The Past, Present, and Future of Gulf Sovereign Wealth Fund Investments in China

Abstract

This article explores sovereign wealth fund investments by Gulf Cooperation Council member states in China's equity market. Using data from Chinese stock exchanges, we analyze patterns of shareholding over two decades, across different sectors and among distinct funds, and compare them to their non-Gulf counterparts. We reveal a gradual upward trajectory in both the scale and diversity of investments by Gulf funds, indicating growing engagement with the Chinese equity market. We anticipate a continuation of current trends, albeit with larger volumes and potential expansions into technological and emerging sectors that align with Gulf interests. We project that the deepening financial linkages between China and the Gulf could give rise to a mini petro-yuan system operating under the dominance of the American dollar. This does not presage a transformation in China-Gulf relations but should be understood within the increasing complexity of their broader economic ties. The article is part of a special issue examining the responses of Gulf countries to rising Sino-American competition, edited by Andrea Ghiselli, Anoushiravan Ehteshami, and Enrico Fardella.