This week’s big signal: The UAE and China are cosying up amid geopolitical tensions

UAE-China ties got a big boost as Abu Dhabi Crown Prince Khaled bin Mohamed bin Zayed Al Nahyan visited Beijing earlier this week: We saw two dozen agreements on hydrogen, energy storage, and EVs and an agreement to set up joint investment funds and platforms to back opportunities not only in each other’s markets, but in third countries. The UAE’s many investment arms will also launch a China-focused investment platform.

The visit carries weight both on the geopolitical side and on timing: Al Nahyan is the highest-ranking Arab leader to visit China so far this year and the visit signals commitment on both sides amid a turbulent regional environment, Chinese ambassador to the UAE Zeng Jixin said in an opinions piece for The National.

“The timing of the trip was more about longer-term economics than near-term diplomacy,” Robert Mogielnicki, non-resident fellow for the Arab Gulf States Institute, tells EnterpriseAM.

China’s refusal to (openly) provide military support to Iran appears to have preserved its standing with the Gulf (or at least Abu Dhabi): “It can safely be assumed that China holds a level of influence over Iran through its economic alliance with it, which may work out in the UAE’s favor as future negotiations occur,” Amandeep Ahuja, head of research at Confluence Consultants, tells us.

SOUND SMART- China’s role in brokering the 2023 Saudi-Iran normalization suggests it could shape future talks once hostilities subside, Ahuja says.

It’s not all about the war: Closer UAE-China ties come as the US and the EU are nearing anagreement on critical supply chains that aims to reduce reliance on China and find “like-minded” partners to bolster supply chains, Ahuja points out. “For China and the UAE to grow closer is strategic not just in the context of the war, but also for the future,” she added.

US-China tensions have forced the UAE to its relationship with Beijing cautiously. Until now, the UAE has maintained strong ties with China on manufacturing, for example, while intentionally insulating its tech space under sharp pressure from Washington.

Chinese firms might also have an opening in the UAE if Western firms were to pull back in the wake of the war. “If leading multinationals, especially those in the tech sector, become wary of the region in the aftermath of the Iran conflict, then Chinese companies may be able to capture a greater share of the region’s (potentially smaller) market,” Mogielnicki wrote recently.

But Chinese firms don’t have the risk appetite that many observers seem to think they do, Mogielnicki said — they’re “pragmatic about regional engagement and keen to explore commercial arrangements … but not plunging into conflict zones or keen on massive geopolitical risks,” he explained.

“Beijing and China's business community prize stability in the region, and any serious plans for longer-term engagement are likely predicated on the calculation that some manageable form of stability will return to the Gulf,” he added.