Mossack Fonseca on Dubai: Growing China Trade Complements Growth Strategy

Mossack Fonseca – Concluding the Centre’s participation at the 2016 G20 conferences held in China, the Dubai International Financial Centre (DIFC), the global financial services hub connecting businesses and financial institutions with emerging markets across the Middle East, Africa and South Asia (MEASA), reaffirmed its commitment to supporting China’s ‘One Belt, One Road’ (OBOR) initiative and establishing a robust and supportive financial platform for Chinese institutions, to wit:

Chinese banks in DIFC have doubled their balance sheet in the last 18 months

Representing 26% of total assets booked at DIFC, China’s top four state-owned banks have combined total assets of US$21.5 billion.

Dubai’s established framework for Islamic finance provides opportunities for Chinese firms.

DIFC has seen exponential growth in the presence of Chinese financial firms and state-owned banks in recent years. According to the Centre’s 2015 full year Operating Review results, Chinese banks in DIFC have doubled their balance sheet in the last 18 months. Representing 26% of the total assets booked in DIFC, China’s top four state-owned banks – Bank of China, Agricultural Bank of China, ICBC and China Construction Bank – have combined total assets of US$21.5 billion.

The four banks have additionally upgraded their licenses at DIFC to Category 1, expanding their presence from subsidiary to branch status.

Engaging with financial leaders, officials and experts, the DIFC delegation met with China’s prominent capital markets, securities companies and non-financial services firms to discuss mutual interests and setup plans.

Commenting on the growing importance of Chinese firms at the Centre, Arif Amiri, Chief Executive Officer of DIFC Authority, said: “On our first visit to China this year, we are committed to building long-lasting partnerships with the emerging Chinese market.

Contributing to a large portion of our business activity, we envisage an increasingly significant role for Chinese firms as we seek to become a leading global financial hub.”

Asian firms continue to be an engine for growth accounting for 11% of the financial services companies within DIFC and 80% of the Centre’s incremental business activity. Arif Amiri said: “As China continues to invest in emerging economies across the MEASA region, DIFC’s conducive and supportive framework acts as a gateway for companies looking to expand their business interests and investments in these markets. Linking Asia to Africa and Latin America, Dubai is emerging as a crucial hub along China’s New Silk Road.”

He added: “Dubai’s strategic location and its world class infrastructure becomes especially important as Chinese and African governments seek to double their two-way trade to US$400 billion by 2020. The emirate’s connectivity and solid legal and regulatory framework serve as important links in connecting Chinese companies with African markets and vice versa.”

Further supporting Chinese business interests, DIFC’s 2024 growth strategy aims to position Dubai as a global hub for Islamic finance. Well on its way, Dubai with its established Islamic finance framework offers global visibility, streamlined listings, prompt responses to issuer needs, and wide access to investors―enabling a healthy Islamic finance network for Chinese firms looking to build their Islamic finance portfolio. In addition, Dubai’s exchange has successfully launched the Murabaha financing platform, which provides retail and corporate users with an efficient, fast and flexible alternative to traditional solutions, and a Sharia-compliant repurchasing platform for short-term financing.