Other BriefingsChinese Investment in the Khalifa Economic Zone Abu Dhabi (KEZAD)
Chinese investment in the Khalifa Economic Zone Abu Dhabi (KEZAD) has been significant under the Belt and Road Initiative (BRI). Promoted industries in KEZAD include equipment manufacturing, fine chemical engineering, renewables, and metal processing, and support Abu Dhabi’s economic diversification on the one hand, while facilitating the international growth of Chinese companies on the other.
Chinese investment in the Khalifa Economic Zone Abu Dhabi (KEZAD) is emerging as a cornerstone of economic collaboration under the Belt and Road Initiative (BRI). With nearly 40 Chinese firms planning to establish manufacturing plants in the China-UAE Industrial Capacity Cooperation Demonstration Zone (ICCDZ) within KEZAD, a total investment of US$10 billion is set to transform the region into a hub of innovation and industrial advancement. This significant development reflects the evolving dynamics of China-UAE relations, particularly in manufacturing, technology, and green industries.
ICCDZ: A platform for bilateral growth
The ICCDZ, located in Abu Dhabi’s KEZAD and adjacent to the state-of-the-art Khalifa Port, covers a total planned area of 12.2 square kilometers. It serves as a critical node in advancing the BRI, connecting Chinese industrial capacity with Abu Dhabi’s economic diversification goals. The zone’s infrastructure is meticulously designed, with a start-up area spanning 2.2 square kilometers in KEZAD’s Area A and expansion into Area B covering 10 square kilometers.
Rashed Abdulkarim Al Blooshi, undersecretary of the Abu Dhabi Department of Economic Development, has emphasized Abu Dhabi’s strategic importance as a global trade and investment hub. He highlighted the region’s robust initiatives, including the Abu Dhabi Industrial Strategy, aimed at fostering collaboration with top-tier Chinese enterprises.
Economic advantages
The ICCDZ’s strategic location near Khalifa Port facilitates global trade access, making it a vital hub for Chinese enterprises targeting international markets. This aligns with China’s push to establish localized manufacturing abroad amid domestic economic slowdowns and increasing trade barriers. For the Gulf Cooperation Council (GCC) countries, this collaboration opens avenues to integrate global supply chains while diversifying their economies.
Since its inception, the zone has attracted over 30 projects, with the first wave of companies already operational. The synergy between Chinese and UAE stakeholders strengthens the bilateral development strategies and accelerates the high-quality construction of the BRI.
Industrial diversity and infrastructure
The ICCDZ welcomes industries such as equipment manufacturing, fine chemical engineering, and metal processing, promoting the international growth of Chinese enterprises while accelerating Abu Dhabi’s economic diversification. Comprehensive infrastructure—from an operational administrative and service center to road networks and customized workshops—ensures seamless operations for resident enterprises.
Showcasing industrial excellence
The 2024 Chinese Industrial Products Exhibition, held in November at the ICCDZ’s JOCIC Park, provided a platform for nearly 90 leading companies from China and the UAE to showcase their prowess. Themed “Showcasing China’s Iconic Industrial Brands,” the event featured six zones focusing on advanced manufacturing, technology, environmental protection, and more. Participants included industrial giants, such as China National Nuclear Corporation, China Telecom, and Emirates NBD, highlighting the strategic importance of the partnership.
Zhu Lian, economic and commercial counselor at the Chinese embassy in the UAE, remarked on the deepening collaboration between the two nations, expressing optimism about exploring opportunities in smart manufacturing, green industries, and digital transformation. The exhibition symbolized the resilience and potential of China-UAE ties.
Eco-friendly and sustainable development
The zone adheres to strict environmental regulations, fostering a green and sustainable industrial environment. Admitted enterprises must meet explicit environmental requirements, reinforcing the zone’s commitment to eco-friendly development.
Preferential policies and cost advantages
KEZAD offers competitive land lease rates, zero taxes on value-added, income, and consumption, and reduced production costs. These benefits, coupled with efficient services modeled on Jiangsu’s “One Stop Shop” management experience, provide a robust framework for business operations.
Chinese investments boost Abu Dhabi’s economy
Chinese investments are creating jobs, developing infrastructure, and strengthening Abu Dhabi’s status as a global hub, according to Hareb Al Mheiri, executive director of the investor growth sector at the Abu Dhabi Investment Office (ADIO). These investments span sectors such as ports, industry, energy, and property, contributing to the emirate’s diversification goals.
“One prominent trend is the increasing involvement of Chinese firms in port development and industrial zones, such as the China-UAE Industrial Capacity Cooperation Demonstration Zone at Khalifa Economic Zones Abu Dhabi Group, which is enhancing the emirate’s industrial capabilities,” Al Mheiri stated. The property market, too, has benefited from Chinese investment, with projects in luxury residential and hospitality sectors, driven by a growing influx of Chinese tourists.
Abu Dhabi, which holds 90 percent of the UAE’s oil reserves, is leveraging partnerships with Chinese firms to diversify its economy and bolster its status as a financial center and free zone. Bilateral trade reached US$95 billion in 2023, with US$50.108 billion recorded in the first half of 2024, reflecting the robust economic ties between the nations.
Also read: Why set up your UAE manufacturing business in KEZAD zones
Strategic Partnership Between China and the UAE
China and the UAE have fostered a robust relationship, elevated to a comprehensive strategic partnership since 2018. This relationship is marked by regular high-level diplomatic engagements, mutual prioritization of bilateral cooperation, and alignment on global governance and stability such as by collaborating through platforms like BRICS and the Shanghai Cooperation Organization. The UAE supports China’s initiatives such as the BRI, Global Development Initiative, and Global Civilization Initiative.
Economic collaboration
- Trade and investment: The UAE is China’s largest export market in the Middle East and the second-largest trading partner.
- BRI: Key projects like the China-UAE Industrial Capacity Cooperation Demonstration Zone and Khalifa Port Container Terminal Two highlight mutual benefits.
Energy cooperation
China is a critical partner in the UAE’s renewable energy transition, contributing to projects in solar, wind, nuclear, and hydrogen energy. Notable projects include:
- A 700MW concentrated solar power project by China State Construction Engineering Corporation.
- A 950MW hybrid photovoltaic and concentrated solar power project by Shanghai Electric.
- The Al Dhafra PV2 Solar Power Plant by China Machinery Engineering Corporation.
- CATL and Masdar have partnered on a US$6 billion giga-scale project in Abu Dhabi, combining 5.2 GW of solar capacity with 19 GWh of energy storage using CATL’s TENER technology, marking the world’s largest solar and battery energy storage system (BESS) capable of 24/7 1 GW baseload power delivery.
Financial cooperation
The two nations have deepened financial ties with bilateral currency swap agreements and renminbi clearing arrangements to facilitate trade and ensure financial stability. A five-year currency swap agreement (35 billion yuan) was extended in November 2023.
Cultural exchange and education
- The UAE has actively incorporated Chinese language education, with courses introduced in 171 public schools under the “Hundred School Project.”
- Growing academic and cultural exchanges have strengthened mutual understanding, with initiatives fostering Emirati interest in studying in China.
Innovation and economic modernization
- The UAE’s Centennial 2071 plan and Digital Economy Strategy aim to reduce oil dependency, expand renewable energy, and grow the digital economy to 20 percent of non-oil GDP.
- Shared modernization goals provide opportunities for collaboration in innovation-driven industries and economic diversification.
Conclusion
Chinese investment in KEZAD through the ICCDZ underlines the strategic partnership between China and the UAE. By fostering industrial innovation, economic diversification, and sustainable development, this collaboration positions Abu Dhabi as a pivotal player in global trade and investment. As the two nations deepen their ties, the ICCDZ is set to become a beacon of economic progress and a model for international cooperation.
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