An increasing number of Chinese companies are expected to invest in the UAE's property and manufacturing sectors next year as the government encourages companies to look overseas for growth, officials said yesterday.
Chinese companies are investing more abroad, allowing the country to achieve a balance between inward and outward direct investment for the first time last year as the country transforms into a capital exporter rather than just a goods exporter.
"We are in a transit phase and we are encouraging companies to go abroad, and that means companies are going out, so it's a good opportunity for Dubai and other countries,” Zhang Yi, an economic and commercial counsellor at the Chinese consulate in Dubai, said at a business forum.
While traditionally investors in China were interested in trade with the UAE, and Dubai in particular, they are increasingly eyeing other sectors. China is Dubai's largest trade partner and the UAE's second-biggest trading partner, behind India. Trade with the country is set to reach US$60 billion by the end of the year, according to the UAE Government.
"Recently we found more and more Chinese people who want to invest in real estate and manufacturing [in the UAE],” said Justin Li, the managing director of the Yingke and Shayan law firm in Dubai.
"There is some change because the Chinese government is encouraging Chinese companies to go abroad and invest overseas. In China, we have a lot of foreign currency we need to invest.”
China is the third-largest foreign direct investor in the world, investing more than $100bn a year. Chinese investments overseas are rising even as total global foreign direct investment declined between 2011 and last year, according to an EY report.
"A lot of Chinese companies want to move their manufacturing [base] outside because labour costs are very high in China right now and the environmental requirements are very high,” said Mr Li.
The UAE's relations with China received a boost this week following the visit of Sheikh Mohammed bin Zayed, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the Armed Forces. The visit resulted in the signing of a number of agreements.
The Abu Dhabi investment firm Mubadala said on Monday that it would launch a joint fund worth US$10bn with China Development Bank Capital and China's State Administration of Foreign Exchange.
China's One Belt, One Road strategy is boosting investments in infrastructure projects along the medieval Silk Road trade route.
China also renewed its currency swap agreement with the UAE in its latest move to internationalise the Yuan.
The agreement allows the UAE Central Bank to provide up to 35bn Yuan to settle bilateral trades.
Source :The National