Yazeed Al-Humied, deputy governor of Saudi Arabia’s Public Investment Fund and Ding Chen, CEO of CSOP Asset Management, at the listing ceremony of the CSOP Saudi Arabia ETF at the Hong Kong exchange in Central on November 29. Photo: Edmond So
Opinion
Sanjeev Aaron Williams
Sanjeev Aaron Williams
‘Superconnector’ Hong Kong has US firmly in its sights in pivot to Middle East
Hong Kong has shown that for the likes of Saudi Arabia, the option to incrementally drain the US capital pool and divert it to Asia is on the table
The city’s ambitious list of superconnector aspirations is straight out of Sun Tzu’s Art of War, forcing the US to fight multiple fires at once
Welcome to the multipolar interpretation of “Go West”, an idea perhaps most popularly expressed by the Village People. Instead of ending up on shores lapped by the Atlantic, many are heading for the sands of Arabia. “Superconnector” Hong Kong’s pivot to West Asia not only shows geopolitical boldness but is calculated to strengthen the city’s position as a financial and digital entrepot.
While Financial Secretary Paul Chan Mo-po has acknowledged that the slowing global economy faces the triple challenges of geopolitical risk, high inflation and high interest rates, his declaration that the Association of Southeast Asian Nations, Belt and Road Initiative countries and West Asia are Hong Kong’s target markets will make the US sit up.
Hong Kong has put itself in direct competition with the United States for capital, innovation and influence. The government describes it as a new “proactive and catalytic” mindset – a nod, perhaps, to the famed Lion Rock “can do” spirit.
At the “SCMP 120 Conversations” event, Chan spoke again of Hong Kong’s role as a superconnector. What he didn’t mention, however, was the triad of concepts articulated by Beijing that is driving this – the Global Development Initiative, Global Security Initiative and Global Civilisation Initiative.
All three initiatives reject American hegemony and are grounded in China’s “five principles of peaceful coexistence”, one of which is mutual benefit. All three are derided by the US, which sees them as part of a Chinese power grab.
The US has long been critical of China’s Belt and Road Initiative and wary of its investments in West Asia. The prevailing attitude in Washington, it seems, is that Iran’s rise must be stopped, and the Saudis controlled to counter Iran and prop up the petrodollar. Frustration is rising because the US-led Build Back Better World and the European Union’s Global Gateway programmes, meant to rival the Belt and Road Initiative, are dead in the water for lack of ideas and funding.
Since Chinese President Xi Jinping’s visit to Saudi Arabia last year, which was followed by a top-level Hong Kong delegation, the US has sustained optical, financial and geopolitical hits in that region.
The monopoly of the petrodollar and trade primacy of the US dollar are no longer guaranteed, Iran and Saudi Arabia have resumed diplomatic relations, Syria has been welcomed back into the Arab League, a blood-soaked Gaza is raising suspicions of US intentions, and Russia’s President Vladimir Putin is in conversation with the Saudis and Iranians.
China and Russia are emerging as the primary interlocutors in West Asia, with Iran, Saudi Arabia and the United Arab Emirates (UAE) to join Brics-plus, the bloc originally comprising Brazil, Russia, India, China and South Africa. Pax Americana isn’t what it used to be.
Meanwhile, Hong Kong is leveraging new Brics-plus connections in its bid to become a forum for and salesman of West Asian investments, not just in the city but the Greater Bay Area and also Asean, Singapore’s traditional stamping ground. The new Saudi exchange-traded fund (ETF) and the conference last week co-organised by Hong Kong’s government and stock exchange and the Future Investment Initiative Institute, a think tank backed by Saudi Arabia’s Public Investment Fund, are just for starters.
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Paul Chan woos Middle East companies to visit Hong Kong in 2023 to explore listing opportunities
Paul Chan woos Middle East companies to visit Hong Kong in 2023 to explore listing opportunities
For West Asia, diversification is the name of the game. If the geopolitical centres are shifting to Moscow and Beijing, then their capital will go where it’s treated the best, sanction-free.
Aided by Hong Kong, Saudi Arabia has fired a warning shot across the US bow: Riyadh’s US investments cannot be taken for granted, and the option to incrementally drain the US capital pool and divert it to Asia, in particular Hong Kong and the rest of the Greater Bay Area, is on the table.
Xi Jinping, Qatari Emir discuss World Cup on sidelines of Arab summits
Xi Jinping, Qatari Emir discuss World Cup on sidelines of Arab summits
The US may declare it has no intention of confronting Beijing but it seems keen to portray an arc of agitation across China – from Xinjiang in the northwest to Hong Kong in the south, Taiwan in the southeast and along the nine-dash line in the South China Sea.
In Hong Kong, the expulsion of pan-democrats has meant the end of any US-leaning influence, even as the city’s officials who have been sanctioned by Washington aggressively repudiate American criticism that undermines the city’s superconnector ambitions.
Attacking Hong Kong’s executive and judiciary under the canard of an oppressive national security law to frighten businesses won’t work, even if Moody’s Investors Service has downgraded the city’s credit outlook from stable to negative. The Hong Kong government’s “come and see for yourself” stance has repelled US attempts to derail foreign investment in the city.
Hong Kong’s ambitious list of superconnector aspirations is straight out of Sun Tzu’s Art of War. Knowing the US has nothing comparable or constructive to offer, the city is leveraging its home turf advantage, ability to attract capital, strong regulation and infrastructure to undermine US relevance in Asia.
It is cleverly forcing a domestically fractured US to fight fires in multiple commercial sectors and jurisdictions when its prestige is declining.
It portends another set of bad optics for the US because every intervention will be rejected, accurately, as foreign interference. Threats and sanctions will crash into the law of marginal utility – the more they’re used, the less effective they’ll be.
Hong Kong has never done this before and is gearing up for a monumental fight that will put “one country, two systems” on the map. The US thinks it has the patent on “shock and awe” warfare. Not any more.
Sanjeev Aaron Williams is a lawyer in Hong Kong who writes about geopolitics and the digital economy
