China is aggressively courting the UAE in an attempt to gain access to the wider Middle East, with local companies set to cash in.
Chinese companies see UAE as launch pad
Chinese companies are flocking to the UAE, hoping to participate in its infrastructure and energy projects. But they also see it as a launching pad to reach risky markets in the Middle East, such as Iraq.
Industrial and Commercial Bank of China (ICBC), the world's largest bank by market capitalisation, is the latest company to establish itself in Abu Dhabi.
At the opening ceremony of its Abu Dhabi branch this month, Yang Kaisheng, the president of ICBC, said the branch would help "to better facilitate the growth of the UAE".
"Economic co-operation between the UAE and China is becoming closer and closer, especially in infrastructure and energy," he said.
ICBC is the largest commercial lender in China and the first Chinese bank to gain a licence from the Central Bank to operate in the UAE.
The bank has operated within Dubai International Financial Centre since 2008, and it has another branch in the Qatar Financial Centre in Doha. The bank's expansion is part of a huge drive to enter overseas markets, including Canada and South East Asia. ICBC also plans a rights issue worth US$6.8 billion (Dh24.97bn) this month, according to Reuters.
However, Declan Hegarty, the managing director for HSBC Middle East in Abu Dhabi, said Chinese companies and banks were increasingly looking to the UAE as a base to participate in the economic growth of the Gulf region.
"Links between China and the Middle East are definitely going to grow in the next few years," he said.
"Given the nature of some of the projects coming up here on the infrastructure side, you can see Chinese contractors becoming more mainstream, as well as some of the more established industries."
Mr Hegarty said Abu Dhabi had been "ahead of the curve" in engaging with Beijing at a governmental level, although he warned that the practical implementation of those links might be more challenging.
But representatives of companies operating around the Gulf said they were finding many lucrative opportunities to buy into China's economic growth and overseas expansion.
Naokazu Sasaki, a regional manager at Sumitomo Mitsui Banking Corporation, the second-largest bank in Japan by assets, said: "We've expanded our business activity to Korea and China to access Abu Dhabi. Japan is very weak [in this market]. As an Asian bank, we should co-operate with ICBC. We have a lot of interbank transactions [as well as deals] in trade finance for short-term trading activities."
Sarim al Azzawi, the managing director of ITR Group, an oilfield services company operating in Iraq and the Middle East, said that engaging with Chinese companies was an essential part of his business.