast lane of development, and Shanghai, which is deepening the construction of an international financial center, is one of the main battlefields for cooperation between the two sides.

Huang De said that Shanghai is an international financial center with global influence, with a concentration of financial infrastructure, a wealth of financial institutions, a gathering of financial talents, and a continuously optimized financial business environment. Many commercial banks from Middle Eastern countries, including the First Abu Dhabi Bank, have chosen to establish their first institution in the Chinese market in Shanghai, fully demonstrating the strong competitiveness of Shanghai as a window for the opening up of China's financial industry.

At present, Shanghai has become the city with the most concentrated financial markets and financial infrastructure in China, with more than 10 national financial markets and financial infrastructure, and more than 1770 Chinese and foreign financial institutions have gathered in Shanghai to carry out their business, among which foreign financial institutions account for nearly one-third, making it the city with the most concentrated foreign financial institutions in mainland China.

At the same time, Shanghai has many institutional dividends of financial reform and opening up, and various financial opening and innovation measures are continuously promoted; Shanghai has a rich talent resource and financial practitioners, with a preliminary estimate of more than 500,000 people. More importantly, Shanghai is backed by the vast economic hinterland of China, located in the Yangtze River Delta region with the most active economic growth and strongest strength in China, with strong economic strength as the material basis. At present, Shanghai has initially built a new industrial system led by three leading industries, supported by six key industrial clusters, with new track industries accelerating and future industries looking ahead.

The UAE is one of Shanghai's most important trade partners in West Asia. In 2023, the trade volume between the two sides reached 4.7 billion US dollars, and the same year, the bilateral trade between the UAE and China reached 95 billion US dollars. In November 2023, the "Renminbi/Dirham Bilateral Currency Swap Agreement between the People's Bank of China and the Central Bank of the UAE" was renewed, with a validity period of five years and a swap scale of 35 billion yuan/18 billion UAE dirhams. The two sides also signed the "Memorandum of Understanding on Strengthening Central Bank Digital Currency Cooperation."At the same time, China's financial market is continuously expanding and deepening its opening to the outside world, and the renminbi, as an investment and reserve currency, is attracting the attention of global investors. "We are also very pleased to see that the sovereign wealth funds in the Middle East are optimistic about the long-term growth potential of China's economy, continuously increasing their layout and investment in the Chinese market, and commercial asset management institutions in the Middle East are actively seeking to enter China's capital market," said Huang De.

As early as 2004, the Bank of China established a representative office in Bahrain, becoming the first Chinese financial institution to set up a branch in the Middle East, and successively established branches in Dubai, Abu Dhabi, Qatar, and Riyadh, continuously improving its layout in the Middle East market. It is worth mentioning that this international special session set up sub-venues in the Bank of China's Dubai, Abu Dhabi, Qatar, and Riyadh branches, inviting local institutional customers to watch the forum's live broadcast together.

"Over the past 20 years, the Bank of China has actively integrated into the economic and social development of the Arab region, established very close cooperative relations with local core enterprises, and promoted the precise docking of the 'Belt and Road' initiative with the region's 'Vision 2030' and 'Green Middle East' and other major development initiatives," Huang De said. In promoting interconnectivity, promoting the internationalization of the renminbi, and supporting the transformation of green development, the Bank of China has leveraged its professional advantages and has always been the vanguard and main force in serving China-Arab economic, trade, and financial cooperation.

"The Bank of China has comprehensive service capabilities and sufficient financial strength in the Middle East and North Africa region, and can also support large-scale projects. We hope that the Bank of China can strongly support Chinese enterprises to further expand their business in the UAE," said Muhanaad Nakbi.

There is still a large space for interconnectivity between primary and secondary markets

The in-depth cooperation progress between China and Arab countries in economy, trade, and investment has laid a good foundation for capital market cooperation, and the interconnection of capital markets is also conducive to further deepening of investment and trade between the two sides.

Mohammed Al-Rumaih, CEO of the Saudi Exchange, shared the close cooperation between Saudi and Chinese capital markets in recent years. "We will continue to invest in cooperation between the two markets. Our strong market infrastructure, diversified and complex investment opportunities, and continuous efforts to improve access indicate that we are ready for cooperation with international investors, including Chinese investors," said Mohammed Al-Rumaih.

The Shanghai Stock Exchange signed a cooperation memorandum with the Saudi Exchange Group in September 2023, laying the foundation for the cooperation and development of the two exchanges. Wang Buzhou, Deputy Director of the International Cooperation Department of the Shanghai Stock Exchange, said that the cooperation memorandum mainly involves cooperation exploration in product information, scientific research, market promotion, and other aspects, and there is still a larger space for cooperation in the future.

"Next, the Shanghai Stock Exchange will continue to guide by the cooperation memorandum, take the Saudi Exchange as a window, and establish extensive and in-depth contacts with major financial institutions and investment institutions in Saudi Arabia to jointly explore potential cooperation fields," Wang Buzhou said.

He also said that the Shanghai Stock Exchange will continue to support and promote two-way market cooperation. On the one hand, it will showcase listed companies on the Shanghai market to Middle Eastern investment institutions, tell the story of China's capital market, and attract more long-term capital into China's capital market. On the other hand, it will actively cooperate with the Saudi Exchange to carry out various activities, involving communication and contact with financial institutions, listed companies, and various market participants, and do a good job in communication and contact platform work.Huatai-PineBridge Southern Eastern Saudi Arabia ETF is one of the first ETFs in China to focus on investing in the Middle East market. Liu Jun, Deputy General Manager of HuaTai-PineBridge Fund Management Co., Ltd., stated that the company is also actively preparing or considering investment targets that meet the needs of Middle Eastern institutional investors.

"Currently, many domestic fund companies still use direct investment methods for mature developed markets. I believe that in the future, there may be more direct investment products," said Liu Jun.

In addition to the secondary market, the cooperation between China and Saudi Arabia in the primary market has shown an advanced development trend. Wang Wei, Deputy Chief Investment Officer of Ajlan Brothers Holding, believes that there are three stages for Chinese enterprises to develop in Saudi Arabia: The 1.0 stage of cooperative investment is to find relevant distributors and partners in Saudi Arabia, with the aim of selling Chinese products to the Saudi market to meet its demand; Currently, many enterprises have entered the 2.0 stage, hoping to establish local production factories and teams in Saudi Arabia to achieve localization of product production and services; The 3.0 stage is for Chinese enterprises to directly establish localized brands in Saudi Arabia.

"We believe that as the cooperation between the two sides in the primary market continues to deepen and expand, it will also be beneficial to the development and services of capitalization in the secondary market," said Wang Wei.

The gradual warming of China-Saudi Arabia bilateral economic and trade cooperation has also further promoted the interconnection of cross-border finance. In terms of debt capital markets, "An important task is to tell the Chinese story well, to explain China's strengths and characteristics clearly and clearly to overseas friends," said Liu Wei, Deputy General Manager of the Investment Banking Department and General Manager of the Asset Management Department of Bank of China.

Liu Wei also said that in the future, he wants to do more work from a two-way perspective in the debt capital market: On the one hand, to serve Saudi Arabia and Middle Eastern issuer customers well, and to continue to make efforts for their domestic and foreign issuance matters; On the other hand, to help Chinese customers go global, in the future, he will guide Chinese enterprises to understand the Middle East more, and at the same time, through roadshows, strengthen the understanding of Chinese enterprises by investors in the Middle East, and further share the dividends of China's economic development.

Future cooperation opportunities and strategies

Under the background of in-depth China-Arab cooperation, what new cooperation opportunities will there be in the future, and what new trends will emerge?

"At least based on my personal experience, Middle Eastern investment in China started more than ten years ago, and they are very interested in investment opportunities in China. They are real long-term investors, very forward-looking, and very patient. The professionalism of Middle Eastern investors is also very strong, and they will look at China's investment opportunities from a global perspective," said Zhang Jianying, Deputy General Manager of Ping An Asset Management Company. Nowadays, Middle Eastern investors' understanding of the Chinese market is becoming more and more profound, and they will make diversified investments in various fields in China.

So, what investment opportunities in China do Middle Eastern investors mainly value? "We mainly focus on fields with long-term development prospects, among which the key parts include renewable energy, logistics, healthcare, and infrastructure, all of which have significant growth," said Marwan AIMarri, Director of the Asia-Pacific region of the Dubai Chamber of Commerce. "These directions are also consistent with China's 'Belt and Road' initiative. We actively encourage Chinese investment in future-oriented industries, such as artificial intelligence, blockchain, e-commerce, and advanced manufacturing."Countries in the Middle East are also attracting Chinese investors, particularly in the manufacturing, real estate, and business services sectors. "The number of Chinese companies registered with the Dubai Chamber of Commerce has reached over 5,000, with more than 1,000 registered in the first eight months of this year," said Marwan Al Mheiri. Chinese investment is crucial for the economic development and diversification of the United Arab Emirates, helping to accelerate the transformation to a knowledge-based economy and strengthen trade relations between the two countries.

"As China-Arab cooperation deepens further, whether it is the traditional oil and gas upstream and downstream industries and related construction, infrastructure, or green energy, digital economy, digital finance, etc., there is a lot of resonance with the five major articles. We hope to become a bridge between China and Arab countries, both a bridge for capital and a bridge for cultural exchanges," said Chen Jie, the head of the Abu Dhabi branch of the Bank of China.

So, how will the Bank of China better build a bridge between China and Arab countries? Chen Jie said that different customers have different demands, "We will combine traditional paths with emerging paths to provide better services for customers, such as providing value-added solutions when customers have abundant funds, and financing or bond issuance solutions when funds are tight."

Abhishek Dhingra, Senior Vice President and Group Strategy Director of the First Abu Dhabi Bank, also said that as the only Emirati bank with full licenses in mainland China, it can help customers trade and expand in China, providing customers with very attractive solutions, striving to increase revenue from Chinese business, with a goal of more than $8.3 billion by 2026. At the same time, the bank sees huge growth opportunities in promoting the flow of goods and services, supporting China's green initiatives, and promoting the internationalization of the renminbi.

"From a global allocation perspective, renminbi assets may fluctuate in some cases, but in the long run, they can still provide stable and competitive returns," said Zhang Jianying, who suggested that China and Arab countries still need more two-way, in-depth information exchange, more in-depth research and analysis, which is an important basis for promoting long-term stable cooperation between the two sides in the future.

Looking forward to the opportunities for financial and trade cooperation between China and the Middle East in the next five years, Chen Jie believes that the exchanges between the two countries will become deeper and deeper. While the two sides trade, the development space in areas such as digital finance is immeasurable. At the same time, the cross-border renminbi system will also develop better and better, and there will be more room for investment in renminbi and dirham in the future.