China is the world’s second largest economy by nominal GDP and the largest trading partner by value for Dubai and the UAE.
China is transitioning from an export-led, capital investment development model to a more sustainable service focused, domestic consumption- led model. China’s economic growth is a major driver for global growth and the Chinese Government’s Belt and Road initiative is an important infrastructure development plan which will have major impact on global trade and geopolitical relations.
Since initiating market reforms in 1978, China has shifted from a centrally-planned to a market-based economy and has experienced rapid economic and social development. GDP growth has averaged nearly 10 percent a year—the fastest sustained expansion by a major economy in history—and has lifted more than 800 million people out of poverty. China reached all the Millennium Development Goals (MDGs) by 2015 and made a major contribution to the achievement of the MDGs globally. Although China’s GDP growth has gradually showed since 2012, it is still impressive by current global standards.
With a population of 1.3 billion, China is the second largest economy and is increasingly playing an important and influential role in development and in the global economy. China has been the largest contributor to world growth since the global financial crisis of 2008.
Yet China remains a developing country (its per capita income is still a fraction of that in advanced countries) and its market reforms are incomplete. According to China’s current poverty standard (per capita rural net income of RMB 2,300 per year in 2010 constant prices), there were 55 million poor in rural areas in 2015.
Rapid economic ascendance has brought on many challenges as well, including high inequality; rapid urbanization; challenges to environmental sustainability; and external imbalances. China also faces demographic pressures related to an aging population and the internal migration of labor.
Significant policy adjustments are required in order for China’s growth to be sustainable. Experience shows that transitioning from middle-income to high-income status can be more difficult than moving up from low to middle income.
China’s 12th Five-Year Plan (2011-2015) and the newly approved 13th Five-Year Plan (2016-2020) forcefully address these issues. They highlight the development of services and measures to address environmental and social imbalances, setting targets to reduce pollution, to increase energy efficiency, to improve access to education and healthcare, and to expand social protection. The annual growth target in the 12th Five-Year Plan was 7 percent and the growth target in the 13th Five-Year Plan is 6.5 percent, reflecting the rebalancing of the economy and the focus on the quality of growth while still maintaining the objective of achieving a “moderately prosperous society” by 2020 (doubling GDP for 2010-2020).
Source: www.worldbank.org/en/country/china/overview
Dubai and the UAE represent important gateway markets for Chinese companies looking to expand into the regional markets and Africa. Dubai’s strategic location and businesses environment make it an attractive investment location within China’s belt and road initiative. As the world’s largest consumer market and the manufacturing hub, China offers diversified market opportunities for Dubai companies. High potential sectors include:
- Trade & Logistics
- High Tech
- E-Commerce
- Food
- Finance
- Real Estate & Construction
- New Energy
China has been Dubai’s top trading partner since 2014, as the emirate has cemented its status as a major regional and global hub for the Chinese market. Dubai-China bilateral trade hit Dh139 billion in 2018, and was valued at Dh36 billion over the first quarter of 2019.
China’s investments over the years in the UAE reached US$9.1 billion in 2017. Chinese Foreign Direct Investment, FDI, in the UAE was worth US$620 million in 2017 alone. China-UAE cooperation in the energy sector is expanding across the value chain – from upstream exploration to downstream refinery, and from stake holding to service-contracting. Chinese companies are actively working in railways, airports, seaports, roads, telecommunications and other infrastructure developments in the UAE, making their contributions to regional connectivity. Chinese technology companies like Huawei use Dubai as a hub for their MENA operations, and Chinese ecommerce like Jollychic are expanding in the region through Dubai.