Chinese investments in the UAE increased by more than 16 per cent annually in 2023 to $1.3 billion, as economic ties between the countries strengthened, a senior diplomat said.
The amount accounted for 60 per cent of the Asian nation's total investment in Arab countries, Zhang Yiming, China’s ambassador to the UAE, told the China-Arab Entrepreneurs Summit in Abu Dhabi on Wednesday.
The UAE boosted its investments in China by 120 per cent last year, accounting for “90 per cent of Arab countries' investments in China”, Mr Zhang said.
The co-operation between the UAE and China is “multifaceted” and the Emirates “remains China’s second-largest trading partner, the largest export market and the third largest engineering market among Arab countries”, he added.
The UAE is introducing measures to attract more foreign direct investment as it focuses on diversifying its economy away from oil.
The UAE was ranked as the third-largest FDI market globally in terms of project activity in 2023, moving up from fourth the previous year, according to the latest report by data and analytics company GlobalData.
Last year, the Emirates attracted $23 billion of FDI in 1,277 projects spanning business and professional services, software and IT services and financial services among others, the report said.
China is also boosting ties around the world as it faces increased pressure from the US on the export of goods and investments to the world's largest economy.
On Tuesday, US President Joe Biden unveiled steep tariffs on Chinese imports, including on electric vehicle batteries, to protect its industries.
“The UAE and Saudi Arabia have become gateways for Chinese companies to go overseas and the GCC countries have also co-operated with China,” Mr Zhang said.
Gulf sovereign wealth funds have “directly acquired and invested in China to the amount of $2.3 billion”, he added.
This year, Investcorp, an alternative asset manager that counts Mubadala Investment Company as its biggest shareholder, teamed up with China’s sovereign wealth fund to launch a $1 billion fund that will invest in high-growth companies in Saudi Arabia, other GCC countries and China as it continues to expand its investment portfolio.
Other Gulf-based companies are increasing their investments in China.
This year, Saudi Basic Industries Corporation (Sabic), the Middle East's biggest petrochemicals company, said it finalised the investment of 44.8 billion yuan ($6.4 billion) in a joint venture in China, while Saudi Aramco is considering taking a 10 per cent stake in China’s Hengli Petrochemical.
Meanwhile, the value of trade between China and Arab countries rose to $500 billion in 2022, from $14.7 billion in 2011, “buoyed by both growing demand and rising oil prices”, according to a new report by Sino International Entrepreneurs Federation and Oliver Wyman.
With the introduction of the Belt and Road Initiative in 2013, China-Arab relations started to become more comprehensive and multifaceted, “going beyond the trade of energy and goods, to the fields of finance, investment, science and technology, and culture”, the China-Arab Finance and Investment report said.
The report also said China’s outbound construction contracts to Arab states reached a total of $61.5 billion by 2021, the highest total outside Asia.
“While construction projects are still important, digital and technological solutions and clean energy projects, among other sectors, have risen to account for a growing share of China’s activity in the region,” the report said.
Since 2013, China has been considered the primary investor in the Middle East economic and artificial intelligence sector, according to a 2020 report by the Washington Institute.
China and the UAE signed a memorandum of understanding in 2015 that paved the way for high-level education partnerships.
In 2019, China AI giant SenseTime signed a deal with Abu Dhabi to base its regional research and development headquarters in the emirate, to create hundreds of jobs.
The UAE and China are expected to continue to boost their investment co-operation in sectors including manufacturing, new energy and financial services, Tony Dong, chief representative of Sino International Entrepreneurs Federation, told The National on the sidelines of the summit on Wednesday.
More companies are planning to open factories in the UAE because of its “strategic location linking Europe, America and Africa as well as business-friendly policies of the government”, Mr Dong added.
Last year, the Abu Dhabi Investment Office also teamed up with Hong Kong-based Arte Capital to help Chinese companies expand in the Mena region.
