Guotai Haitong Securities released a research report stating that the UAE, as the second-largest economy in the Gulf region, is accelerating its economic diversification transformation through a dual-engine approach leveraging oil and gas resource endowments alongside trade hub advantages. In terms of industrial structural changes, the country has gradually reduced its oil dependency, with comprehensive development across manufacturing, construction, real estate, and financial services sectors. With its 88% high immigrant population ratio, leading digital infrastructure, and open tax policies, the UAE has established itself as the Middle East's innovation hub, providing a strategic pivot for Chinese enterprises' overseas expansion. The energy sector serves as an important cornerstone of China-UAE relations, gradually expanding from traditional oil and gas purchases to Chinese capital's overseas ventures in clean energy, and extending from traditional infrastructure to cooperation in new economy and digital infrastructure sectors.

Guotai Haitong Securities' main viewpoints are as follows:

**UAE's Superior Geographic Location and Unified, Efficient National Operating Mechanism Ensure Political Stability**

The UAE is strategically located at the maritime transportation chokepoint where the Gulf enters the Indian Ocean, boasting superior geographical positioning and abundant oil and gas resources. As the gateway between East and West, it serves as a crucial global energy corridor and modern shipping and logistics hub, while also functioning as the transportation and trade center for the Middle East and North Africa region. The UAE comprises seven emirates, with Abu Dhabi serving as the capital and political center, while Dubai holds international influence. The UAE operates under a federal monarchy system, balancing unified governance with efficient decision-making in its national operating mechanisms and power structures.

**UAE's Economy: Oil Resource Endowments and Maritime Trade Hub Functions Jointly Contributing to Growth**

The UAE possesses abundant oil and natural gas resources, ranking sixth and seventh globally in reserves respectively, forming important pillars of national economic growth. From an economic structural perspective, the oil industry remains a significant sector for the UAE in recent years. As of Q4 2024, the oil industry accounts for 20% of the UAE's total GDP. Strong energy resource endowments have helped the UAE become the second-largest economy in the Gulf region and one of the countries with the highest per capita GDP levels globally. However, similar to other major Middle Eastern countries, the UAE government has been inclined toward promoting economic diversification strategies in recent years. Leveraging its geographical advantages, the UAE has fully utilized its function as an important hub for international maritime trade in the Middle East region, promoting inter-regional economic radiation.

**UAE Actively Pursues Economic Transformation with Positive Results, Significantly Increasing Non-Oil Economy Share**

In terms of industrial structural changes, the UAE has gradually reduced oil dependency, with comprehensive development across manufacturing, construction, real estate, and financial services sectors. From an economic growth contribution breakdown, the UAE's service sector's contribution to economic growth has significantly increased in recent years. Additionally, while external demand and net exports of goods and services previously had high economic stimulation effects, recent years have seen more positive drivers including domestic demand, private consumption expenditure, and fixed capital formation, reflecting the country's gradual transition from external demand and investment growth to domestic demand expansion, achieving a positive cycle.

Currently, the UAE has become an important commercial, financial, and logistics center in the Middle East Gulf region, with global competitiveness, innovation, and business environment indicators all ranking among the world's top performers. Re-export trade and financial services have developed rapidly, making the UAE a typical example of resource-endowed countries achieving economic diversification in recent years.

**UAE's Population and Consumption Country Comparison in the Middle East Region: UAE Has Better Population Structure and More Dynamic Human Capital, Attracting International Capital Net Inflows**

The UAE has the highest foreign immigrant proportion in the Middle East region at 88%. Additionally, characteristics such as highly educated workforce, higher labor participation rates, low aging rates, and inclusive business environments for female employment provide the foundation for promoting industrial transformation development and expanding domestic demand markets. Furthermore, as the "Middle East Innovation Hub," its diversified economic structure, open cultural and business atmosphere, and advantageous tax systems continue to attract international talent and capital net inflows.

Overall, while UAE consumption exhibits characteristics of "coexistence of high income and high inequality," driven by high levels of digital infrastructure, continuously improving urbanization, and economic transformation strategies, future expansion of the non-oil economy and growth of new economic momentum are expected to achieve a positive cycle that drives consumer market expansion.

**Recent Strengthening of UAE-China Economic and Trade Cooperation, Chinese Enterprise Overseas Expansion into New Economy Sectors**

The UAE is China's important energy supplier and largest export market in the Middle East. China-UAE trade cooperation has strengthened in recent years, but compared to the overall GCC's increased import dependence on China, UAE-China foreign trade cooperation still has room for improvement. In terms of industries, the UAE has increasingly favored importing Chinese machinery, automobiles, and household products in recent years. The energy sector serves as an important cornerstone of China-UAE relations, gradually expanding from traditional oil and gas purchases to Chinese capital's overseas ventures in clean energy, and extending from traditional infrastructure to cooperation in new economy and digital infrastructure sectors.

**Risk Warnings** High volatility in international oil prices triggering UAE national fiscal contraction; global economic growth weakness affecting decline in UAE goods and services demand; further intensification and spread of geopolitical conflicts between Israel and multiple countries in the Middle East region; unexpected deterioration of geopolitical relations between global powers and the UAE.