A recent study prepared by Dubai Chamber of Commerce & Industry revealed the UAE's interest in strengthening its economic relations with China which, according to the International Monetary Fund (World Economic Outlook Database, April 2007), has ranked as the fourth largest in the world when measured by nominal GDP. Its GDP for 2006 was USD 2.68 trillion which grew by 10.7 per cent from the previous year. UAE on the other hand was ranked as the 38th with a GDP of USD 163 billion.
In 2006, China real GDP totalled USD 2.6 trillion of which the industrial sector accounted for 48.1 per cent, the services for 40 per cent and the agricultural sector for 12 per cent. UAE real GDP on the other hand totalled USD 162.9 billion of which the industrial sector accounted for 62 per cent, the services sector for 36 per cent and the agricultural sector for only 2 per cent.
The labour force in the UAE services sector accounts for 78 per cent whereas in China it accounts for only 31 per cent. However, in the agricultural sector the labour force in China (49%) supersedes that of the UAE (7%). With regards to the industrial sector, the labor force participation in both countries is comparable.
The inflation rate in china is very low compared to UAE (1.5 per cent & 9.5 per cent respectively).
Foreign Direct Investment (FDI)
China maintained its position as one of the world's top destination for foreign direct investment (FDI). China's inward FDI in 2005 totalled USD 72.4 billion and accounted for 9.2 per cent of its gross fixed capital formation, while UAE's inward FDI in the same year totalled USD 12 billion and accounted for 51.8 per cent of its gross fixed capital formation. On the other hand, The FDI outward attained by China and UAE was USD 11.3 billion and USD 6.7 billion respectively.
In 2005, china's inward FDI stock totalled USD 317.9 billion which accounted for 14.3 per cent of the GDP. While China's outward FDI totalled for USD 46.3 billion and accounted for 2.1 per cent of the GDP. Whereas in the case of the UAE, inward FDI stock totalled USD 28.2 billion which accounted for 21.1 per cent of the country's GDP and the FDI stock outward totalled USD 10.1 billion and accounted for 7.5 per cent of the GDP.
Foreign Trade
In 2006, China's Trade with the World totalled USD 1,760 billion of which 55 per cent were exports and 45 per cent were imports amounting to a trade balance of USD 177.5 billion. UAE on contrary had a trade deficit of USD 45.2 billion in 2006 as its total imports worth USD 79.1 billion exceeded its total exports worth USD 33.9 billion.
China's main exports in 2006 were electrical machinery & equipment, power generation equipment, apparel, optics & medical equipment, furniture, inorganic & organic chemicals, toys & games, vehicles other than railway and plastics & articles thereof. Whereas China's main imports were electrical machinery & equipment, power generation equipment, mineral fuel & oil, optics & medical equipment, inorganic & organic chemicals and iron & steel.
In 2006, UAE trade with China totalled USD 8.7 billion of which 96 per cent were imports, 3 per cent were exports and only 1 per cent were re-exports. During 2002-2006, UAE total foreign trade with China increased by 177 per cent with an annual growth rate (CAGR) of 29 per cent.
In conclusion, there are many valuable investment opportunities offered by the hi-tech industries, financial sector (banks and insurance), telecommunications and the property developments in both counties.
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© Press Release 2007
