China and UAE move a step closer to opening a 'Belt and Road Exchange'

  • China's Shanghai Stock Exchange agreed a deal in principle with the Abu Dhabi Global Market (ADGM) on Monday. The partners signed a memorandum of understanding (MoU) to develop the platform in Abu Dhabi.
  • The joint exchange is poised to support businesses and investors along the Belt and Road. This Beijing-backed scheme plans to link the world's second-largest economy to the west via a vast land and maritime infrastructure network across Eurasia.
View of Abu Dhabi's skyline at sunset from Dhow Harbour in the UAE.
Getty Images
View of Abu Dhabi's skyline at sunset from Dhow Harbour in the UAE.

China is on the brink of opening an international exchange alongside the United Arab Emirates to cater for its mammoth Belt and Road Initiative.

The Asian giant's Shanghai Stock Exchange agreed a deal in principle with the Abu Dhabi Global Market (ADGM) on Monday. The partners signed a memorandum of understanding (MoU) to develop the platform in Abu Dhabi.

"We are very excited and pleased to enter into this MoU with Shanghai Exchange to establish a Belt and Road Exchange," Richard Teng, chief executive of ADGM's Financial Services Regulatory Authority, told CNBC on Tuesday.

The joint exchange is poised to support businesses and investors along the Belt and Road. This Beijing-backed scheme plans to link the world's second-largest economy to the west via a vast land and maritime infrastructure network across Eurasia.

'Debt-trap diplomacy'

Teng did not give specifics of which instruments the new exchange would trade — or when it might open — but explained that as the platform offered "endless opportunities" to investors in the region, it would be prudent to keep all of their options open for now.

"What we are looking at is a platform serving the Middle East, North Africa and South Asia region (and) serving the Belt and Road economic route," he said.

The Belt and Road Initiative was proposed to promote infrastructure development, echoing the "Silk Road" that once linked Asia and Europe. Countries involved in the scheme, many of them emerging economies in dire need of investment, obtain funding in various forms, such as sovereign loans from Chinese President Xi Jinping's administration and credit from Chinese state-owned banks.

But concerns of developing countries taking on unrealistic financial obligations have sparked allegations of what's being called 'debt-trap diplomacy.'

In recent years, trade and investment links between China and the six-nation Gulf Cooperation Council (GCC) have grown rapidly. Abu Dhabi is looking to increase the standing of the ADGM on the international stage as part of a drive to diversify the emirate's economy beyond oil exports.

— CNBC's Nyshka Chandran contributed to this report.