Complex Made Simple

What’s behind Xi’s visit to the UAE?

China is taking the bull by the horn when it comes to shifting economic power in the region in its favor.

Tomorrow’s first visit by Chinese president Xi Jinping to the UAE, and the first by a Chinese head of state in 29 years, is another step in what has already been a series of moves towards this aim.

A UAE welcome

The UAE is currently home to 200,000 Chinese citizens and 4,000 trading companies and the number of Chinese tourists rose 26% YoY in 2016 to 880,000, according to published data.

In 2017, Chinese visitors to the UAE surged to over 1 million, and about 3.5 million Chinese tourists transited through the country, while in January this year, the UAE became the 11th country to have mutual visa-exemptions with China for ordinary passport holders

China’s top four banks are represented in the UAE, and there are over 100 flights a week between the two countries.

Related: Middle East to receive $20bn from China: Why the interest in the region?

The visit

UAE leaders praised Xi’s visit to the Emirates, at the invitation of UAE President Sheikh Khalifa bin Zayed Al Nahyan, as an “important step” in the economic, diplomatic and cultural relations between the two countries, and it coincides with the UAE-China Week, July 17 to 24.

“We welcome Chinese President Xi Jinping in this historic visit that celebrates the strategic partnership between the two countries and establishes a new phase of fruitful cooperation and promising outlooks,” said Sheikh Mohammed bin Rashid Al Maktoum, Prime Minister of the UAE and Ruler of Dubai.

“We seek to build long-term economic, cultural, trade and investment ties with China,” he added. “We are happy to celebrate China’s rich and continued historical culture on an annual basis.”

Chinese Ambassador Ni Jian in a recent interview with Xinhua media said that strategic UAE-Chinese ties are indispensable in China’s overall diplomacy and stand, as the two countries deepen trade and economic cooperation, but also in cultural, tourism and educational fields.

“Furthermore, there are overlapping visions for the Belt and Road Initiative and the UAE development strategies,” Jian said

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Jian said that the UAE is China’s second largest trade partner and the largest export market for Chinese goods among Arab countries, while China has been the largest trade partner of the UAE for many consecutive years.

According to UAE government statistics, the annual trade volume between the UAE and China has exceeded $50 billion, with the UAE represents 23% of Arab trade with China, and the China Foreign Trade Centre expects bilateral trade to reach $80 billion by 2020.

According to Xinhua, bilateral trade stood at $41 billion in 2017, a 1.06% increase from the previous year.

“In 2016, the UAE invested over $2.1 billion dollars in China, topping the list among Arab countries,” reports the media.

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Chinese UAE bilateral investments detailed

Ahead of his visit, President Xi said the UAE will be the first stop of an overseas trip this year and also the first Arab state he will visit since his re-election as President of the People’s Republic of China.

“Our ancestors started trade through the ancient Silk Road well over 2,000 years ago,” he said.

“China has emerged as a strong driving force for world economic growth and the UAE has become an oasis of development for the Arab world.”

Xi mentioned oil cooperation as key.

“In 2017, the UAE awarded Chinese companies a combined 12% stake in Abu Dhabi’s onshore oil concession, the first time for China to acquire stakes in upstream cooperation in an oil-producing country in the Middle East. In March 2018, the UAE awarded a Chinese entity another 10% stake in each of the two offshore concessions in Abu Dhabi,” said Xi.

On industry, he said the Khalifa Port Container Terminal Two, a project jointly built and operated by Chinese and UAE companies with a designed annual capacity of 2.4 million TEUs, will be up and running in the first quarter of 2019.

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The China-UAE Industrial Capacity Cooperation Demonstration Zone located in the Khalifa Industrial Zone has made good progress. As things stand now, 16 enterprises have signed letters of intent with a committed investment of $954.2 million

The 700-MW Concentrated Solar Power (CSP), a China-UAE joint project, is under construction in Dubai and is slated to be the world’s largest and most advanced solar thermal power plant.

“The Hassyan Clean Coal Power Plant, the first Middle East project financed by the Silk Road Fund, will be the first clean coal plant in the region upon completion,” said Xi.

Financially, the China-UAE Joint Investment Fund has finalized its plans for investment in 12 projects valued at $1.07 billion.

China will also open a Chinese culture center in Abu Dhabi and will support and participate in Expo 2020 Dubai.

Related: Kuwait’s Silk City is key project in China’s One Belt One Road initiative

China wooing the Middle East

China will provide Arab states with $20 billion in loans for economic development, President Xi Jinping told top Arab officials recently, as Beijing seeks to build its influence in the Middle East and Africa.

The money will be earmarked for “projects that will produce good employment opportunities and positive social impact in Arab States that have reconstruction needs,” said Xi.

It is part of a special Chinese programme for “economic reconstruction” and “industrial revitalization,” Xi told participants at a China-Arab States forum in Beijing’s Great Hall of the People.

Beijing is also prepared to provide another $150 million to countries in the region to “build capacity for stability.

China would offer aid worth $15 million to Palestine to support economic development, besides providing a further $91 million to Jordan, Lebanon, Syria, and Yemen, he added.

He also announced that a consortium of banks from China and Arab nations, with a dedicated fund of $3 billion, will also be set up.

The Belt and Road initiative was announced in 2013 by Chinese president Xi Jinping, a sort of new-age restoration of the ancient silk road commerce route. The Route is a development project that will help connect China to the regions to its west, in Central Asia, the Middle East, and Europe.

According to the Belt and Road Action Plan released in 2015, the initiative will encompass land routes (the “Belt”) and maritime routes (the “Road”) with the goal of improving trade relationships in the region primarily through infrastructure investments.

With the Middle East factoring greatly in this project, the Chinese government cannot afford faltering infrastructure or political or economic unrest hindering their efforts.

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