A Brief Economic History of China x the UAE

[Music] excellencies ladies and gentlemen Mr basam alaykum Shia how I hope my Chinese is not too bad and good afternoon as you can see maybe from the title I'm going to focus a lot on the Strategic partnership between UAE and China and where it can lead to so I'm an economist and my focus is going to be on economic and financial matters and in the title I'm focusing on the fact that we're both facing a changing global economic geography with many challenges so three items on my agenda I want to talk a little bit about the past but only because it's interesting for the future and how we build on it so that a changing global economic geography we have to learn some lessons from it there's a new world order that is emerging and three the most important part is how do we work together and this is in the context of what I call the uae's economic diversification 2.0 where China can be a comprehensive strategic partner these are what is agreed between the UA and China his Excellency the Ambassador or mentioned the fact that November is the 40th anniversary of the establishment of diplomatic relations and those diplomatic relations have evolved you've had high level visits both by Sheik Zed president shei and recently His Highness shik ahamad importantly we now have a focus increasingly on economic cooperation along with cultural educational and technological cooperation all three will play an important role and we have a number of bilateral trade agreements and now we have a number of about 148 agreements between the UAE and China and for China um UAE is going to be part of the digital Silk Road I won't go back to the old Silk Road that is behind us what matters is how we move forward so how has the world changed if you look at global economic geography and this is over 40 years from 1984 to 2004 I just want you to look at the share of China in global GDP going from 2.7% % in 84 to 8.2% and now to close to 20% of global GDP that's a massive transformation of global economic geography driven by China and if you look at the bricks they now account for 35% of global economic activity so China and increasingly Asia are driving the global economy and if you look at trade global trade rapidly expanded with globalization and if you look at China's share of global trade after WTO it goes from 6% to 12% doubling over the space of 20 years and that is like to continue given China's role in the global economy and for us um Asia and China are the dominant trade partner and I'll come back to some of the numbers that his Excellency has mentioned this is a snapshot of some of the numbers that should interest you there are now some 400,000 Chinese citizens established here some close to 15,000 Chinese companies there were only 7,000 residents Chinese residents in the year 2000 so if you look at the massive increase um it is tremendous over a very short period of time both in terms of UAE investment flows into China but also Chinese investment flows into the UAE in terms of Tourism and education you've had 1.2 million Chinese visitors back in 23 you have 210 flights every month and you now have Chinese schools and you have the confucious Institute why are these important because eventually Chinese is going to have to enter our curriculum we're going to learn not only about technology but we've also have to speak the language and understand the culture much of our culture has been Western oriented in the future it's going to be increasingly Asian and Chinese oriented and we need to prepare ourselves for that the UAE is already China's love largest export market and the largest non-oil trading partner in the whole Mina region and in 2020 China replaced the EU as the gcc's largest trading partner so what you're seeing is a big shift away from Europe United States towards Asia and emerging Asia and China and if you look at the bottom um China's exports the Middle East the fastest some of the fastest growing is to the UAE and of course a lot of the exports that come to China from China into the UAE are re-exported by UAE because it is has very performing transport and Logistics and China's imports from the Middle East are also growing and they're now going Beyond oil if you look at the uae's exports and I want you to show to focus a little bit on this obviously petroleum oil and gas is dominant but UAE is also diversifying its exports so if you look at non oil changing very rapidly and if you look on the right hand side who our main partners are in red you'll see it is mainly the Arab countries as well as Asia so again this shift is way from from Europe United States and more towards this region of the world and towards China and Asia and increasingly and this is important for our future the dependence on oil and gas of the Middle East is going to continue for the foreseeable future we are the lowest cost producer of oil in the world but increasingly if you look at the bottom you look at the energy Investments they're going moving mov increasingly into clean energy or renewable energy and China is the leading investor in the world for clean energy it has a comparative advantage already in solar wind and batteries what does that mean it means that it's going to be a partner for the UAE as the UAE goes into sustainable clean and renewable energy this one is the most important one of the most important of all slides it talks about economic complexity what do we mean by economic complexity it's one thing to take oil and gas out of the ground and Export it but what you really want to look at is value added how complex are the products that you export and you'll see at the top the three countries with the most complex products things like aircraft phones Etc which require a lot of complex work are Japan Switzerland and South Korea and I want you to look at where China was and where it is now look at the rapid growth and the complexity of products that China exports those goes beyond your phones and others it's into electric vehicles now across the board look how rapidly that increased UAE is gradually increasing the complexity of its products but the most important line of them all is Vietnam look at where Vietnam was in terms of complexity of products and where it is now rapid increase what does that mean fundamentally Vietnam has partnered with China and China is making Vietnamese products more complex so as you partner with China you go into Global Supply chains which are more and more complex demanding more skills more investment in technology so in the future if I forecast as UAE becomes more integrated into China manufacturing industry and new technology will be rapidly increasing the complexity of our products but that is a little bit of the past we're now facing a very changed world and I've just put in the slide some of the challenges we both face there's a shift in global economic geography but we're also living a period of trade and Tech Wars and what's been called China decoupling this could eventually lead to a cold war which will mean deterioration of trade reorientation of Supply chains and value chains across the world you also have a period of increased defense spending increased defense spending comes at the expense of investment for climate change and the energy transition and economic development so those are challenges we were going to have to face and importantly um this is a period both of climate change which we have to address and at the same time you got rapid technological change so we're both facing that so the question is how do we deal with that together the UAE is what I call a falcon economy if you look at the green part the first part it's what I call economic diversification 1.

0 you had the oil you created special economic zones and free zones this allowed for the growth of Tourism tremendously performing infrastructure but that is very much the past we've done all that you now have to think of economic diversification 2.0 I use the term Falcon to remind you of the tiger economies in Asia and the idea really is that as paradoxical as it can seem the decoupling of Europe and the United States away from China is a big opportunity for us the GCC countries and the UAE in my view are going to emerge as middle Powers benefiting from both sides and what it will mean is that we're going to have to increasingly go into new technologies which is what the UAE is focusing on digitalization fintech Dey space Ai and transversal Technologies and I'll I'll talk about them a little bit but also one of the things that's happening in the UAE and other GCC countries but mainly led by the UAE is it's becoming much more Regional in terms of its approach what I call regionalized globalization the UAE is increasingly integrating other economies of the region into its economy so it's making them globalized so economic diversification 2.0 will see stronger Chinese partners ship between the UAE and China um already China was important in the initial phase of diversification building infrastructure ports airports and other facilities but now I think with a reorientation of Global Supply chains we have an important possibility of UAE becoming the entry point into the Arab world and the Middle East but also into the growth areas in Africa those that's what's promising the third part is I think the rapid growth in Services Services trade is growing much faster than Goods trade and that means you're going to have to invest much more in digital infrastructure and finally I think one of the most promising areas is that the UAE can emerge and become a global Center both for all energy oil and gas but also for new energy solar power hydrogen and the rest this is unique no other region or country in the world is focusing on that so if you think of what the comprehensive strategic partnership can mean there are bilateral building blocks for the Partnerships and there are multi multilateral Regional building blocks for the partnership both of those are important on the left hand side the bilateral means that eventually you're going to have to have a free trade agreement or a sea as you know as the UAE calls them a comprehensive economic partnership but eventually the GCC countries were going to have to move towards an free trade agreement with China it's been under negotiation for 20 years many things have intervened to prevent that but it could be on the horizon then you have the belon road you have the bricks opportunities and lots of investment opportunities across the region many countries of the region are going to require reconstruction and Redevelopment this is an area of partnership between China and the UA if I focus on the Banking and Financial side and thank our host HSBC for bringing us together in in this afternoon and and by the way if you look at the logo um I didn't sit down some afternoon and took out a paint brush this was done by Chad GPT as all the other logos that you will see gives you an idea of the tremendous power let me just mention three things that I think need to happen we need to integrate the payments infrastructure between the UAE and Hong Kong China HSBC for example clears dollars standard chart that clears Euro in Hong Kong as well as uan we need to integrate the payments infrastructure as our trade grows between the UAE and China we're going to have to use the remb and the uan for financing a lot of trade we'll need the payments infrastructure to be integrated and eventually um you're going to have to think of the petol U1 for financing a lot of the oil trade keep the price in dollars but have the clearing and settlement be done in uan we're also going to have a lot of cross listings your Excellency mentioned some of them we're going to have to cross list companies from the region and the UAE into Shanghai Hong Kong and have Chinese companies get listed here along with ETFs funds and the like and The Sovereign wealth funds have an important role to play if you look at where the gulf Sovereign wealth funds are investing they're increasingly being focused on investment in the local economies as should be we need to create the jobs we need to invest in local sectors infrastructure at the rest but the other part is International Investment and increasingly what we're seeing is that the Sovereign wealth funds of the region are shifting towards Asia and towards China so they will be a pivot towards Asia in terms of Investments so the gulf Falcon markets as I like to call them starting with hm have become mature you've got the Regal infrastructure legal and Regulatory infrastructure so you can Finance the new economy in digitalization you can Finance the global new energy map and this is going to be extremely promising because at the moment there is no Global Financial Center focused on financing new energy solar wind batteries and the rest this is an enormous opportunity for the UA to become the global Center for renovable Energy finance and in partnership with China which has the technology but we're going to have to finance also structural change across the region we're going to have to finance reconstruction and development Redevelopment across the region regionalized globalization will also have to be financed two quick slides I won't have time to go through them but they'll talk about some of the deals we already have both in terms of Dubai uh China Investments and also in particular this one um where China is now increasingly investing in renewable energy in the region and one particular area we all know about solar power we know about solar PV we know China has an advantage and there's going to be a plant here but more important is to look forward a little bit we're going to have to address climate change and that has two aspects climate change risk mitigation but also adaptation to climate change what we mean by adaptation is is that we're already Beyond 2° increase in temperatures in the region we're heading towards three so you're going to have to adapt to it we're already seeing droughts W wind rain coming in enormous quantities you're going to have to re retrofit a lot of the infrastructure that we have so climate risk adaptation is going to be an enormous opportunity for the region around $1.3 trillion which will need to be invested so we've got the markets we have access to the technology we can do that to together three areas at the bottom uh where I think these are exportable Technologies from the region and in particular from the UAE one is desalination we've been doing it for more than 40 years District Cooling what you have here is not air conditioning units hanging out of the windows but cooling coming through power plants and third is Desert agriculture those are three exportable Technologies to the rest of the world that needs them and if you look at China's investments in the UAE renewable energy Market they're rapidly expanding and it is across the board including into to electric vehicles the UAE of course is looking towards electrifying its whole transport system So eventually it's not only going to be flying taxis much of our transport system from now to 2030 is going to be gradually converted into electric vehicles and here again um China is in the Forefront in terms of the technology in terms of batteries and its ability to export the technology this is one of the big differences they're not asking you to buy buy the products they will co-invest with you several other areas I will quickly go through one is Data Centers um as you increasingly use Ai and other modern Technologies you're increasingly dependent on having performance data centers which require electricity we're privileged in being able to have solar power based data centers and so in the future I think the UAE um will be a major Center for showing how you can use and develop green data centers one other area um and this obviously concerns AI Abu dhab host g42 and of course there's been a lot of pressure on access and use of AI for the UAE it has a neutral stance we are open to using AI Technologies from across the world we don't need to Big sights so we can be neutral from that point of view but I think you need to move forward and have a technology Institute set up so that we can teach our current and future Generations about AI digital and the rest and the final one um and this is going Way Beyond this is Aerospace the UAE is going to be investing in Aerospace technology in as I understand it in Alin that is one part why do you want to go into Aerospace you want to go into Aerospace because for the UAE as a trading Nation you already have land sea and air right youve got itad Airlines Emirates Airlines and all the rest we already have that and our ports and airports and land and railroad are now integrated but the future is not there it is there yes for getting into the rest of the Middle East Africa and all the rest but increasingly everything thing that we do on Earth is being controlled by satellites in space and if I don't protect my space assets I won't be able to protect my digital assets on the ground when you buy an electric vehicle you're not buying a piece of equipment you're really buying a piece of software incorporated into a piece of equipment and if I can control the if I can control the software I can prevent you from using that piece of equipment and the same is true for all telecoms power and the so I am an advocate of doing two things not only that you need to invest in space Technologies I would Advocate that we should have a space port in the UAE that is the ability to launch satellites and Rockets here just like you have cape canaval and you have other space ports across the world and that would be in cooperation under the Strategic partnership with with China so those are some of the building blocks I think for the future and um they rely on technology on finance and really having a lot of ambition um I Lebanese I'm not a emirati Citizens but I've been here 18 years and I'm an economist and what I care about is not only having the vision but also the willingness to make it happen and this is one of the rare countries in the world where you have that and I think now we have an enormous opportunity moving forward to partners with China which is offering it us so and I'm not talking politics right now I'm an economist if the rest of the world wants to decouple let them decouple we can build our own future and I think those are some of the areas in there that's the logo for a comprehensive strategic partnership and that's also Chad gbt thank you [Music]