UAE, China reaffirm diplomatic ties, ramp up investments amid geopolitical tensions

UAE-China ties got a big boost during Abu Dhabi Crown Prince Khaled bin Mohamed bin Zayed Al Nahyan’s recent visit to Beijing. The two countries agreed to ramp up investments and deepen cooperation across hydrogen, energy storage, and EVs. They signed 24 agreements to boost trade and investment ties, according to The National.

They also agreed to establish an investment framework for creating joint funds, investment platforms, and vehicles to support investments not only in each other’s markets, but as partners investing in third countries, according to a statement. UAE investment entities will also establish a China-focused investment platform, subject to approvals and “prevailing market conditions,” the statement said without disclosing further details regarding the participants, timeline, or sector of focus.

The timing of the visit — and the acceleration of cooperation — is particularly interesting given the delicate balance China must play as a strategic partner of both Iran and the Gulf at the same time. Al Nahyan stands as the highest-ranking leader from the Arab world received by China in 2026 so far, Chinese ambassador to the UAE Zeng Jixin stated in an opinion piece for The National. He also referred to the visit as a “major event” in UAE-China ties, which “propelled bilateral co-operation from ‘complementary factors’ to ‘synergistic development.’”

The message both countries are sending is one of commitment and neutrality in the face of an unstable, turbulent geopolitical environment. While some speculated that Gulf governments could become more critical of China’s ties to Tehran after Iran’s attacks on the Gulf, China’s refusal to engage meaningfully in the war or provide military support to Iran seems to have helped preserve its friendly relations with the Gulf — or at least with the UAE.

FAST FACT- The UAE and China are close trade and investment partners, with bilateral non-oil trade volume increasing 24.5% y-o-y to USD 111.5 bn in 2025.

That is strategic on the UAE’s part. Even if China’s role in the war so far has been marginal, future influence on Iran is still a possibility. “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 favour as future negotiations occur,” Amandeep Ahuja, head of research at Confluence Consultants, tells EnterpriseAM.

While China might not be an official mediator right now, its role in brokering the 2023 Saudi-Iran normalization suggests it could influence future negotiations once the current hostilities subside — particularly as ties between the Gulf and Tehran have reached a new low, Ahuja explained.

It’s not all about the war: Closer UAE-China ties would also come at a time when the US and the EU are nearing an agreement 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.

“I think 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 UAE. “Especially amid significant conflict-related economic pressure on the UAE, the country's leadership is not going to turn down an [opening] to strengthen economic ties with a major global economy like China,” he added.

What does strengthening UAE-China ties mean for the UAE’s alliance with the US?

The tension between Washington and Beijing has forced the UAE to navigate its cooperation with China cautiously. Until now, the UAE has maintained its alliance with China in industrial and strategic sectors while intentionally insulating its tech space — where relations with the US are much deeper and predicated on a lack of Chinese exposure.

CEO of the Dubai Economic Development Corporation Hadi Badri even reiterated that position at an event by Semafor this week, saying that the UAE’s relationship with China represents a long-held foreign policy philosophy to not choose sides.

While some have speculated on the future of US-Gulf relations post-war, given the impact of the war on the Gulf, there’s no definitive indication that the UAE would consider pulling away from the US, despite the war potentially prompting a “strategic realignment among regional leaders when it comes to relationships with the US and Israel,” as Ahuja previously told us.

It depends on the outcome of the war, of course: A definitive US military success in Iran “would be a soothing balm for US-Gulf relations,” serving to reassure GCC states of Washington’s reliability, Nicholas Heras, senior analyst and program head for the State Resilience and Fragility Program at the New Lines Institute for Strategy and Policy, previously told us.

Strategic sectors is the keyword here: The 24 agreements signed this week have focused on the “enhancement of [existing] ties,” Ahuja added, noting that “no new technology announcements occurred between China and the UAE, [indicating] that the direction of trade policy has not changed.”

The war could also be an opening for China on multiple fronts

Chinese firms might have an opening in the UAE if Western and multinational firms view the Gulf through a risk lens. “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.

With Iran threatening US tech firms and financial institutions in recent weeks, and at times targeting them directly, the risk factor has skyrocketed when it comes to firms eyeing the region. Still, many FIs have pushed ahead with their expansion plans. Consulting firm Bain Capital just opened an Abu Dhabi office yesterday.

Yes, but: Chinese firms don’t have as high a risk tolerance as is often believed, Mogielnicki said. “Chinese government and business actors are pragmatic about regional engagement and keen to explore commercial arrangements that are not possible for American and European counterparts. But Chinese actors are 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.