China is partnering with the United Arab Emirates to make millions of doses of its state-backed Sinopharm vaccine, in a deal that takes manufacturing of the shot overseas for the first time and deepens Beijing’s influence in the Middle East.

A newly-created joint venture between Sinopharm CNBG and Abu Dhabi-based G42 aims to produce up to 200 million doses annually at a new plant that will become operational this year, the companies said in a statement. Production on a smaller scale has already started at an existing Gulf Pharmaceutical Industries PSC plant with a capacity of 2 million doses per month.

With the accord, the UAE becomes the first nation in the U.S-allied Gulf to set up a coronavirus vaccine production facility, boosting its efforts to become a supply hub to the Middle East and beyond. G42, which describes itself as an artificial intelligence and cloud computing firm, had helped roll out trials of the Sinopharm vaccine in the country last year.

The UAE has since overseen one of the world’s fastest inoculation drives, with most people having received the Chinese vaccine. The locally-made vaccine will be called Hayat-Vax -- Hayat being the Arabic word for life -- and is the same as the Sinopharm shot that was approved in the UAE last year.

“Thanks to the close collaboration with the UAE, Sinopharm’s vaccine has been now administered to millions of people in the country, the region, and the world in a fundamental step towards defeating this virus,” Sinopharm’s Chairman Liu Jingzhen said in the statement.

The deal will bolster UAE’s ties with Beijing, which have strengthened since 2018 when President Xi Jinping visited Abu Dhabi and agreed to upgrade relations to China’s highest level. Foreign Minister Wang Yi, who was in the UAE for an official visit, said on Saturday the countries will expedite bilateral production of vaccines.

“It is a really clear signal that the UAE is China’s most trusted partner in the Middle East and it creates linkages with other countries in the region” said Jonathan Fulton, assistant professor at Abu Dhabi’s Zayed University and a specialist in China-Gulf relations.

Beijing has been building stronger Middle East links as part of its Belt and Road Initiative. On Saturday, it signed a 25-year deal with Iran outlining economic, political and trade relations. That poses an immediate challenge to U.S. President Joe Biden’s administration as it seeks leverage with Tehran over resurrecting the 2015 nuclear deal.

Fulton described the Iran deal as aspirational. “The UAE relationship is not aspirational, they are deep into the implementation of it,” he said. “This shows the depth and the breadth of the involvement.”

The UAE is keen to expand its influence in China and other fast-growing markets in Asia. China was the UAE’s second-largest trading partner in 2019 after India, with $55.9 billion in total trade -- more than double what it had with the U.S. that year, according to data compiled by Bloomberg.

Supply Hub

While the UAE has approved vaccines from Pfizer Inc. and AstraZeneca Plc as well as Russia’s Sputnik V, its inoculation program hinged on Sinopharm given early availability and the potential to produce the shots locally -- key to the UAE’s aspirations of becoming a supply center.

“Our JV is also actively looking to bring our capabilities to new markets around the world,” G42 CEO Peng Xiao said in the statement.

The Sinopharm vaccine can be transported and stored at normal refrigerated temperatures, making it a candidate for the developing world. The company’s annual production capacity for Covid vaccines is set to reach 3 billion doses, the People’s Daily reported.

In November, Abu Dhabi launched the Hope Consortium, a logistics grouping with the capacity to distribute more than six billion vaccine doses. The consortium includes the emirate’s Department of Health, Etihad Cargo, Abu Dhabi Ports Group, Rafed and SkyCell.

In neighboring Dubai, companies including Emirates airline, ports operator DP World and Dubai Airports have also formed an alliance to move two billion doses of vaccines around the world this year, focusing on emerging markets.