The financial windfall from oil and gas exports may boost regional officials’ ambitious economic diversification plans but doesn’t make them foolproof.
As one of the first Gulf Arab states to establish diplomatic ties with Beijing, the United Arab Emirates has maintained an amicable relationship with the People’s Republic of China since 1984. Already a trading hub in the region, Dubai emerged as the regional base for Chinese state-owned enterprises after the first Gulf War. Since the launch of the “Going-Out” strategy in 1999 to promote Chinese investments abroad, some 4,000 Chinese companies have been established in the UAE fueling an economic surge in the region. Dragon Mart, the largest Chinese commodities market outside China, opened its doors in 2007. Housing more than 6,000 wholesale and retail shops and kiosks, Dragon Mart registered nearly $10 billion in business transactions in 2015 alone. Incentivized by the enormous success of Dragon Mart, investors replicated China trade centers in nearby cities and surrounding countries and extended China-UAE economic ties from commodity trade to real estate, health care, education, research, media, and entertainment.
Under the framework of the Belt and Road Initiative, the exchanges between China and the UAE have further diversified. In July 2018, the two partners upgraded the bilateral relationship to a comprehensive strategic partnership. By 2019, China had become the UAE’s largest non-oil trade partner and the fourth-largest source of tourists to Dubai. Despite the unprecedented challenges of the coronavirus pandemic, China still ranked as the UAE’s largest trading partner in 2021.
Dubai is doubtlessly the new entrepôt of China into the Middle East and Africa. With the barriers for foreign direct investment lowered and the entry requirements for Chinese passport holders relaxed in the last decade, the city has become a facilitating node where various flows from China converge – goods, capital, and people, both lawful and illicit. According to former employees of Chinese state-owned enterprises and Chinese diplomats, the number of Chinese residents in the UAE had increased from some 2,000 in the early 1990s to nearly 300,000 by 2018, among which 270,000 concentrated in Dubai. The majority are part of the fourth wave of Chinese migration into the region since 2000. Despite its relatively short history and small size compared to the South Asian and Arab expatriate communities, the Chinese presence in the UAE’s public space and exclusive social clubs is no longer negligible.
The Chinese expatriate community in Dubai, and the UAE more broadly, is comprised of four main groups: employees of Chinese state-owned enterprises (e.g., Sinopec) and large private companies (e.g., Huawei) and their dependents; self-employed businesspeople and their employees and dependents; Chinese-speaking staff in the service sector; and highly skilled professionals employed by multinational corporations and the UAE’s educational and research institutions. Dubai’s continuous effort to attract the global creative class has shaped the demographic composition of the Chinese expatriate community. The emirate’s state-of-the-art infrastructure, family-friendly social and cultural environment, and, most importantly, growing educational resources have encouraged Chinese expatriates to bring their families to the city. In recent years, the Chinese population has shifted from primarily comprised of singles or married couples without children to include more families with school-aged children. This improvement of the socioeconomic status of Chinese expatriates and the relaxed visa policies for Chinese passport holders reflect the strengthening of bilateral ties between China and the UAE.
The demographic changes and increasing occupational diversity among Chinese expatriates have sped up the institutionalization of the Chinese expatriate community. The key community institutions include province-, region-, and city-based hometown associations; pan-China trade associations; organizations for arts, sports, and hobbies; religious organizations; Chinese-language media; and, most recently, a government-funded Chinese national curriculum school – Chinese School Dubai. These organizations have played instrumental roles in facilitating transnational flows, supporting the adaptation of immigrants, and assisting the work of the Chinese government agency the United Front with its efforts to unite Chinese scholars, religious organizations, business associations, companies, and individuals in promoting China’s cultural heritage and political identity. More importantly, these organizations have helped to consolidate overlapping social networks and provide platforms for community outreach and charitable activities. During the coronavirus pandemic, various volunteer organizations have collaborated with Chinese diplomatic missions and UAE-based charitable organizations to provide medical and relief aid locally and regionally. Through community outreach activities, the Chinese expatriates in the UAE have helped to foster “people-to-people” exchanges, a critical driving force of many projects under the Belt and Road Initiative framework. In addition, Chinese School Dubai seeks to promote educational and cultural exchanges between China and the UAE and attract more Chinese expatriate families to relocate to Dubai. The robust growth in student enrollment at the school since its opening in September 2020 suggests that the Chinese expatriate community has remained resilient despite the challenges triggered by the pandemic.
The economic downturn since 2017 and the plummeting global economy during the pandemic have, nonetheless, brought complex challenges to the Chinese expatriate community in the UAE. Although Dubai remains one of the safest places in the world, there have been increasing reports of robbery, assault, kidnapping, and murder cases involving the Chinese, either as perpetrators or victims. Personal and property safety is especially concerning in Dubai International City and the Dragon Mart area where the Chinese population and Chinese-owned businesses are concentrated.
Further, Dubai’s status as a major transnational trading hub and the need to ensure its sustained economic growth in a volatile region have amplified the city’s vulnerability to illicit global flows. Dubious business activities and individuals have found safe havens in Dubai. Policy loopholes and a profit-driven free market economy have made Dubai prone to money laundering and cybercrimes.
The most delicate challenge is the unprecedented influx of transnational online gambling operations from Southeast Asia to Dubai during the coronavirus pandemic. This has largely been a result of China using its geopolitical influence to crack down on the illegal betting and gambling industry in Southeast Asia. Reporting from Radio Free Asia found that, under the guise of online gaming, e-commerce, or software development companies, these immensely profitable businesses have managed to register legally in Dubai often under prominent Emirati sponsors. Since mid-2020, these transnational cybercrime networks have brought over 100,000 Chinese recruits on tourist visas to Dubai from Cambodia, Myanmar, the Philippines, Vietnam, and mainland China to operate offshore gaming and gambling platforms. These nouveau riches have flooded the local market by making cash payments for luxurious commodities and prime real estate. They are also responsible for significant price hikes at grocery stores, hair salons, and restaurants and for apartment rentals. Operating with a high level of secrecy and using suspect recruitment methods, these businesses have come under the radar of the Chinese diplomatic missions in the UAE and Emirati authorities. The stringent safety measures to curb the spread of the coronavirus have further exacerbated the humanitarian crisis associated with these underground operations.
Ironically, the timely arrival of these Chinese online gambling operations not only injected a substantial cash flow into Dubai’s real estate market but also brought back to life many Chinese-owned small businesses that were left in tatters in the wake of the pandemic. Soon after Dubai denied reports that it had started issuing licenses for gambling, the Chinese vice consul-general in Dubai met with the head and other representatives of the Dubai Police, expressing the hope for the two sides to “strengthen cooperation in policing and law enforcement to protect the legitimate rights and interests of overseas Chinese, and jointly maintain Dubai’s public security and international reputation.” Under pressure from Chinese and Emirati authorities and because of the higher operational cost in Dubai, about one-third of the offshore gambling companies have either gone to eastern Europe or back to Southeast Asia. Yet, the remaining operations continue to pose a threat to the safety of the Chinese expatriate community at large.
Technological advancement has blurred the lines between the legitimate and illicit. The UAE’s policies on cryptocurrencies pose yet another challenge to the Chinese authority that has categorically banned any dealings associated with bitcoin and the like. Dubai and the UAE may be leading the future of a digital economy, but money-laundering allegations and cryptocurrencies could cause disturbances to the existing financial structure. China’s cryptocurrency entrepreneurs have made Dubai their new base. How the nouveau enterprises are going to shape the future of the Chinese expatriate community remains to be seen.
is a professor in the Department of International Studies at the American University of Sharjah in the United Arab Emirates.
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