The focus on non-oil revenues is helped by the Belt Road Initiative, which involves the development of new ports, industrial parks, and the digital economy.
Some of the biggest talking points at the start of 2019 were China’s Belt Road Initiative taking shape, while its economic competitor U.S. decided to position itself as the world’s largest oil producer.
Both of these initiatives had a massive impact on the GCC region, specifically Saudi Arabia and the UAE.
The U.S. Energy Information Administration (EIA) announced a record projected shale output of 13 million barrels per day by 2020 in its first forecast of 2019, positioning it as the world’s largest oil producer ahead of Saudi Arabia. At the same time, the Middle East bastion of oil export joined surrounding nations in increased investments in long-term non-oil growth, in an attempt to diversify away from depending on oil revenues.
This investment in non-oil revenues is compounded by China’s Belt Road Initiative, which is likely to involve the development of new ports, economic zones, industrial parks, and the digital economy of the UAE and its extended GCC partners.
AMEinfo had an in-depth conversation with Prof. Mark Greeven, a leading voice on China, innovation and the global economy to make sense of a score of issues by taking a deep dive into the reality of each situation. This is the third of a three-part interview with him.
Before we take the plunge, here’s a bit more about Prof. Greeven.
Prof. Mark Greeven is a Chinese-speaking Dutch professor who has been associated with China’s Center for Global Research and Development (GLORAD) and Netherlands’ well-known Rotterdam School of Management, Erasmus University. He has been advising Fortune500 companies in China and Europe since 2004 and has published multiple pieces of research in international academic journals as well as leading newspapers such as The Financial Times.
Impact of Belt Road Initiative and Chinese innovation on the UAE
Prof. Mark Greeven: There are two aspects to that. So first of all, China has realized that the UAE is a crucial part of the Belt Road Initiative. I want to mention that because the Belt Road Initiative is a very important strategic, long-term initiative of the Chinese government. So, the UAE plays a very crucial role as a hub for the Middle East, Africa, and other parts of Asia.
In the broader policy context, we have the big ecosystems like Alibaba that are massively investing in expanding their cloud services, payment services, smart logistics network, which are then going to land in places like the UAE. A lot of the innovations are coming from “changemakers” – companies that have consumer-oriented business models and are looking for markets outside of China. In such an environment, places like Southeast Asia and the Middle East are not necessarily the “lowest hanging fruit”, but are definitely the most likely candidates to attract them with expensive markets.
Prof. Mark Greeven: This also makes sense because the UAE is pioneering in nature. It is attempting to lead in terms of digital knowledge, AI, big data, technology and, therefore, there is a natural match there.
Additionally, given that the UAE market is comparatively small, there is a big benefit of partnering up with new and advanced digital technologies. The “Digital Silk Road” is bringing clear advantages in demonstrating how to build up ecosystems of innovation, entrepreneurship, and development that the Chinese are very used to and could be very valuable here in the UAE.
GCC diversifying from oil dependencies
Prof. Mark Greeven: The Middle East is at a stage where it has become a necessity to diversify the economy. The good news, in my opinion, is that everybody is aware. There’s an eagerness to develop diversified economies. In terms of the mindset, the UAE is absolutely ready and is already allocating resources accordingly. This is half of the story.
Prof. Mark Greeven: Looking at the focus areas in the UAE, specifically, the surge in digital technologies can really help. The country already has its fundamental, hard infrastructure in place, which makes the implementation of the latest technologies easier, creating a large spectrum of opportunities. I see no reason why places like Dubai or Abu Dhabi to have any problem in becoming the main hubs for financial technology, AI or blockchain in the Middle East. I’m fairly optimistic.
The only necessary condition that is not yet met is that the region needs a massive scale of entrepreneurs to catalyze this development. If China is good at anything, it is entrepreneurship – and that’s how the GCC region and China can grow together.