Industrial zone helps steer economy to high-tech development, experts say

The steady progress made on the development of an industrial zone in Abu Dhabi attests to the depth of cooperation with China under the Belt and Road Initiative even in the midst of the pandemic, experts say.

Xiong Jun, executive deputy general manager of the China-UAE Industrial Capacity Cooperation Demonstration Zone, or ICCDZ, said work on the zone has continued throughout the pandemic and is running on schedule.

Since 2019, the zone－in the Khalifa Industrial Zone in Abu Dhabi－has attracted more than 3.2 billion yuan ($505 million) in investments.

"Over the past three years… the ICCDZ has signed land-leasing agreements with seven companies and factory-leasing agreements with five companies, representing over 30 percent of usable land within the zone," said Xiong.

The industrial zone has attracted attention as an important cooperation project between China and the United Arab Emirates under the China-proposed BRI. In December 2015, an agreement for the zone's development was signed at a meeting between Chinese President Xi Jinping and Abu Dhabi Crown Prince Sheikh Mohammed bin Zayed Al Nahyan. Construction began in May 2018.

At a promotional event for the industrial zone at the Expo 2020 Dubai convention in October, UAE Ambassador to China Ali Obaid Al Dhaheri said the economic and trade ties between the UAE and China have grown increasingly stronger since diplomatic relations were established, and he expects the two sides to build on the ICCDZ's success to set up more projects.

Zhang Shiyuan, chairman of Runtai New Material in Jiangsu province, said the company has overcome many challenges to ensure it can set up its first overseas factory in the zone, with construction expected to begin early this year.

Tax exemption

"The Middle East region accounts for nearly one-third of our total sales overseas," Zhang said. "Setting up a factory in the Middle East not only helps save costs in raw material procurement and transport but also allows us to enjoy various tax exemption policies in the ICCDZ."

But COVID-19 has introduced complexities and increased costs.

Xiong said: "The financial and time costs of traveling between China and UAE have increased drastically. As a result, the number of business groups visiting our zone has taken a nose-dive."

He notes that, amid the disruptions caused by the pandemic, many Chinese companies have focused on domestic business and some have even suspended overseas investment.

Xiong said that as a means of adapting to the changing environment, the zone will focus on cooperation in petroleum equipment, biopharmaceuticals and smart agriculture－industries crucial to the UAE's industrial development.

In March, the UAE launched a strategy called Operation 300bn under which efforts will be made to boost the industrial sector's contribution to the economy from the current 133 billion UAE dirhams ($36.21 billion) to 300 billion dirhams over the next decade. In 2019, the country launched the UAE Policy for Advanced Industries to promote the high-tech sectors identified with the fourth industrial revolution.

Xiong said that UAE's cooperation with China in efforts against the pandemic have laid a solid foundation for the ICCDZ to attract investment in healthcare projects.

Chai Shaojin, assistant professor in the department of international relations at the University of Sharjah, said the industrial zone is "a substantive project" and one that represents "the right choice" by stakeholders from both sides.

Aside from enabling the export of China's industrial capacity and experience to the Middle East, the project will also help resource-rich countries, including the UAE, to move rapidly into advanced industries, said Chai.

Chai highlights the strategies of the UAE and other Gulf Cooperation Council states to diversify their economies. The academic said these countries are hungry for technology transfers and industrial upgrades from China.

"Chinese companies should seek this opportunity to jointly advance the Middle East's goal by allowing them to become part of the progress, not just as producers, manufacturers or traders, but partners and developers," said Chai.

Jan Yumul in Hong Kong contributed to this story.