China's ramp-up of belt and road investments plays to Hong Kong's strengths: HSBC

Hong Kong is poised to gain from mainland China's expanding Belt and Road Initiative, as new projects under the effort to build a China-centred economic network increasingly focus on green development, digital transformation and trade-corridor connectivity, according to HSBC.

Hong Kong, with its strengths in green finance and status as the world's largest offshore yuan hub, was set to play a bigger role as the 12‑year‑old belt and road plan shifted towards more private sector-led projects across its 150 member countries, particularly in Southeast Asia and the Middle East, said Jing Liu, the bank's chief economist for Greater China, in a briefing on Thursday.

In addition, Hong Kong's stablecoin ordinance, which regulates digital tokens pegged to fiat currencies and other reserve assets, could support the internationalisation of the yuan, she added. This was because it aligned with the belt and road plan's increasing investments in emerging markets and higher use of the yuan for settlement, she said.

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"The Belt and Road Initiative began with an early emphasis on large overseas infrastructure projects, but has gradually shifted to 'small and beautiful' projects", with greater emphasis on "green development, digitalisation and hi-tech content", Liu said. Hong Kong stood to benefit from the steady growth of the initiative thanks to its deep ties to mainland China's economy, she said.

The share of total Chinese overseas direct investments going to the initiative rose to 25 per cent in the first six months of 2025 from an average of 16 per cent in 2021 and 2022, according to HSBC research.

China's overseas investments were expected to accelerate amid the US-China tariff tensions, which propelled production closer to end consumers to supplement exports, Liu said. Chinese companies' globalisation strategies would also continue, she added.

Jing Liu, HSBC's chief economist for Greater China, pictured at the bank's offices in Central on September 4, 2025. Photo: Aileen Chuang alt=Jing Liu, HSBC's chief economist for Greater China, pictured at the bank's offices in Central on September 4, 2025. Photo: Aileen Chuang>

Two regions stood out in China's overseas direct investments: Asean and the Middle East, according to the bank's research. With the Association of Southeast Asian Nations pushing for a digital economy and the Middle East looking to decrease its dependence on oil, more investments related to these fields could emerge, Liu said.

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"Going forward, as China accelerates green transitions at home as well as in [belt and road] countries, Hong Kong has ample opportunities to leverage its advantages in green finance and further strengthen its position as a regional, even global, green-finance hub," she said.

Meanwhile, the belt and road strategy has become an important avenue for yuan internationalisation, as Beijing has made more than 30 currency-swap agreements and around 20 yuan-clearing arrangements with member countries, according to HSBC research. Hong Kong remains the world's biggest offshore hub for the yuan, handling more than half of all cross-border trade settlements.

Hong Kong's digital-asset initiatives, such as tokenisation and potential stablecoin issuance, were expected to provide innovation in how the belt and road countries settled trades, boosting the use of the yuan, Liu said.

Beijing could be ready to promote its central bank digital currency, e-CNY, for overseas use after launching it in phases domestically since 2020 and easing its cross-border use in Hong Kong, according to Liu.

"As the use of the e-CNY grows, the rise of stablecoins is particularly interesting," Liu said. Some large state-owned enterprises had expressed interest in exploring stablecoin adoption, especially when investing in emerging markets where local currencies could be highly volatile and hedging tools were limited, she said.

Under this scenario, a widely recognised official intermediary such as e-CNY could play a crucial role in connecting various yuan-pegged stablecoins issued by different companies, she added.

Given Hong Kong's regulatory groundwork on both stablecoins and cross-border pilots for the e-CNY, the city could be the "bridgehead" for piloting and advancing mainland China's opening up, she said.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2025 South China Morning Post Publishers Ltd. All rights reserved.

Copyright (c) 2025. South China Morning Post Publishers Ltd. All rights reserved.

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