By Muhammad Zulfikar Rakhmat for Gulf State Analytics
Throughout the 21st century, China’s ties with the Gulf Cooperation Council (GCC) have strengthened in various domains. China and the UAE’s growing relationship is a case in point. Since Beijing and Abu Dhabi established a diplomatic partnership in 1984, China and the UAE have become major economic partners and the bilateral relationship is well poised to flourish in the future.
China Daily recently reported that China-UAE trade is expected to reach USD 16 billion in 2015, making China the UAE’s second biggest import partner behind India. At the same time, the UAE is responsible for one-third of China-GCC trade and one-fifth of Sino-Arab trade. China exports primarily electronic appliances, mechanical tools, and devices; the UAE exports mainly copper, plastic, and iron.
A Financial and Commercial Hub
Eyeing promising potential in the UAE, several Chinese banks have made their way into the emirates. Industrial and Commercial Bank of China, China’s largest lender, established an office in the Dubai International Financial Centre (DIFC) in 2008. DIFC is also home to branches of Bank of China Middle East, the Agricultural Bank of China, and China Construction Bank. Other banks, including China Development Bank, also plan to open branches in the UAE.
At the same time, the UAE has been very active in China’s banking sector, establishing branches and representative offices on the Chinese mainland. Union National Bank was the first Emirati lender to enter China in 2007, setting up an office in Shanghai, followed in 2012 by National Bank of Abu Dhabi (NBAD) and Emirates NBD. Optimistic about the emerging power’s growth, the Commercial Bank of Dubai launched a Chinese banking platform called TianLong in late 2012 to support the business and personal banking requirements of China’s small and medium businesses. Services include a Chinese speaking staff, Chinese language documentation, and renminbi accounts.
Several major Chinese companies outside the banking sector have also begun to see encouraging opportunities in the UAE. The Emiratis’ state-of-the-art port, customs services, free zone facility, and logistics park have made the UAE a strategic point from which to conduct business throughout the greater Middle East. Over 2,400 Chinese enterprises are members of Dubai Chamber. Most of these companies sell electronics, machinery, building materials, gifts, garments, and novelty items. Over 1,400 Chinese firms are reported to be located elsewhere in the country. These companies view the UAE as an important hub, facilitating expansion across the wider Middle East. Many Chinese companies have started to use the Dubai International Financial Centre as a bridge to access wider markets in the region. China’s largest petroleum firm Petro China and the Industrial and Commercial Bank of China have also established footholds in the emirates.
Dragon Mart, China’s largest trading hub outside the mainland, was built in Dubai during 2004. The complex is expected to undergo a massive expansion (and name change) to include retail, residential and leisure developments. The new Dragon City will eventually cover 11 million square feet.
These growing economic ties have facilitated more than China’s access to untapped consumer markets and lucrative investment opportunities. The UAE, with its ‘Look East’ policy, has been interested in luring Asian investment. Attracting Chinese investors and promoting the UAE to China has been an increasingly important priority of officials in Abu Dhabi.
The Dubai Week, for example, was an event held in Beijing by DIFC to showcase Dubai as a competitive global business destination for investment opportunities. Another recent initiative was the agreement signed by China’s New Silk Road Investment Association in May of this year to promote the Emirati-hosted event Global Trade Development Week to Chinese businesses and investors.
The UAE has also been making inroads in China. It is reported that the UAE’s investments in China stood at USD 1.5 billion in 2013. Emirati enterprises and businesses have around 650 projects in China. Several institutions, such as UAE stock exchanges and the Dubai Pearl Project, have exerted efforts to increase their profiles in China and to attract potential investors.
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