In a pre-cursor to the Boao Forum in Dubai, experts said Tuesday that the emirate is set to play a central role in China’s economic growth, as foreign firms increasingly seek to use it as a springboard for expansion into the world’s second-largest economy
The Gulf emirate, which already serves as a conduit for trade flows and investment into Asia and Africa, may also help influence closer financial integration between the west and Asia’s fast-growing emerging economies.
“Dubai lies at the heart of three great markets: Asia, Europe and the African continent. It connects the global economy,” said Xiyu Yang, executive vice president, Boao Forum for Asia Institute. “Dubai commands some of the greatest potential in the world for financial cooperation, and is best placed to connect these three diversified, but very dynamic economies.”
Yang was speaking at a press event to announce the staging of the Boao Forum for Asian Financial Cooperation Conference in Dubai in November. The three-day event will see government, public and private sector leaders convene to debate the most pressing issues facing Asian countries, and promote economic integration among member states. It is the first time the conference has been hosted in the Middle East.
“Asian economies are strong in trade and investment, but quite weak in finance,” Yang told delegates. “Taking the energy market as an example; both the major suppliers and consumers of energy are in Asia, yet deals have to be carried out in a third-party currency. We need to strengthen our financial cooperation to match the level we have reached in terms of trade and investment. That’s why we chose Dubai as this year’s location for the Financial Cooperation Conference.”
The primary engines of global growth, Asian countries have marked up double-digit increases in recent years, as the world’s advanced economies have retreated. China, the region’s juggernaut, is expected to notch up 7.4 per cent growth this year.
Dubai has benefited from its close commercial ties to the region. Trade between the emirate and China surged to a record $10.5bn in the first quarter, marking Beijing as Dubai’s second-largest trade partner after India. An estimated 10 per cent of Dubai’s population is Chinese, while the emirate plays host to more than 2,500 Chinese firms.
Dubai International Financial Centre (DIFC), the tax-free business zone, has seen a surge in demand from Asian companies and from multinationals hoping to capture part of the region’s economic boom.
“When DIFC began 10 years ago, more than 75 per cent of the firms came from North America and Western Europe,” said Chirag Shah, chief strategy and business development officer, DIFC. “Today, we are seeing huge growth from Asian firms and companies from the Middle East and Africa.
We need to strengthen our financial cooperation to match the level we have reached in terms of trade and investment
“As these economies grow, the financial sector is following suit,” he added. “Dubai is a conduit not only for trade, as the emirate is known for, but also in financial services, and what is happening here is a reflection of wider economic trends.”
Despite the close commercial links between China and the UAE, there is ample opportunity to capitalise on these ties and generate further growth, said Hongbin Cong, managing director of Invest Dubai, Falcon.
“In 2012, China’s overall outbound investment in the non-financial sector was $67bn. Barely $100m went into Dubai,” he told attendees. “This is disproportionate and doesn’t match the bigger picture [between China and Dubai]. There is significant potential, and the foundations for further growth are clearly there.”
The Boao Forum for Asian Financial Cooperation Conference will be held in Dubai from November 23-25.