The port city of Hong Kong has played a very crucial role in facilitating a whole host of commercial and financial interactions between East Asia and the greater Middle East region over the past several decades. Even after the strategic city became an integral part of China in 1997, the Special Administrative Region (SAR) continued to oil the wheels of the multifaceted relationship between East Asian countries, China in particular, and their partners in the Middle East. Besides its conventional function of smoothing the way for an array of economic and financial ties, the SAR is increasingly contributing to various cultural and recreational activities involving the two regions.
The territory of Hong Kong is probably the only region in East Asia whose connections to the Middle East have received the least scholarly attention among all interested observers across the world. In fact, academic studies about Hong Kong’s interactions with the greater Mideast region are almost non-existent, while non-academic studies on this subject are, for the most part, sparse and scattered. Moreover, the Hong Kong element is also dubiously ignored in various fields by the specialists and pundits who have concentrated their research projects on China’s relationship with the Middle East, though the same shortcoming does still exist in other studies that broadly tackle the issue of East Asia’s links with the Middle East region. If there had been some justification for such apathy with regard to the period when Hong Kong was not under Chinese rule, there would certainly have been little rationale not to give prominence to the rather unique role of Hong Kong, either separately or as an integral part of China, in the increasingly expanding nexus of East Asian–Middle Eastern relations.
Given China’s ever-expanding interests throughout the Middle East over the past decades, how did Hong Kong serve Beijing in putting into practice some of its commercial and non-economic policies in the region? Moreover, since the geographic location, modern politico-economic history, and governance of Hong Kong are somewhat contrasting as compared with some other major Chinese cities, which parts of the Middle East were particularly more conducive to their growing bilateral interactions? More importantly, has the gradual “Chinization” of Hong Kong over the past two decades influenced markedly the nature and scope of its various connections to the Middle East?
In spite of all the hindrances adumbrated above, Hong Kong has surprisingly played a very important role in East Asian, and especially Chinese, connections to the Middle East in various commercial, and even politico-cultural, areas favorable to the two regions. Officially known as the Hong Kong Special Administrative Region (SAR) of the People’s Republic of China (PRC), this relatively autonomous territory has sometimes been instrumental in such cross-regional interactions, particularly since the time it was handed over, or actually returned, by the British to the Chinese in July 1997 (Henderson 2011, 68–69). Given its unique characteristics, Hong Kong has indubitably been more relevant to the economic and financial aspects of the East Asia–Middle East dynamics over the past several decades. But even this rather dominant pecuniary area has sometimes required the SAR to take advantage of its other potentials either to initiate or to facilitate the pure commercial interactions involving the two regions (McNally 2008). Personified by relatively frequent meetings and negotiations between top officials of the SAR in different capacities and their Middle Eastern counterparts, it seems that Hong Kong’s relationship with the region has virtually become manifold, covering politico-economic, financial, technological, and cultural tie-ups.
Still, a sketch of Hong Kong’s overall interactions with the Middle East shows that three issues deserve particular attention. The first issue is about Hong Kong’s location as a major trade entrepôt, which has greatly contributed to the SAR’s expanding exchanges with various Middle Eastern states, and especially with those similar port cities in the region. In fact, a great deal of Hong Kong’s myriad connections to and relative success in the Middle East region ultimately boils down to this rather distinctive characteristic. The second issue is about Hong Kong’s often controversial and sometimes subterranean relationship with Iran in more recent decades. Although the SAR’s entrepôt capacity has again been a major factor behind its growing links to Iran, nonetheless, Hong Kong’s modern connections to other parts of the Middle East region have, by and large, been devoid of such contentious matters involving the SAR and the Persian Gulf country (Forbes 2016; Middle East Economic Digest 2018; Reuters 2014). Finally, the third issue deals with various non-commercial interactions other than those initiated or sponsored by the formal and public sectors. This aspect of the Hong Kong–Middle East relationship is largely cultural in nature, and its realization may not be necessarily and predominantly attributed to the entrepôt factor.
ACE IN THE HOLE: THE EFFICACY OF A TRADE ENTREPÔT
In the lexicon of international trade, an entrepôt normally refers to a commercial hub where goods are imported in order to be re-exported, sometimes by using different modes of transportation. Whether or not the re-exported commodities are repackaged in an entrepôt, they are certainly sold at a higher price. After all, an entrepôt can survive and thrive on such a mark-up because it conventionally does not impose high customs duties on the goods that enter there from a source territory. An entrepôt is, therefore, associated with a trading center where merchandise can be redistributed to other places, no matter how far or close, without adding outrageous import duties on the goods originally imported to that commercial midpoint (Buckley 1992, 39–40). By playing such a facilitating and constructive role, an entrepôt oils the wheels of indirect trade between different regions and territories, though it may also produce some other important results such as job creation. That is why this pattern of international commerce has played a considerable and indispensable role in the rise and ascendency of Hong Kong in East Asia and Dubai in the Middle East (Financial Times 2018; Gulf News 2016).
Hong Kong has had a relatively long history of functioning as an entrepôt by serving the commercial interests of various lands and territories. Because it encounters modern patterns of international trade somewhat on a daily basis, this function was particularly developed during the period when Hong Kong was a British colony between 1841 and June 1997 (Mills 2012, 1). Hong Kong’s entrepôt role underwent further developments after its sovereignty was transferred to Communist China, which itself was unprecedentedly experiencing enormous changes in its commercial interactions with the outside world.
As the Chinese mercantile turnover with other regions ratcheted up by leaps and bounds, Hong Kong became a much more pivotal commercial midpoint by linking mainland businesses to different parts of the world (Mathews 2011, 1). Besides its convenient geographic location, the SAR enjoyed certain other advantages that few, if any, other Chinese port cities could offer, including free trade, open markets, minimal customs duties, etc. (Cremer and Willes 1998, 29–31). As far as the East Asian, and especially Chinese, trade with the Middle East was concerned, these appealing attributes would better smooth the way for bi- and multilateral commercial interactions if Hong Kong could pair up with similar places in the Mideast region.
In the Middle East, Dubai is probably the only port city that comes close to Hong Kong in terms of entrepôt trade. Unlike the SAR, however, Dubai has a rather modest historical record in this area as a great deal of its modern success and cachet is sensibly attributed to an ill-gotten fate that has sadly befallen many other more resourceful and convenient locations in the greater Middle East region (Lilley 2006, 149). Blessed by a whole host of supportive external and internal inducements, Dubai has thereby managed to position itself unexpectedly as a leading entrepôt in the entire Mideast region, though the Arab port city has also equally been successful in a number of other economic and non-economic spheres (International Monetary Fund (IMF) 2003a, 6). Today, a major share of the United Arab Emirates’ (UAE) non-energy exports and imports are practically handled through Dubai, making the port city the richest and most important place in the Arab sheikhdom (IMF 2003b, 4; Wilson 1994). More importantly, Dubai’s entrepôt function has significantly boosted its status as a major commercial midpoint between the Middle East and other parts of the world, including Hong Kong in East Asia (Barrett 2010).
It is true that the East Asian states such as China did not necessarily need Dubai to engage in commercial interactions with their partners across the Middle East; however, such an argument makes sense only when things in the Mideast region work under normal circumstances. The problem is that at least since the outbreak of the Iran–Iraq War in 1980, the Middle East, particularly the Persian Gulf region, has been in the throes of military conflict and various forms of economic turbulence. Such perpetual anomalous conditions mean Iraq, and especially Iran, often find themselves at the whims of functional neighboring ports such as Dubai (Khaleej Times 2014; The National 2012). Of course, this was not a one-way desire alone because other partners, such as East Asian countries, sorely needed to take advantage of a number of accessible and convenient entrepôts such as Hong Kong and Dubai in order to handle their lucrative commercial interactions with Iran, which has long been suffering sundry international sanctions (Financial Times 2015; South China Morning Post 2017a; Zawya 2017). The stakes were simply too high, and that is the reason why sometimes such bi- and multilateral dealings could end up becoming contentious, scandalous, or just inconceivable.
GOING SUBTERRANEAN: HONG KONG–IRAN CONNECTIONS MAKING INTERNATIONAL HEADLINES
Hong Kong has certainly played a very crucial role in Iran’s international trade with East Asian countries, China in particular. The PRC is Iran’s top trading partner, and the SAR has ineluctably been instrumental in Sino-Iranian commercial interactions through transshipment, entrepôt trade, and direct trade. Interestingly, a hike in the scope and size of Iran’s economic relationship with China started to gain momentum soon after Hong Kong came under the full control of the Chinese (Reuters 2016). Moreover, top officials in Hong Kong have increasingly become cognizant of the SAR’s distinctive position in the growing pace of Sino–Iranian connections over the past several years. As Iran and China have vowed to the prospect of US$600 billion of turnover in bilateral commercial ties between the two countries, Hong Kong seems to be further preoccupied with the thought of how to make the most of such an eventuality by playing the card of its strategic location wisely (Tasnim News Agency 2016; Tehran Times 2016a). However, a major impediment is whether the two sides can fully overcome the various rumors and controversies related to their connections which often ruffled the feathers of other stakeholders over the past decades.
Basically, some disputatious claims and contentious arguments with regard to certain aspects of Iran’s commercial connections with Hong Kong go back to the time when the critical port city was still under British rule. In the period between 1984 and 1997, the Executive Council in Hong Kong closed several companies that were accused of illegal interactions with Iran. In 1995 alone, for instance, Hong Kong shut down seven companies that had reportedly engaged in transferring some banned products to the Persian Gulf country (Tehran Times 2016b; Xinhua 2018). A prominent company among those entities was Rex International Development which was affiliated with the state-owned China North Industries (Norinco) that had been indicted for allegedly shipping “chemical weapons precursors” to Iran (Howard 2004, 103; South China Morning Post 2011a). These companies were essentially suspected of providing the Iranians with sensitive technologies or delicate chemicals that could be exploited in both civilian and military sectors, but it is still hard to prove whether and to what extent such dual-use goods were actually used for any illegal purposes by Tehran.
Although no Hong Kongese company was closed on such grounds after the port city returned to the Chinese authority, nevertheless the SAR’s connections with Iran underwent tighter international scrutiny during the presidency of Mahmoud Ahmadinejad (August 2005–August 2013). Particularly from 2008 onwards, a number of Western media outlets and journals published reports about the involvement of some companies and private citizens from Hong Kong and a number of other East Asian countries in the illegal transfer of nuclear components and other sensitive technologies to Iran, which they claimed violated different sanction laws against Tehran (South China Morning Post 2012a). Whenever such news broke out, the authorities in charge promptly denied the incident, promising to investigate the matter at hand as quickly as possible through close cooperation with non-regional stakeholders. Whether or not such claims were plausible in the first place and regardless of the willingness of those parties to take risks and engage in any “illegal” business, Hong Kong, like other East Asian states, was widely expected in the West to implement all the stipulated sanctions against Iran, and to stay away from any means that could potentially help Tehran circumvent those levied punishments (South China Morning Post 2012b).
Meanwhile, Hong Kong had its own fair share of troubles with regard to the sanctions bills or their alleged violations by companies and private individuals. One problem was that the port city was not initially prepared, for whatever reason, to implement all the sanctions levied against Iran swiftly. It took the relevant top officials in the SAR, for instance, some nine months ultimately to come up with measures regarding the implementation of one of the sanctions bills enacted by the United Nations in 2010 (South China Morning Post 2011b). Probably pressures wielded by Beijing behind the scene were behind such reluctance, because China was often accused by the West of not being willing enough to comply with all the rules dictated by the sanctions simply for the huge economic interests the Chinese were enjoying in the wake of those international punishments placed on the Iranians (Tehran Times 2008). Another problem was that the SAR could hardly exercise total control over all the individuals and companies who were to engage in some potentially illegal dealings with the Iranians. Not all of them possessed the nationality of Hong Kong, and there happened to be certain front companies and fraudulent individuals who were simply taking advantage of the SAR to smooth the way for their lucrative business with Iran (Azad 2015).
NON-COMMERCIAL LINKS: CULTURAL AND RECREATIONAL ALLURES
As a corollary to their contemporary developments and societal transformation, Hong Kong and many major cities across the Middle East have increasingly become venues for various types of regional and international cultural events and edifying programs. A fair share of such cultural occurrences are now jointly held between institutions and individual stakeholders from the SAR and the Mideast region. The public sector might still play a considerable role in initiating and implementing many joint cultural events between the SAR and Middle Eastern countries, but the private sector in both regions is also increasingly finding itself at the forefront of such projects. The main focus of their collaborative cultural schemes has also become significantly diversified over the years, covering sports events, film and music festivals, museums and arts galleries, catering and culinary festivities, literary and book exhibitions, etc. (Gulf News 2017; Khaleej Times 2017; The Daily Star 2017). Such cultural happenings may last only for a short while, but long-lasting cultural trends between the two parties are increasingly becoming popular as well (Xinhua 2017).
Education is probably one of the most pivotal persisting and permanent cultural trends that is progressively contributing to the dynamics of the Hong Kong–Middle East relationship. For its part, Hong Kong has certainly a number of attractive educational and academic advantages that greatly appeal to an increasingly large number of Middle Eastern citizens who choose East Asia either to build up their scholastic records or simply to hone their scientific and technical skills in different fields (Hyde and Hyde 2014). Besides offering the attractive benefit of the English language, the SAR provides a whole host of other sociocultural comforts that a Middle Eastern national, with a thoroughly different mindset and culture, may not easily find in many other parts of East Asia. On the other hand, a growing number of interested people from Hong Kong select a Middle Eastern country in which to pursue their higher education, the bulk of which may concentrate on a discipline in social studies and humanities. Of course, part of this straightforward trend is undeniably stemming from various economic and job opportunities that the modern Middle East–Hong Kong connections have created in one way or another (Clarke 2005).
Another more secular trend is the growing number of individuals and groups from Hong Kong and Middle Eastern countries who choose the other party for their leisure and recreational activities. The SAR and an increasing number of Middle Eastern cities are even becoming a destination for long-term expat life and retirement (Sky News 2017). For many Middle East tourists and travelers, Hong Kong is an exotic option either to visit temporarily or to get a flight connection to other East Asian cities and Oceania. With regard to the Hong Kongese of such genre, the Middle East is a giant swathe of territory that gives them numerous options to choose (South China Morning Post 2017b). The region is both very diverse and relatively cheap, while its convenient geographic location often tempts the visiting Hong Kongese also to include in their travel itinerary a trip to a neighboring European or African region (South China Morning Post 2017c). This is a reason why more and more airline companies from the SAR and the Middle East add greater numbers of flights in order to cope with the demands and make it certain that their rivals will not easily capture this rewarding market (Nikkei Asian Review 2018; The National 2017).
Because of its critical geographic location and contemporary internal dynamics, China’s Hong Kong has developed unexpectedly a multipronged relationship with the Middle East over the past several decades. The SAR has thereby become increasingly susceptible to any normal or abrupt development that may take place at any time across the region. The rise of the Islamic State, for instance, led to the securitization of certain matters in Hong Kong–Middle East interactions, though the SAR itself was also inevitably influenced by such sensational occurrence in one way or another (The New York Times 2017).
Still, to a large extent the present-day relationship between Hong Kong and the Middle East has something to do with three critical issues: the role and functions of a trade entrepôt; subterranean and often illicit connections in commerce and finance; and varied forms of cultural and educational linkages between the two regions. Although certain political and security matters may temporarily and misleadingly dominate Hong Kong’s ties with the Middle East, however, economic and cultural elements are expected to firmly hold sway over a bulk of the Chinese SAR’s ever-expanding interactions with the region for the foreseeable future. Even when the security and strategic interests of China in the Middle East become increasingly complex and consequential, commercial benefits would most probably remain as the salient element of the SAR’s growingly multifarious relations with Middle Eastern countries.