China’s Financial Foothold in the UAE: A Growing Powerhouse

China’s Financial Foothold in the UAE Expands

The Dubai International Financial Centre (DIFC) has granted a licence to China International Capital Corporation (CICC), a significant investment bank, to operate within the special economic zone. This move marks a substantial expansion of Chinese firms’ presence in the United Arab Emirates, further solidifying the country’s position as a hub for cross-border activities.

A Growing Financial Ecosystem

CICC joins the ranks of China’s five largest banks, which have already established bases in the DIFC. This influx of Chinese financial institutions has led to a significant increase in the range of financial services available, including trade and sustainable finance. According to Ian Johnston, CEO of the Dubai Financial Services Authority (DFSA), CICC’s presence will facilitate deals and arrangements, marking a significant step forward for the region.

Cross-Border Ambitions

Xu Jia, deputy head of CICC’s investment banking department, emphasized the bank’s commitment to supporting Chinese enterprises’ cross-border mergers, acquisitions, and greenfield investments. Additionally, the bank aims to provide independent equity financing and listings for these firms’ incubated enterprises abroad.

Chinese Banks Gain Traction

Chinese banks have been gaining ground in areas such as infrastructure and project finance, building on their existing trade-related dealings. The total assets under management by Chinese banks in the DIFC have surged over 33% in the past three years, reaching $65.3 billion by the end of 2024.

A Thriving Financial Hub

The DIFC is now home to 16 Chinese firms, comprising various financial institutions, including commercial banks, wealth managers, and insurers. This number has doubled since 2021. Nasdaq Dubai, one of the emirate’s exchanges, hosts around 22 securities listings from issuers in Hong Kong and mainland China, with a value of $12.3 billion.

Sustainable Finance Takes Center Stage

The DFSA has been working to strengthen international cooperation to achieve net-zero targets. Its agreement with the Hong Kong Monetary Authority aims to bolster sustainable finance, with a focus on the issuance and listing of green bonds. Dual listings of green bonds may be on the horizon, as the Dubai Financial Market has been recognized as a stock exchange by Hong Kong Exchanges and Clearing.

A Commitment to Decarbonization

The China-Middle East corridor is becoming an increasingly important axis for financial cooperation. Governments, policymakers, and regulators must work together to remove barriers and provide opportunities for cross-investment, prioritizing decarbonization and net-zero targets.

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