United Arab Emirates and China to cooperate on fintech

UAE's financial free zone and China's Qianhai district have become friends

China's Qianhai district and the UAE's financial free zone have made a fintech partnership.

There’s an old joke about the United Arab Emirates that says every time they drill for water they find oil.

The joke contains more than a grain of truth. The second largest Gulf economy, the UAE depends on oil for 40 percent of its GDP. But the UAE is working hard to escape the chains of oil and diversify its economy.

As part of these efforts, the UAE is turning to fintech. And China too.

This week, one of the largest “financial free zones” in the UAE has inked a deal with a Chinese counterpart, aimed at boosting fintech development in each country. As part of the deal, Abu Dhabi's financial regulator will cooperate with China and pair its free zone with the Qianhai New District in Shenzhen.

“Financial free zones” in the UAE are similar to the capitulations of the Ottoman Empire: tax-free areas where foreign companies can operate under their own import and export laws.

Qianhai is a new commercial area in Shenzhen, near Hong Kong, where foreign professionals can work without paying tax and foreign companies get preferential tax treatment.

As part of the agreement, China and Abu Dhabi will support each other’s fintechs and give guidance on how to expand into each other’s markets.

“As an international financial centre, we aim to further bolster financial services activities, facilitate investment flows and encourage business innovation,” said Richard Teng, head of Abu Dhabi’s financial services regulator, commenting on the deal.

The partnership with China is the second international partnership made by the UAE, the other being with Singapore, with whom a deal was reached in March this year.