Growing UAE-China Trade Complements Dubai International Financial Centre Growth StrategyPress Release 29 Feb 2016 11:00 am
- Chinese banks in DIFC have doubled their balance sheet in the last 18 months
- Representing 26% of total assets booked at DIFC, China’s top four state-owned banks have combined total assets of US$21.5 billion
- Dubai’s established framework for Islamic finance provides opportunities for Chinese firms
Dubai-UAE: 29 February, 2016 - Concluding the Centre’s participation at the 2016 G20 conferences held in China, Dubai International Financial Centre (DIFC), the global financial services hub connecting businesses and financial institutions with emerging markets across the Middle East, Africa and South Asia (MEASA), reaffirmed its commitment to supporting China’s ‘One Belt, One Road’ (OBOR) initiative and establishing a robust and supportive financial platform for Chinese institutions.
DIFC has seen exponential growth in the presence of Chinese financial firms and state-owned banks in recent years. According to the Centre’s 2015 full year Operating Review results, Chinese banks in DIFC have doubled their balance sheet in the last 18 months. Representing 26% of the total assets booked in DIFC, China’s top four state-owned banks – Bank of China, Agricultural Bank of China, ICBC and China Construction Bank – have combined total assets of US$21.5 billion.
The four banks have additionally upgraded their licenses at DIFC to Category 1, expanding their presence from subsidiary to branch status.
Following the announcement of the Centre’s Operating Review results, DIFC officials confirmed the financial hub’s ongoing discussions with two Chinese banks to set up operations at DIFC.
Inspired by the OBOR initiative, Chinese financial firms were increasingly active on DIFC’s global financial exchange in 2015.
Bank of China (BOC) listed a two billion yuan bond (AED1.18 billion, US$322 million) on Nasdaq Dubai in July 2015 to support cross-border trade and infrastructure activities, while Agricultural Bank of China (ABC), listed a 1 billion yuan bond (AED590 million, US$163 million) in 2014.
Engaging with financial leaders, officials and experts, the DIFC delegation met with China’s prominent capital markets, securities companies and non-financial services firms to discuss mutual interests and setup plans.
Commenting on the growing importance of Chinese firms at the Centre, Arif Amiri, Chief Executive Officer of DIFC Authority, said: “On our first visit to China this year, we are committed to building long-lasting partnerships with the emerging Chinese market. Contributing to a large portion of our business activity, we envisage an increasingly significant role for Chinese firms as we seek to become a leading global financial hub.”
As part of its 2024 growth strategy, DIFC has refocused its growth to encompass the latent potential of the fastest-growing emerging markets in the MEASA region and stimulate trade and investment flows along the South-South economic corridor. With the objective of attracting more Chinese firms in the next 10 years, DIFC has aligned its South-South strategy with China’s OBOR initiative.
Asian firms continue to be an engine for growth accounting for 11% of the financial services companies within DIFC and 80% of the Centre’s incremental business activity. Arif Amiri said: “As China continues to invest in emerging economies across the MEASA region, DIFC’s conducive and supportive framework acts as a gateway for companies looking to expand their business interests and investments in these markets. Linking Asia to Africa and Latin America, Dubai is emerging as a crucial hub along China’s New Silk Road.”
He added: “Dubai’s strategic location and its world class infrastructure becomes especially important as Chinese and African governments seek to double their two-way trade to US$400 billion by 2020. The emirate’s connectivity and solid legal and regulatory framework serve as important links in connecting Chinese companies with African markets and vice versa.”
In December 2015, His Highness Sheikh Mohammed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces, held official talks with President Xi Jinping to bolster strategic bilateral cooperation. In addition to signing nine agreements, the two leaders witnessed the launch of a US$10 billion UAE-China joint strategic investment fund, further contributing to OBOR’s objective of improving connectivity and cooperation with regional partners across Europe and Asia. The bilateral trade between China and the UAE in 2015 was slated to reach US$60 billion compared to US$47.6 billion in trade volumes in 2014.
Further supporting Chinese business interests, DIFC’s 2024 growth strategy aims to position Dubai as a global hub for Islamic finance. Well on its way, Dubai with its established Islamic finance framework offers global visibility, streamlined listings, prompt responses to issuer needs and wide access to investors - enabling a healthy Islamic finance network for Chinese firms looking to build their Islamic finance portfolio. In addition, Dubai’s exchange has successfully launched the Murabaha financing platform, which provides retail and corporate users with an efficient, fast and flexible alternative to traditional solutions, and a Sharia’a compliant repurchasing platform for short-term financing.