Hong Kong’s Intermediary Role on Funding the BRI: How Does it Fare Against Singapore?

HKUST IEMS Thought Leadership Briefs No. 44

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Alicia Garcia-Herrero , Hanrui Li and Gary Ng

Given the scale and the cross-border nature of the Belt and Road Initiative (BRI), it is clear that major offshore centers should play a role in funding and Hong Kong is supposed to be well placed to have a central role in intermediating overseas capital for the related projects. The reality, though, is that offshore centers do not seem to be very relevant in financing the BRI projects. Within that context, Hong Kong and Singapore have the lion’s share among major offshore financial centers.

When analyzing the direct financing for the BRI countries after excluding money lent to Mainland Chinese banks or corporates without a clear destination or usage in the BRI, we find that the role of both Hong Kong and Singapore in intermediating BRI projects remains limited. When comparing the two, Hong Kong does not appear to outperform Singapore in any financial avenues of syndicated loans, offshore bond issuance, equity financing and asset management. We argue that Hong Kong has a long way to go to play a leading role in the financing of the BRI, an issue becoming more urgent in the aftermath of the COVID-19-19 pandemic.

Reference: Alicia Garcia-Herrero, Hanrui Li and Gary Ng. Hong Kong’s Intermediary Role on Funding the BRI: How Does it Fare Against Singapore? HKUST IEMS Working Paper No. 77. https://iems.ust.hk/wp77

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