In a significant move to bolster economic cooperation, the Shanghai Stock Exchange and the Saudi Exchange have signed a memorandum of understanding (MoU). This agreement marks a pivotal step in deepening the financial relationship between China and Saudi Arabia, two major players in the global economy.
The momentum for stronger diplomatic and economic relations surged following Chinese President Xi Jinping's visit to Riyadh last December. During this trip, the two nations inked numerous deals spanning technology, energy, and infrastructure, laying the groundwork for enhanced collaboration.
Recent developments include Saudi Arabia's entry into the Shanghai Cooperation Organization as a dialogue partner and the New Development Bank's ongoing discussions about Saudi Arabia's potential membership. Additionally, Saudi Arabia has been invited to join BRICS as a new member next year, highlighting its growing importance on the global stage.
The newly signed MoU aims to align the financial ecosystems of both countries, facilitating cross-listings, financial technology solutions, data exchange, and collaborative efforts in exchange-traded funds (ETFs). This partnership with Saudi Arabia expands China's ETF Connect Scheme beyond East Asia, offering foreign investors greater access to the Chinese financial market.
For China, this initiative provides alternative overseas funding avenues for its companies amidst slower global growth and reduces reliance on U.S. capital markets. Meanwhile, Saudi Arabia's Vision 2030 seeks to diversify its economy, decrease dependence on oil, and attract foreign direct investments into emerging sectors.
With Saudi Arabia being the world's seventh-largest stock market, boasting a total capitalization of $3 trillion compared to China's nearly $10 trillion, the combined strength of these exchanges could have a transformative impact on Western Asia's financial landscape. Saudi Arabia's pivotal role in the region means that this partnership is likely to influence neighboring countries and foster broader economic integration.
China remains the Arab world's largest trading partner, with trade volume reaching nearly half a trillion dollars. Saudi Arabia accounts for about 25 percent of this trade, underscoring the strategic importance of their financial collaboration. The establishment of Bank of China branches in Riyadh and Jeddah further exemplifies China's commitment to facilitating trade and economic cooperation between the two nations.
Reference(s):
Financial linkages take China-Saudi Arabia relations to the next level
cgtn.com
