Whether the subject is tourism, aviation, technology, AI or entrepreneurship, barely a month goes by without news of ever closer collaboration between the UAE and the People’s Republic of China. New milestones and agreements concerning the countries’ shared strategic partnership abound. And as efforts to strengthen economic ties and increase new opportunities for UAE SMEs gather pace, more Chinese businesses are being encouraged to take advantage of the UAE’s favourable business environment. As a result, the UAE is now home to around 350,000 Chinese residents and 15,000 Chinese entities.
Last year saw the eighth meeting of the Joint Economic, Trade and Technical Committee between the two nations, where leaders agreed to deepen cooperation beyond their historical energy trade. These agreements include crucial areas such as renewable energy, agriculture, technology, aviation, logistics transport, infrastructure and industry, as well as entrepreneurship and SME initiatives.
But how did we get here, and more importantly, where is this bilateral relationship going? Is this blossoming partnership still in its shallow and immature stages?
In short, is the UAE-China relationship only just getting started?
Background: 40 years of rapprochement
China is an important trading partner for the UAE. In H1 2024, the country accounted for over 10% of the UAE’s non-oil trade, and in 2023, the UAE accounted for 25% of China’s non-oil trade with the Middle East and Africa (MENA) region.
In September last year, Chinese Premier Li Qiang announced at talks in Dubai that it was “in the fundamental interests of both sides” to strengthen cooperation in areas such as manufacturing, biomedicine, and renewable energy and to help one another succeed in these fields. In an event that also marked 40 years of diplomatic relations between the two countries, “the fundamental interests of both sides” spells out a level of cooperation into the future that exceeds simple shared economic interests and mutual benefit.
Opportunities for UAE businesses and economy
As the economies of the two countries grow closer and their interests and strategic plans begin to align more closely, there will be further opportunities for cooperation, collaboration and investment between the two states. Of the sectors that stand to gain the most from ever-closer ties with China, emerging tech holds the greatest potential. But others are already showing signs of growth amidst this blossoming partnership.
Tourism
Tourism has both economic and cultural significance in the developing strategic partnership between the two countries, with sustained growth throughout all areas of the industry. Inbound visitors from China grew in 2023 by more than 200% compared to the previous year’s figures, and with an average of no fewer than six flights per day between the UAE and China with UAE carriers alone, the country attracted over 1 million Chinese visitors in 2023. Both countries are expanding aviation links as demand continues to increase.
Renewable energy
Chinese companies have taken sizeable stakes in some of the GCC’s largest green-energy projects to coincide with diversification away from oil and gas. The Noor Abu Dhabi solar plant and the Mohammed bin Rashid Al Maktoum Solar Park stand out as evidence of deepening cooperation as GCC nations move to establish energy security away from hydrocarbons with two of the world’s largest solar-energy projects.
Emerging technology
The UAE has invested significant sums of money in efforts to digitalise its economy, and this has been accompanied by deepening cooperation with Chinese research institutes and technology companies. For example, prominent AI research centres developing large Arabic language models and AI applications, such as the Mahammed bin Zayed University of Artificial Intelligence (MBZAI) in the UAE, is headed up by Chinese professors, and 40% of MBZAI’s faculty is Chinese. The UAE and Chinese firms Huawei and Alibaba collaborated on smart-city, data-centre and 5G-tech infrastructure, and the UAE’s most prominent AI company, G42, worked hand in hand with Chinese firms on the UAE Ministry of Health’s genomics programme.
Logistics
The UAE has worked with Chinese companies as part of China’s Belt and Road Initiative (BRI) on crucial infrastructure projects, such as ports and industrial zones, to strengthen its importance for global trade routes. These projects include a terminal at Khalifa Port in the UAE, as well as widespread investment in African infrastructure in tandem with China. Dubai’s DP World operates six African ports, and Abu Dhabi Ports has expanded into Guinea, Egypt and Angola.
A partnership of mutual international influence: Africa
We’re more than a decade on from the establishment of China’s Belt and Road Initiative (BRI) in 2013, and as China’s original infrastructure funding has tapered off, investment into Africa from the UAE has grown. But this shouldn’t be seen in the context of competition with China; shared strategic and economic investments will benefit both countries, where one partner benefits directly, the other, indirectly.
The UAE has become Africa’s largest backer of new business ventures, with UAE companies earmarking US$110 billion to projects during the last 6 years, US$72 billion of which has gone into renewable-energy projects. To put that in perspective, that level of investment overshadows those from China and France combined. Many of the UAE’s investments into Africa fall within its stated aims to ultimately diversify its economy from oil and gas. In that respect, much of its investment outside of renewable energy centres around logistics and critical minerals, where International Resource Holdings has acquired a 51% holding in Mopani Copper Mines in Zambia for US$1.1 billion. As part of this complimentary and mutually beneficial approach to investment and influence in Africa, China is investing in upgrading the 1,500-mile railway line from the Indian Ocean port of Dar Es Salaam to Zambia’s copper belt at Kapiri-Mposhi.
But beyond pure investment interests and deepening economic ties, Africa’s relevance to the two countries lies in the geostrategic location of the Horn of Africa. The crucial maritime passage linking the Mediterranean to the Indian Ocean runs along the Horn of Africa and is one of the world’s most important routes. Up to one-fifth of the world’s entire trade – and that includes around 6 million barrels of oil every single day – transits along the shores of the Horn of Africa, through the Gulf of Aden and into the Red Sea, through Suez and into the Mediterranean.
In the fundamental interests of both sides
The diplomatic, strategic and economic relationship between China and the UAE barely leaves any areas untouched. From entrepreneurship programmes to joint investment initiatives, currency-swap agreements, digital networks and infrastructure, this deepening relationship encompasses more and more opportunities for investment and influence, not just in the Middle East but also throughout Africa.
As the European Council on International Relations notes, “the picture that emerges of Chinese relations with the UAE and Saudi Arabia is of a burgeoning but still limited and somewhat transactional partnership. It thrives in some areas, lags in others, but both sides want it to continue to grow in depth and breadth”
When seen alongside their strengthening 40-year partnership, this growing relationship is akin to a mutual insurance policy that offers a win-win solution to both. Where China’s influence doesn’t reach, the UAE’s strategic involvement and strong international presence will contribute to a mutual success that will underpin and eventually guarantee the fundamental interests of both nations.
