The future of the Middle East - Asia trade corridor

Two of the world’s most dynamic regions, the Middle East and Asia, are seeing rapid growth in their economic ties.

The corridor between the Middle East and Asia is becoming a key route for trade, investment and travel, and is poised to reshape the global economy in the coming decade.

Take the Gulf region and emerging Asian economies - both primed to outperform other regions in terms of economic growth.

If both trade relationships can continue expanding at 2010-2023 rates, Gulf-China trade will overtake Gulf-West trade in 2027¹. Cumulative foreign direct investment (FDI) flows between Asia and the Middle East are expected to total over USD270bn over the next 10 years, up from less than USD140bn the previous decade².

“The corridor between the Middle East and Asia is becoming very important. It is really strategic and already very dynamic. It is going beyond oil and gas.” Samir Assaf, Chairman of the Board, MENAT, HSBC Middle East Holdings and Senior Advisor, HSBC Group, while speaking at a panel focused the Middle East’s growing connections with at the HSBC Global Investment Summit.

Dubai for example, is one of the Gulf cities increasing its connections with Asia. One way this trend can be seen is how it is becoming a major destination for Asian travellers. The city had almost 19 million visitors last year³, and the fastest growth sector came from Northeast and Southeast Asia.

Among the visitors to Dubai, there are a growing number of Asian high-net-worth individuals. Dubai and the UAE are the single largest beneficiaries of migration by high-net-worth individuals worldwide, with high-skilled talents accounting for 75% of new migrants to Dubai. Meanwhile, data from online job platforms shows Dubai is the world’s most sought-after city for jobseekers.

“Dubai's door is open for everyone, especially if you are bold, and especially if you have brains,” said His Excellency (H.E.) Hadi Badri, Chief Executive Officer, Dubai Economic Development Corporation.

The city’s real estate sector is a major draw for Asian investors, offering attractive valuations and high yields compared to major Asian cities such as Hong Kong and Singapore.

“Real estate is one key area where Asian investors are getting very excited about putting their money,” H.E. Badri said.

Corridor with Asia

The increased presence of Chinese companies in Dubai is a clear indicator of the flourishing Middle East – Asia Corridor. Trade and investment links are going far beyond their traditional mainstay of oil and gas.

China is the fastest growing source of Dubai’s overseas investment and new business operations. China is also the fastest growing source of visits to Dubai, with the city seeing just under a million visitors from China in 2024 – facilitated by 88 direct China-Dubai flights each week.

Even though China’s oil-based fuel consumption is close to peaking⁴, traditional trade growth drivers are being replaced by sectors from construction to software.

The city is now home to over 5,000 companies from China, with more than 350,000 Chinese residents there. That is fueling a wave of foreign direct investment in sectors from semiconductor design to artificial intelligence.

To meet this growing connectivity, HSBC continues to invest in its China desk in the UAE that provides a “one stop shop” for Chinese companies’ business and financing needs.

Looking ahead, Gulf countries’ targets to increase renewable energy and green its transport network will be supported by China’s strength as a major manufacturer and exporter of solar panels and electric vehicles.

The long-term outlook

Dubai has an ambitious agenda centered around two key policy plans.

Firstly, given the region is still very dependent on oil and gas, diversification is still a big issue. That is why the city is developing innovation districts like the Dubai Silicon Oasis (DSO) to foster startups and attract global talent.

Second, the Dubai Economic Agenda, or D33⁵, aims to double the size of Dubai’s economy in the next decade and consolidate its position among the top three global cities. It includes plans for the next decade to double the size of Dubai's Foreign trade – adding 400 cities to Dubai's foreign trade map.

The Middle East has a young population, as more than half of the region’s population are under 30 years old. The D33 Agenda includes an aim to integrate 65,000 young Emiratis into the private sector.

Water scarcity and climate change is a challenge for the Middle East, and governments are taking action. The Dubai Clean Energy Strategy aims for the city to achieve 75% clean energy by 2050.

H.E. Badri emphasized Dubai's philosophy of continuous improvement and innovation, focusing on sectors like FinTech, virtual assets, and longevity technology.

“What I think Dubai offers above all else is resiliency, for any business,” said H.E. Badri.