Economic Growth

Tech and investment are fueling a surge in the China-GCC economic bond

A coloured globe showing China, Korea, Asia, Japan, and India. The GCC is becoming an increasingly important part of China's Belt and Road Initiative.

The GCC is becoming an increasingly important part of China's Belt and Road Initiative. Image: Getty Images/iStockphoto

Duncan Zheng
Senior Managing Director, Investcorp International Ltd
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This article is part of: Annual Meeting of the New Champions
  • China's Belt and Road Initiave is bolstering economies from East Asia to Europe.
  • At its centre is the Middle East and GCC, where these countries' national objectives are complemented by Chinese tech and investment.
  • Technology, energy and mutual investment are helping the China-GCC economic bond reach new heights — and bringing investors along with them.

Businesses and investors are constantly evolving to adapt to geopolitical, technological and macroeconomic trends. The burgeoning investment landscape between China and the GCC is one such trend happening right before our eyes.

The GCC — comprising Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates — has long been a hub of wealth and energy resources. China, with its expansive economy and strategic Belt and Road Initiative, has emerged as a pivotal player in the GCC’s diversification and modernization efforts.

The relationship between the two is centred around mutual opportunity and innovation, and is paramount for investors seeking to capitalize on the intersection of tradition and transformation.

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Investing in the China-GCC partnership

The revival of the ancient Silk Road through China’s Belt and Road Initiative has not only reconnected East and West but has elevated the opportunity for investment and collaboration globally. Geographically, the Middle East is a crossroad for trade, opportunities and ideas as well as a launchpad for entrepreneurial ventures. There is immense potential in GCC businesses leveraging Chinese technological advancements and market access to scale their business globally.

Technology is quickly becoming a cornerstone of financial and industrial ties between China and the GCC, enhancing cross-border cooperation and investments. It is a catalyst for entrepreneurs and new investment opportunities, and will make significant positive impacts on businesses in both regions, driving economic growth and innovation. As the GCC countries continue to diversify their economies, investments from China can provide the necessary capital and expertise to develop other sectors, creating a symbiotic relationship that benefits both parties.

This emerging development includes the Digital Silk Road (DSR), which integrates Artificial Intelligence (AI) and new technologies into the fabric of the Belt and Road Initiative. By focusing on the development of digital infrastructure and technological advancements, the DSR promises to enhance connectivity and economic integration across Asia and the GCC. For the GCC, this could translate into improved trade routes, enhanced digital services and stronger economic ties with China, potentially leading to increased foreign investment and technological know-how. Moreover, the DSR aligns with the GCC's vision of diversifying their economies away from oil dependency, fostering innovation and developing smart cities. The initiative also offers the potential for the GCC to become a hub for digital transformation and commerce, leveraging its strategic geographic location.

Capitalizing on the opportunity

The Belt and Road Initiative and DSR represent a key opportunity for investors globally, as well as those already operating in the GCC or China. And now, companies like Investcorp are making it easier to invest in this dynamic trade relationship. Investcorp Golden Horizon is a platform with a target size of $1 billion, aimed at fostering investments in leading high-growth companies across the GCC and China. The initiative, anchored by the China Investment Corporation (CIC), one of the world's largest sovereign wealth funds, signifies a strategic partnership that leverages Investcorp’s expertise in the GCC and CIC's extensive global investment experience. The platform focuses nurturing business from sectors with robust growth potential, such as consumer goods, healthcare, logistics and business services, all of which are pivotal to the economic transformation and diversification strategies of the GCC countries.

The Investcorp Saudi Pre-IPO Growth Fund, which invests primarily in leading GCC companies looking to access the capital markets within three to four years, is part of the Golden Horizon platform and has already announced three investments in the GCC, indicating the active pursuit of opportunities within the region.

This platform is just one example of the growing economic interconnectivity between China and the GCC, reflecting a trend of increased collaboration and mutual investment. With its strategic focus on high-growth potential sectors and the backing of prominent investors, the platform is well-positioned to capitalize on the synergies between the two regions, fostering a dynamic environment for businesses to thrive and expand.

A promising future

The possibilities for investment between China and the GCC are poised for a promising future, marked by shared prosperity and continued partnership.

Chinese investment in the GCC is a reflection of a broader trend of economic interdependence and cooperation. It’s a partnership that goes beyond mere financial transactions; it’s about building a shared vision for a prosperous and sustainable future.

As the GCC countries continue to diversify their economies, Chinese investment will play a crucial role in shaping the region’s trajectory towards innovation and growth. The result is a new economic partnership with the potential to reshape industries in both geographies, and touch the lives of people from East to West.

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The views expressed in this article are those of the author alone and not the World Economic Forum.

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