UAE-China: A global trade axis

Shady Elborno - Head of Macro Strategy
Published Date: 17 October 2021

 

The importance of the trade and economic ties between the United Arab Emirates and China cannot be underestimated and has grown significantly since the diplomatic relationship between both countries was established in 1984.  China is a key market for the UAE’s hydrocarbon exports, and the UAE is one of the largest regional markets for Chinese imports and a key axis for the re-export of Chinese goods into the region and Africa. The UAE from China’s perspective is a crucial axis at a geographic junction between Africa, Europe, and Asia. In fact, the UAE plays an important role in China’s Belt & Road initiative, given its position as the leading regional logistics hub, through maritime, air and land logistics capabilities. The UAE’s trade-ready infrastructure is crucial to enabling Chinese goods transiting through the immediate and near region and into Africa.

The UAE’s economic diversification agenda can benefit from solutions and technologies that China is able to offer. Chinese corporates are becoming global champions in fields ranging from healthcare, artificial intelligence, communications, renewables, finance and many more. We are seeing Chinese companies becoming important partners in the UAE across many of those fields, from hydrocarbon investments, to build-up and financing of renewables projects. Policymakers in the UAE see the value of aligning with Chinese corporates across sectors, where Chinese firms can play an important value-added role in the economic diversification plans of the UAE. 

The two countries have signed a number of high-level agreements over the past few years, as the importance of the economic relationship has grown.  In this paper we look at some of those key agreements between the UAE and China, and how they will frame the long-term nature of that relationship. We also highlight some examples of where those economic interests are aligning through partnerships and deals in different sectors. In our view the long-term growth of the UAE-China partnership will complement the UAE’s existing relationships with key economic partners in the west. We expect the next few years to see a continued development in an already strong relationship which bodes well for the long-term economic interests of both countries. This document will set out the broad contours of the UAE – China relationship, and we aim to follow up with further reports on specific aspects such as cross border trade and sector specific investments. 

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