Global Financial Leaders’ Investment Summit 2024: Asia's trade flows expected to grow with China’s investment strategy

Top banks anticipate intra-Asian trade to grow triggered by the "China plus one" strategy at Tuesday's global financial leaders' investment summit held in the nation's offshore financial centre.

“The China-plus-one strategy has formed a virtuous circle and brought opportunities among Asia, and ASEAN, as China's largest partner, has benefited regionally,” said Georges Elhedery, the chief executive officer of HSBC, in the Hong Kong Global Investment Summit, organised by The Hong Kong Monetary Authority. 

The “China Plus One” Strategy, where investors avoid investing in China only but also invest in its neighbourhood to hedge against tariffs and geopolitical conflicts, could increase the intra-Asian trade by 65% this year, as estimated by Elhedery.

According to China's General Administration of Customs, China's imports and exports to ASEAN grew by 10.5% in the first half of 2024, making it the number-one trading partner for the fourth consecutive year. Meanwhile, China also accounts for around 50% of the Foreign Direct Investment in ASEAN countries, according to Elhedery.

“The opportunities in ASEAN are vast and varied, and as a large trade bank, (we view) the Asian market is very important to us, especially the Chinese market,” said Bill Winster, the chief executive officer of Standard Chartered.

The expanding trade corridor between China and Southeast Asia meant more opportunities for the bank, said Winster.

However, Huang Yiping, the Dean of the National School of Development of Peking University,  said that although the Chinese government's policies are “aggressive enough”, it should do more to boost its economy.

In September, the Chinese government revealed a series of stimulus policies towards the nation’s sluggish property market, including trimming the lending rates, mortgage rates and down payments with facilities for institutional investors on the stock market.

“China will run out of the advantage of low cost and the population ageing in 30 years,” said Huang. “ Then China must put more effort into innovations for all industries, and to keep the country open, the dynamic of the private sector is vital.”

The challenge facing the Chinese market is the need for a structural shift because the major trading nations have currencies pegged to the U.S., so high interest rates can pressure trade, Elhedery added.