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Aileen Chuang

Deeper regulatory ties and a shared push for new growth sectors are expected to give fresh impetus to cross-border investment flows between China and the Middle East, according to industry players and a United Arab Emirates (UAE) regulator.
Hong Kong would benefit from the increased China-Middle East cooperation as the city develops into “a key hub for Middle Eastern capital to deploy in Asia and an important gateway for Chinese capital to go global to the Middle East,” said Linda Cai, inbound and outbound leader and head of China corporate finance at PwC China.
One emerging area of cooperation is digital assets, where the two sides have advanced their joint digital currency initiatives. Last month, China introduced a new framework for its digital yuan, upgrading it from a cash equivalent to “digital deposit money” to help enable deeper links with the cross-border central bank digital currency pilot, Project mBridge.
Transaction volume under Project mBridge, which makes settlements more direct and efficient between mainland China, Hong Kong, Thailand, the UAE and Saudi Arabia, surged over 2,500-fold from the early 2022 pilot levels to more than US$55 billion by November 2025, according to the US think tank Atlantic Council. Digital yuan, or e-CNY, accounted for over 95 per cent of the tally.
The January announcement to promote digital yuan’s cross-border payment role would “greatly facilitate bilateral economic and trade activities and personal exchanges”, according to Cai.
Combined with the mBridge project, China and the Middle Eastern countries would have formed a “multilevel financial cooperation framework of ‘currency-fund-digital assets’, laying a foundation for the mutual recognition of more cross-border products, such as exchange-traded funds and green bonds, in the future”, she said.

Last month, the UAE market regulator, the Capital Market Authority (CMA), signed an initial accord with its Hong Kong counterpart on cross-border regulation of digital assets. It covered tokenised securities, commodity token contracts and virtual assets, and established mechanisms for supervisory coordination.
The move “formalises this cooperation by establishing channels for consultation and information-sharing”, CMA CEO Waleed Saeed Abdul Salam Al Awadhi told the South China Morning Post.
“The objective is not isolated pilots, but interoperable, well-regulated digital markets capable of supporting cross-border activity as these markets evolve.”
Investment ties between China and the Middle East have deepened steadily over the past two decades, gaining momentum from Beijing’s Belt and Road Initiative in 2013 and President Xi Jinping’s regional visit in 2016. The focus has since evolved beyond infrastructure projects to encompass hi-tech, digital and financial partnerships.
In January, Undersecretary at the UAE Ministry of Finance Younis Haji Al Khoori said the country had issued more than 14,500 business licences to Chinese firms. Tech giants such as ByteDance and JD.com now operate in the country, reflecting heightened interest and a sharp rise from about 4,000 Chinese firms in 2021.
Last September, the CMA reached an agreement with Hong Kong to facilitate the mutual recognition of funds and asset management, enabling cross-border distribution of public funds. The Hong Kong stock exchange and the Abu Dhabi Securities Exchange also signed an accord at the time to facilitate cross-listings of ETFs, companies and environment, social and governance-related products.
“These frameworks are designed to reduce regulatory friction and provide certainty for issuers and investors operating between the UAE, Hong Kong and mainland China,” said Al Awadhi.
Chinese enterprises are expanding in the Middle East and moving beyond representative offices towards revenue-generation operations. A PwC survey published in September found that one in three Chinese companies earned at least 20 per cent of global revenue from the region, a 43 per cent increase from 2022.
UAE sovereign investors and regional institutions were allocating capital with a long-term horizon, Al Awadhi said. He added that their exposure to mainland China and Hong Kong was concentrated in sectors aligned with structural economic transformation, including technology, advanced manufacturing, energy transition, infrastructure and financial innovation.
“Our role is to ensure the regulatory framework supports patient investment,” he added. The work would include cross-border fund structures, diversified investment vehicles and governance and disclosure standards suitable for large institutional investors for long-term allocations, according to Al Awadhi.
In the future, PwC’s Cai said regulators in the UAE and Hong Kong could further boost capital flows and financial integration by simplifying audit and tax procedures, speeding up the mutual recognition of compliance professionals and improving payment and clearing efficiency.


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Transaction volume under Project mBridge surged over 2,500-fold from the early 2022 pilot levels to more than US$55 billion by November 2025


Transaction volume under Project mBridge surged over 2,500-fold from the early 2022 pilot levels to more than US$55 billion by November 2025.


Hong Kong, UAE solidify financial links with deeper regulatory ties, digital assets focus

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Transaction volume under Project mBridge surged over 2,500-fold from the early 2022 pilot levels to more than US$55 billion by November 2025

Transaction volume under Project mBridge surged over 2,500-fold from the early 2022 pilot levels to more than US$55 billion by November 2025