China and the UAE: Together for a Shared Digital Future

May 30, 2022

 

The United Arab Emirates (UAE) is one of China’s most important economic partners in the region. It is a gateway for Chinese exports and China’s major partner country in the Belt and Road Initiative. The UAE is also an important destination for diversified investment and construction and home to thousands of Chinese businesses. As developing economies, China and the UAE share considerable economic complementarity, cooperation, and potential in areas including technological innovation and logistics and infrastructure. Against all prevailing challenges, China is entering a digital era. How is this relevant to the UAE and the rest of the world? How is the international community understanding all the changes that have taken place in the past few years?

 

TIO: What is the current state of play in China’s digital economy, its components, and the major forces that have brought us to where we are today?

 

Amb.: China is among the most advanced countries in the world in the development of the digital economy, and I think that China has already made great headway in digitalizing its economy to drive dynamic growth. In 2012, China made its digital economy a national strategy and digital economic activities have grown rapidly in past years. 

 

We note that China has the objective of expanding its digital information infrastructure, developing an integrated national system of big data centers step by step, and applying 5G technology on a larger scale as charted in its 14^th Five-Year Plan.

 

(Source: coinquora.com)

 

The UAE has also launched a Digital Economy Strategy. Detailed roadmaps and incentives to promote the sector have been released, with the goal to increase the contribution of this sector to the GDP from 9.7 percent to 20 percent over the next 10 years.  

 

Like China, the UAE also believes innovation and technology are at the core of social development. Already, the UAE is among the top 25 percent of countries according to the most important global digital indicators. While the contribution of the digital economy to the overall GDP is 9.7 percent, for the “non-oil GDP,” it is running at 11.7 percent.¹

 

The UAE has also established a Council for Digital Economy in order to chart future directions and support, and to ensure the implementation of the Digital Economy Strategy initiatives proliferates across all economic and business sectors.

 

TIO: What do you think are the key trends driving digitalization in China? Do they differ from what is driving the U.S. and the world? Why is this important?

 

Amb.: Recently, I saw an article by President Xi Jinping urging continuous efforts to build a stronger digital economy for China, stressing that developing digital economy is becoming a key force in reorganizing global factor resources, reshaping global economic structures, and changing global competitive landscapes. 

 

The UAE shares this view. We are ambitious to become a leader with the adoption of digitalization across our region, in driving transformation of both government and the private sectors. 

 

Our Digital Economy Strategy is the vehicle for enhancing this position as a hub for digital transformation in the region and globally. In recent years, the UAE’s banking and financial services sectors have undergone rapid change, encompassing digitalization of existing services and the launch of a number of digital only services.

 

China’s rapid digital development was due to robust construction of infrastructure and large-scale deployment of 5G, much faster than most other countries. In 2019, the UAE became the first Arab country to deploy 5G networks. This came about due to a very successful partnership with pioneering company Huawei. Our target is to reach 100 percent 5G coverage by 2025.

 

TIO: China is ramping up efforts to roll out the digital yuan to the broader population. What do you see are the challenges ahead? Why now, and how will this impact the Chinese and other economies?

 

Amb.: It is my view that the challenges for the digital yuan can be categorized as technical issues and regulatory issues, such as data abuse, excessive data mining, and disorderly data processing. China has already promulgated laws to deal with data security and protection of personal information last year. 

 

With regard to data management, the UAE approved a federal decree law regarding the protection of personal information and data last November.² Our Personal Data Protection Law constitutes an integrated framework seeking to ensure the confidentiality of information and protect the privacy of individuals in the UAE. It provides a proper governance for data management and protection and defines the rights and duties of all parties concerned.

 

The UAE and China are already cooperating in promoting digital payments and currency. Last November, the Central Bank of the UAE issued a communique on a joint project, “mBridge,”³ which brings together the Chinese mainland with the Hong Kong Special Administrative Region, Thailand and the UAE to jointly build a platform for international payments. The project aims to create more efficient and innovative digital currency infrastructure to reduce obstacles to cross-border payments and to lower costs. The advantages are to increase transparency, to be more efficient, and to lessen operational complexities. 

 

Lastly, I believe digital payments bring environmental benefits and promote sustainability. Digital currencies will save the costs of coinage and notes and reduce the risk of virus transmissions happening in currency transaction amid the outbreak of pandemic. 

 

TIO: Recent moves by the central government to regulate the activities of some of the largest Internet players in China have cast a cloud of uncertainty over the digital ecosystem. In your opinion, what’s the logic behind this and where is China’s digital ecosystem heading towards? Is the situation roughly the same for other countries? If so, is this about governments or technology?

 

Amb.: China has over one billion mobile Internet users, the largest online shopper population, and the highest use of mobile payments in the world. According to China Statistical Yearbook (CSY) 2020, 25% of overall national retail took place online in 2019, amounting to $1.8 trillion, over 90% of which was via mobile payments.⁴ Therefore, China is a global leader in e-commerce. Also, these trends have given rise to Internet giants and created a digital ecosystem in China. However, such a large number of users poses new challenges, such as cyber violence, misinformation, and personal data disclosure. 

 

Cyberspace should not be a place for illegal and irrational behaviors though cybersecurity has already become a global issue that requires countries across the world to work together to safeguard security and online order. For creating a safe and strong cyber infrastructure in the UAE that enables citizens to fulfill their aspirations and empowers businesses to thrive, the UAE launched National Cybersecurity Strategy in 2019. This March, Dubai hosted G-I-S-E-C Global 2022, the region’s largest and most influential cybersecurity event, gathering government leaders, the world’s top cybersecurity companies and international experts to increase international collaboration and information-sharing to strengthen the region’s cybersecurity posture.

 

TIO: How is digitalization in China relevant to the rest of the world and vice versa? 

 

Amb.: The digitalization in China will empower China’s manufacturing industries, and the fusion between the flourishing e-commerce and the robust manufacturing powerhouse has created fertile soil for the rapid growth of the digital economy in China. Now, China is not only one of the largest global digital economies, but also the world’s manufacturing powerhouse. 

 

As Comprehensive Strategic Partners, the UAE and China have a high degree of innovation complementarity, especially in the energy, finance, health and life sciences, retail, logistics, transport and other high-tech sectors. The UAE was among the first countries to join the Belt and Road Initiative and now it serves as a key logistic hub for China in the Middle East region, leveraging this platform as a means of increasing bilateral trade and investment, and as a means of promoting regional prosperity. The Port of Jebel Ali, Khalifa Port Container Terminal Phase II, and the China-UAE Industrial Capacity Cooperation Demonstration Zone are major projects whereby China and the UAE are achieving unprecedented connectivity.

 

I believe the scope of this partnership will continue to expand and diversify, with new areas of cooperation such as digital economy. The UAE’s Digital Economy Strategy defines e-commerce as a key area for the UAE’s digital economy. Last August, Dubai CommerCity, the first dedicated e-commerce free zone in the Middle East, Africa and South Asia (MEASA) region began commercial operations. 

 

The UAE seeks to transform our country with ambitions to become the innovation powerhouse for the Middle East and North Africa. As businesses across the world are preparing for Metaverse, the next generation of Internet that combines virtual reality, virtual money and virtual transactions, the UAE, with a clear digital economy strategy, is set to emerging as a leader in Metaverse finance (MetaFi), a combination of decentralized finance (DeFi), centralized finance (CeFi), and traditional finance (TradFi), with new products specifically designed to meet the unique needs of the new economic ecosystem.⁵

 

This interview was conducted by Kang Yingyue, International Communications Officer of Taihe Institute.

 

 

1. “Chaired by Mohammed Bin Rashid, UAE Cabinet Meeting Approves Establishment of UAE Council for Digital Economy,” WAM, https://wam.ae/en/details/1395303038462.

2. “Data Protection Laws,” Data Protection Laws - The Official Portal of the UAE Government, https://u.ae/en/about-the-uae/digital-uae/data/data-protection-laws.

3. “CBUAE Issues Communiqué on Joint ‘MBridge’ Project with Partners from BIS,” WAM, February 14, 2022, http://www.wam.ae/en/details/1395302990631.

4. “一图看懂2019年全国网络零售市场发展报告,” 电子商务公共服务网, https://dzswgf.mofcom.gov.cn/news/5/2020/4/1586913870177.html.

5. “Local Press: UAE Strategy Will Make It a Digital Economy Hub,” WAM, April 14, 2022, http://www.wam.ae/en/details/1395303039215.