Since formal diplomatic relations between the UAE and China were established in 1984, bilateral trade between the two countries has grown from $63 million in 1984 to $54.8 billion in 2014 and is estimated to have reached $60 billion by the end of 2016.
Over the past three decades, the two nations have been working hard to find the right development path. China in particular has been pressing ahead with reform and opening up, with a focus on people, through scientific development.
In September last year, Ahmad Muhamed Bin Ghannam, acting executive director of the International Economic Relations Sector at the Abu Dhabi Department of Economic Development, told Chinese state news agency Xinhua (literally, ‘New China’) that, thanks to the UAE’s decision to grant Chinese citizens visit visas upon arrival at the country’s international airports, along with China’s move to start direct Yuan currency trading with the UAE, “our vision to reach bilateral trade worth $100 billion in the near future is not far-fetched”.
The next month, China’s second-largest lender in terms of assets, China Construction Bank, listed a $600 million bond on Nasdaq Dubai, the only international exchange in the Middle East in relation to regulatory standards. The four largest Chinese banks have branches in the region’s biggest financial free zone, Dubai International Financial Center (DIFC), of which Nasdaq Dubai is a licensed market.
Saeb Eigner, the chairman of the DIFC’s regulator, Dubai Financial Services Authority, said at the tenth annual Asian Financial Forum in Hong Kong that the shift of the world’s economic center of gravity towards Asia is making itself felt strongly in the Middle East.
“Chinese, Japanese and Indian banks now occupy the top slots in the DIFC in terms of assets. Trade between China, the Middle East and much of Africa is now
being financed through Dubai,” he said. “The increasing role of the Chinese renminbi [RMB, pronounced jenminbi, meaning ‘people’s money’] in settling trade transactions contributes to this process. The role of the UAE as a RMB clearing center is growing.”
According to DIFC Authority CEO Arif Amiri, two more Chinese lenders are in the process of setting up branches in the DIFC. TRENDS has learned that Shanghai-headquartered Bank of Communications (BoCom), might be one, but the DIFC has not communicated a confirmation as yet.
The wheel continues to spin
In a widely quoted interview, the managing director of the UAE’s first sovereign wealth fund, Abu Dhabi Investment Authority (ADIA), Sheikh Hamed Bin Zayed Al-Nahyan, told the Chinese Journal of Finance that the investment vehicle aims to expand its exposure in China.
“Overall, we remain bullish on China’s prospects and we are confident that the Chinese government will be able to manage its economic transformation with prudence,” said Sheikh Hamed, who added that the fund’s asset classes in China include stocks, fixed-income products, real estate and private equity.
ADIA started investing in the ‘Middle Kingdom’ (the precise translation of China’s Mandarin name, ‘Zhongguo’) in 1992, which was when the Chinese market opened its doors to overseas investors for the first time.
Across all sectors
The question on how investments into renewable energy sources can be increased along the One Belt, One Road (OBOR) was discussed at a China Day at the tenth World Future Energy Summit (WFES) in Abu Dhabi in January this year, the first of its kind at the WFES. OBOR, introduced for the first time by Chinese paramount leader Xi Jinping in September 2013 during his visit to Kazakhstan, aims to economically integrate East and Central Asia with the Middle East, Africa and Europe; a strategy for which the UAE government has vowed to extend its support.
OBOR is divided into the Silk Road Economic Belt, which starts in Xi’an, the capital of China’s central Shaanxi Province, and spreads through Central Asia to Western Europe, and the Maritime Silk Road, which connects Mainland China with South Asia, the Middle East and Africa through several bodies of water.
The UAE is one of the 50 member countries of the international Asia Infrastructure Investment Bank (AIIB) in Beijing, which in June 2016 approved its first set of loans for projects in four countries along the Silk Road: Bangladesh, Pakistan, Indonesia and Tajikistan.
Dr Adnan Z Amin, the director general of the Abu Dhabi-based supranational International Renewable Energy Agency (IRENA), told Xinhua that OBOR is focused on financing new infrastructure projects along the New Silk Road, adding that the global shift towards clean energy offers tremendous transnational opportunities for large, medium and small firms.
As an example of intra-regional cooperation, Wang Zhongying, the director of the China National Renewable Energy Center in Beijing, presented the ongoing construction of solar and water power projects between China and Pakistan, in line with the China Pakistan Economic Corridor. China’s energy conglomerate Zonergy is currently completing the construction of the world’s largest solar park, the Quaid-e-Azam Solar Park in Bahwalpur, Punjab, Pakistan.
This led the CEO of Abu Dhabi National Oil Company (ADNOC) Sultan Ahmed Al-Jaber, also the chairman of the green energy company Masdar, to tell Xinhua that OBOR “is one of the main pillars in the development for future energies”. He added that the initiative closes gaps by building bridges between regions, which is essential to spur international cooperation to increase the use of renewable energy like wind, solar or hydro energy.
Dr Al-Jaber also noted that the master plan puts the UAE at “the center of gravity in relation to the rise of renewable energy along the New Silk Road.”
In light of this, it was no coincidence that Li Junfeng, director of China’s National Center for Climate Change Strategy and International Cooperation, was awarded the Zayed World Future Energy Prize in the category of “lifetime achievement”, at WFES 2017.
The $500,000 prize was presented in recognition of Li’s role in raising environmental awareness in China and in promoting renewable energy and green tech across all industries in the country and abroad for over three decades.
Expanding trade and investment links forms the very core of UAE-China relations. In an interview with Sky News Arabia, aired on January 24 and quoted by the government-controlled Dubai Media Office, Sultan Ahmed Bin Sulayem, the chairman of DP World, the third-largest maritime port company in the world, said the Nasdaq Dubai-listed blue chip firm was negotiating with the Chinese government to figure out how the UAE’s global trade enabler can contribute further to China’s OBOR initiative.
Bin Sulayem added that, since China is building six new routes that will connect it with countries and regions abroad, “most of our ports and land and sea stations (77 ports and stations worldwide) are located on the routes that China is building as part of this initiative.”
The Sino-Emirati friendship does not stop at conferences and boardrooms, however. The bilateral ties between the two also include culture and sports.
The UAE witnessed an unprecedented level of celebrations on the occasion of the Chinese spring holidays, which mark the Chinese New Year. On the occasion of the dawn of the Year of the Rooster, Dubai’s major shopping malls were decorated with colorful images of roosters and featured shopping and eating guides in Mandarin, while Abu Dhabi’s Ferrari World leisure theme park showcased Chinese panda bears and its gigantic roof was filled with traditional red Chinese silk lanterns.
Chinese athletes such as top table tennis stars Ma Long or Liu Shiwen are regular participants at table tennis tournaments in Dubai. So are Chinese shuttlers such as the mixed-doubles team of Zheng
Siwei and Chen Winghen, who, along with their countrymen and -women, swept the podium at the Badminton World Federation’s Dubai World Superseries Finals in mid-December 2016.
At cross purposes?
Meanwhile, economists and analysts were puzzled to receive unprecedented geopolitical signals from the two biggest economies in the world. While China’s President Xi delivered a passionate keynote speech in favor of global free trade at the 47th World Economic Forum Annual Meeting in Davos, new US President Donald Trump announced before he took office that free trade does not always serve the interest of the American labor market – some companies “produce cars in Mexico” in order to sell them in the US “without creating jobs for Americans”, he said.
Actions followed suit, accordingly. In mid-January, Xinhua reported that China will now allow foreign firms to go public and issue bonds in the Chinese market to expand financing channels. A few days later, President Trump pulled out of the Trans-Pacific Partnership (TPP) in order to “make America great again” (#MAGA on Twitter), one of his first executive orders after he was sworn in.
Meanwhile, as the UAE, Qatar and Morocco implemented a visa-on-arrival scheme for Chinese tourists in 2016, Trump’s US administration imposed another executive order, preventing refugees and immigrants from Iran, Iraq, Sudan, Syria, Libya, Somalia and Yemen from entering the US for 90 days.
This new East-West contrast led the Swiss media to sum up Davos 2017 with the slogan: “China is the new America.” However, there are also positive statements from the Chinese side about the 45th President of the United States.
Speaking to TRENDS at the eighth Gulf Intelligence UAE Energy Forum in Abu Dhabi this January, Dr Qiang Liu, the secretary general of the Global Forum on Energy Security, China, said President Trump’s plans to kick off a $1 trillion investment spree to upgrade the US’ infrastructure “is positive in our view, because One Belt, One Road is mostly about infrastructure and both sides can learn from each other.”
Earlier, during the first presidential debate of the US elections in 2016, Trump had praised airports in China, Doha and Dubai as “world-class”, while slamming the Democrats for having neglected US civil aviation hubs, which, he said, had sunk to a “third world” level. Wall Street followed the announcements with enthusiasm, sending the bellwether Dow Jones Industrial Average index above 20,000 points for the first time, on January 25.
ADIA, nevertheless continues bank on the rise of the East. “ADIA has more than 15 consecutive years of overweight with emerging markets, of which Asia and the Chinese market accounted for a considerable [portion]. The main reason is that we are optimistic about the economic growth and demographic trends in these regions, as well as the continued development of these markets and [their] open[ness] to foreign investors’ rhythm,” said Sheikh Hamed.