China's initiative is a game changer

Chinas initiative is a game changer
The UAE is set to play a big role in China's Silk Road initiative due to its world-class infrastructure.

Beijing - UAE will be a gateway for Chinese exports to Africa and Europe under Belt and Road Initiative.



By Waheed Abbas

Published: Sat 27 Apr 2019, 10:00 PM

Last updated: Mon 29 Apr 2019, 8:54 AM

The UAE will consolidate its position as a key transit point for Chinese exports to African and European countries under the Belt and Road Initiative (BRI) as billions of dollars in trade will pass through the region.
Due to its strong potential, the China-Africa Belt and Road Initiative through the Gulf region is termed as the 21st century Silk Road, benefitting all the countries in terms of fresh investments, job creation, GDP growth and human capital development.
Led by the UAE, Gulf states have already recognised the importance of African countries and invested in agriculture, ports, infrastructure, mining and other strategic sectors. Similarly, China also pumped in billions of dollars in aid, loans and investments in diverse sectors. This will further strengthen the trade on the 21st Century Silk Road.
Latest figures show that bilateral trade between the Gulf and Africa increased more than nine-fold over the last two decades and in 2018 it stood at over $65 billion. The UAE-China trade reached $53 billion last year, an increase of 17 per cent.
His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, is currently visiting China to participate in Belt and Road Forum.
Highlighting the strong trade ties between the Gulf countries and Africa, Knight Frank stated that the UAE has been a key contributor to the trade growth with bilateral trade growing almost 4,000 per cent over the last decade. Currently, the UAE accounts for over 50 per cent - $34 billion - of the Middle East's trade with the African continent. The UAE is followed by Saudi Arabia with $16 billion, Kuwait with $1.7 billion, Oman with $1.5 billion and Bahrain with $700 million worth of trade.
Dubai-based global ports operator DP World is a leading investor in Africa with presence in Egypt, Djibouti, Algiers, Algeria, Somaliland, Rwanda, Mozambique and Senegal. Similarly, UAE's largest telecom operator etisalat has international operations in Morocco, Egypt, Mauritania, Mali, Gabon, Burkina Faso, Benin, Cote d'Ivoire, Togo, Niger and Central African Republic.
According to fDi Markets data, the Middle East has 33 foreign direct investment (FDI) projects accounting for five per cent of total FDI into Africa, but the UAE is leading the way by a considerable distance and is the ninth largest investor in Africa with 19 FDI projects in 2017. These projects have created an estimated 74,000 jobs.
Vijay Valecha, chief market analyst at Century Financial, said BRI is primarily aimed at increasing trade and stimulate the economic growth.
"From the Middle East's perspective, proposed sea route connecting China's coastal regions to Europe via Mena region is all set to benefit this part of the world. With proposed investments of about $1 trillion, the major sectors that would benefit include ports, transportation, roads, railways, airports, and telecommunication," he said.
During last year's Ministerial Meeting of the China-Arab States Cooperation Forum, Valecha said, China had pledged $23 billion in loans and aid to Arab states. "This would envision money flowing into building of new oil and gas pipelines, railroads, ports and other infrastructure facilities."
"The UAE is set to play a big role in China's Silk Road initiative due to its world-class infrastructure. With over 20 per cent of Arab-China trade already coming to the UAE and more than 25 per cent Chinese exports to Arab world going through it, the UAE is naturally positioned to reap rich dividends from this initiative," he said.
"Egypt is another country that is set to benefit considering the strategic location of the Suez Canal along the maritime routes. Furthermore, cluster of projects have been announced from Chinese side which would see industrial parks being developed in Oman, Saudi Arabia, Egypt, the UAE along with other major African nations like Djibouti, Kenya and Ethiopia," he added.
Taimur Khan, research manager for Middle East at Knight Frank, said the UAE-based airlines also fly to 20 African countries facilitating commerce with the rest of the world.
"A third of the world is accessible within four hours and two-thirds within eight hours of flights from Dubai International airport. Infrastructure investments and transport links not only strengthen the historic ties between Africa and the Gulf states but are crucial for the potential of Africa to be fully realised," he said.
- waheedabbas@khaleejtimes.com


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