UAE-China economic ties stay on growth trajectory

Abu Dhabi - Industry captains upbeat about more trade collaboration.

The UAE-China political and economic relations will get a new impetus as His Highness Shaikh Mohammed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces, is on a three-day official visit to China, where he is discussing matters of mutual interest with a focus on economic ties.
Both countries have maintained high-level political contacts since they established diplomatic relations in 1984.
This is Shaikh Mohammed's third trip to China since 2009. During his last visit in 2012, he had proposed setting up a $10 billion joint strategic investment fund. The fund has been formally ratified during this trip and will jointly invest in strategic projects.
"I am excited about this trip," said Khalfan Al Kaabi, a former member of the board of directors of the Abu Dhabi Chamber of Commerce and Industry (ADCCI). Al Kaabi said the UAE can benefit from China's economy.
The fund will open new avenues of investments and economic cooperation between the nations.
Untapped potential
In 1984, the bilateral trade volume was $100 million which grew to $54 billion in 2014, showing the enormous potential of trade that exists between the two nations.
Two-way trade is expected to cross $60 billion in 2015, said Hamid Al Ruaab, the chief economic editor at Abu Dhabi Television.
Yusuffali MA, the managing director of LuLu Group, has set up three offices in China to source his merchandise. "I think this is a very timely and strategically important visit to China by Shaikh Mohammed. China is a very important business and trading hub not only for us in the UAE but also for the whole region," he said.
LuLu group has been operational in China for more than 15 years, with sourcing and manufacturing units in Yiwu, Guangzhou, Hong Kong and Fujian. Currently, the trade volume is around $160 million and "we expect this to go up by 20 to 30 per cent as we add new hypermarkets," Yusuffali added. Rizwan Sajan, the chairman of Dubai-based Danube Group, which runs a retail chain of construction materials, has a huge presence in China. "China has a lot to offer. Every time I visit the country, I learn something new," Sajan said.
Trading hub
Dragon Mart in Dubai serves as a large exhibition centre for Chinese manufacturers, where items on display attract not only retail buyers but also wholesale traders from the GCC and the wider Middle East.
Chang Hua, the Chinese Ambassador to the UAE, said Dragon Mart is the biggest Chinese market overseas. Also, it is the biggest trading hub of Chinese products in the Middle East.
"Chinese firms in the UAE have an investment stock of $1.66 billion, of which $85.62 million was newly added in the first nine months of 2015," the ambassador said in a statement to Wam.
China's investment in the UAE covers all key areas, including energy, telecommunications, transport, real estate, trade, finance, securities, services and others.
China started importing oil from the UAE in 1995. In 2014, China imported more than 11.65 million tonnes of oil from the UAE, a year-on-year increase of 13.4 per cent.
Energy cooperation
Abu Dhabi's Mubadala Petroleum signed on Monday an agreement with China National Petroleum Corporation (CNPC) identifying potential areas for collaboration in the upstream oil and gas sector outside the UAE and new and existing projects, including onshore conventional projects, offshore projects and LNG projects.
Speaking to Khaleej Times, Khalid Al Awadhi, CEO at Hawk Energy, an energy consultancy, said: "Since trade balance favours China, it's time China invests in the UAE's energy sector with electric power plants, renewable energy, downstream oil and gas facilities and industrial manufacturing." The Chinese ambassador said that UAE-China energy cooperation is not merely in oil trade, but also in comprehensive upstream and downstream cooperation with mutual benefits. For example, the pipeline connecting the Habshan oilfield in Abu Dhabi and Fujairah was undertaken by China National Petroleum Corporation.
Currently, he said Al Yasat Corporation, a brainchild of China National Petroleum Corporation Hong Kong branch and Abu Dhabi National Oil Company, is operating on both land and sea in Abu Dhabi.
The four biggest banks of China have set up branches in the UAE.
The UAE-China economic ties are expanding into more diverse sectors. Now, talks are under way for cooperation in energy, railway, space, renewable energy, climate change and other sectors.
Alp Eke, a senior economist at National Bank of Abu Dhabi, said Chinese companies are focused on new sectors such as technology, agribusiness, real estate and manufacturing. In 2014, China was the top source of imports for the UAE at $22 billion.
- haseeb@khaleejtimes.com