Gulf States Reduce Dollar Reliance

This shift away from the dollar is underpinned by concrete agreements. In November 2023, Saudi Arabia and China signed a three-year local currency swap agreement worth 50 billion yuan ($6.98 billion). This deal aims to facilitate trade and investment by allowing for direct exchange between the yuan and the Saudi riyal. The UAE has also been proactive in establishing non-dollar trade channels. In March 2023, China completed its first-ever purchase of liquefied natural gas (LNG) from the UAE using yuan. Additionally, the UAE has a currency swap agreement with India to enable direct trade in rupees and dirhams, bypassing the dollar to make commerce between the two nations more competitive. These moves are part of broader economic diversification strategies, such as Saudi Arabia's Vision 2030. A key goal of this vision is to increase the private sector's contribution to GDP from 40% to 65% and boost non-oil exports. By early 2026, non-oil activities had already grown to account for approximately 51% of Saudi GDP. The UAE's "We the UAE 2031" plan shares similar ambitions, aiming to double the country's GDP to AED 3 trillion and increase non-oil exports to AED 800 billion. A core part of the UAE's strategy includes signing Comprehensive Economic Partnership Agreements (CEPAs) with key partners like India, Israel, Indonesia, and Turkey to reduce tariffs and boost trade. Both nations have also embraced financial technology to enhance their economic sovereignty. They are experimenting with central bank digital currencies (CBDCs) through initiatives like Project Aber, a joint digital currency experiment. The UAE is also involved in the mBridge project, which explores multi-CBDC cross-border payments with central banks from China, Hong Kong, and Thailand. The impetus for this diversification is partly a response to the perceived "weaponization" of the US dollar through sanctions. Gulf states view the extensive financial measures against Russia as a precedent that could potentially be used against any nation reliant on the US-led financial system. Joining international forums like BRICS is another key element of this strategy for both Saudi Arabia and the UAE. Membership provides a platform to amplify their influence in the global economy, diversify partnerships beyond the West, and engage with major economies like China and India in a multilateral setting. This strategic shift is also reflected in trade patterns, with China now being the largest trading partner for many Gulf nations. In the first 11 months of 2025, China's total goods trade reached 41.21 trillion yuan, indicating sustained and resilient trade activity with its global partners.