The UAE’s foreign policy has evolved from regional engagement to a sophisticated multi-alignment strategy that seeks productive relationships with both Western powers and China simultaneously. This balancing act has delivered considerable economic benefits but carries accumulating risks as great power competition intensifies and the space for strategic ambiguity narrows.
The Economic Architecture
China has become one of the UAE’s largest non-oil trading partners. Bilateral trade volumes have grown substantially, driven by re-export flows through Dubai’s logistics infrastructure, direct Chinese investment in UAE real estate and infrastructure, and the UAE’s role as a gateway for Chinese firms accessing Middle Eastern and African markets. The Khalifa Industrial Zone Abu Dhabi hosts a designated China-UAE Industrial Capacity Cooperation zone, and Chinese firms have established meaningful operational presences across the Emirates.
Simultaneously, the UAE’s economic architecture remains deeply integrated with Western systems. The dirham’s peg to the US dollar anchors monetary policy to the Federal Reserve. The UAE’s financial system operates within the dollar-denominated global infrastructure, with correspondent banking relationships, SWIFT connectivity, and regulatory frameworks aligned with Western standards. Defense procurement remains overwhelmingly Western-oriented, with the United States and France serving as primary security partners.
This dual integration has been enormously profitable. The UAE has attracted Chinese capital and market access while maintaining the financial infrastructure and security relationships that underpin its stability. The question is whether this simultaneous integration is sustainable as US-China competition generates increasing pressure to choose sides.
The Technology Flashpoint
Technology has emerged as the primary arena where the UAE’s balancing act faces its most acute tensions. The 2020 debate over Huawei’s role in UAE 5G infrastructure illustrated the dynamic: the UAE valued Huawei’s technology and competitive pricing while the United States viewed Huawei’s network presence as a strategic intelligence risk incompatible with continued defense cooperation and F-35 sales.
The pattern has repeated in AI, cloud computing, semiconductor access, and data governance. China’s technology firms offer competitive products and are willing to accept regulatory frameworks that Western companies resist. US policy increasingly frames technology choices as binary, requiring partners to exclude Chinese suppliers from sensitive infrastructure.
The UAE has responded with characteristic pragmatism, segmenting its technology landscape. Critical national security infrastructure maintains Western orientation while commercial and consumer technology markets remain open to Chinese competition. This segmentation works as long as the boundaries between security and commercial technology remain clear. As dual-use applications expand, particularly in AI and data analytics, the segmentation becomes harder to maintain.
Defense and Security Dependencies
The UAE’s security architecture is fundamentally Western-oriented. US military facilities, intelligence sharing arrangements, defense procurement relationships, and joint training programs constitute a security partnership that has no Chinese equivalent. France maintains a permanent military base in Abu Dhabi, reinforcing the Western security orientation.
This dependency creates asymmetric pressure in the balancing act. The United States can credibly threaten to condition defense cooperation on technology and diplomatic choices in ways that China cannot reciprocate. The UAE’s security calculations therefore set hard limits on how far its China engagement can extend in sensitive domains.
However, the UAE has shown willingness to test these limits, pursuing defense technology relationships with China in areas like drone technology and satellite systems where US export restrictions have created supply gaps. Each such decision creates friction in Washington while deepening capability ties with Beijing.
The Diplomatic Dimension
The UAE’s diplomatic balancing extends beyond economics and technology. In multilateral forums, the UAE has avoided consistently aligning with either Western or Chinese positions on contested issues. Its voting patterns in the United Nations, its positions on sanctions regimes, and its engagement with Chinese-led institutions like the Asian Infrastructure Investment Bank reflect deliberate ambiguity.
This diplomatic flexibility has allowed the UAE to maintain constructive relationships with all major powers, positioning itself as a neutral venue for dialogue and a trusted intermediary. The Abraham Accords, the I2U2 grouping with India, Israel, and the United States, and the UAE’s engagement with BRICS all reflect a strategy of maximizing options rather than consolidating alignments.
Risk Assessment
The sustainability of multi-alignment depends on factors largely outside the UAE’s control. If US-China competition remains primarily economic and technological, the space for balancing persists. If competition escalates toward explicit bloc formation with demands for exclusive alignment, the UAE’s position becomes untenable.
The most dangerous scenario for the UAE is not being forced to choose but being forced to choose quickly, without time to adjust economic relationships and technology dependencies. A Taiwan crisis, a major cyber confrontation, or a financial decoupling event could compress decision timelines in ways that eliminate the carefully constructed ambiguity.
The UAE’s strategy of maintaining optionality while gradually deepening institutional relationships with both sides is rational given current conditions. But it requires continuous recalibration as the geopolitical landscape shifts. The analytical challenge is not evaluating where the UAE stands today but assessing whether the ground beneath its position is stable. Current indicators suggest it is stable but shifting, and the trajectory of great power competition will determine whether the UAE’s balancing act remains a masterclass in diplomatic pragmatism or becomes a vulnerability that satisfies neither side.