Rachid seeks more trade with China

Ahmed A. Namatalla
5 Min Read

Trade with China lags far behind EU and US

CAIRO: An Egyptian business delegation, headed by Minister of Trade and Industry Rachid Mohamed Rachid, began a week-long visit to China yesterday seeking to attract more Chinese investment to the country and increase bilateral trade. In 2005, total trade reached just over $1 billion (LE 5.75 billion) between the two countries and Egyptian exports accounted for just $109 million of China s $500 billion (LE 2.9 trillion) in imports.

We want to make sure Egyptian manufacturers win a larger share of that pie, Rachid said in a statement, adding he will work to reach $5 billion in bilateral trade in the next 10 years.

Egypt-China trade figures pale in comparison to Egypt s trade with other leading global economies such as the European Union and the United States where bilateral trade reached more than $17 billion and $5 billion in 2005 respectively.

Among Rachid s proposals to draw Chinese investments to Egypt is the establishment of a $1 billion industrial park for auto manufacturers and exhibition centers to display and market Chinese goods. Another proposal will aim to move both countries closer to free trade by giving China cheaper access to the Egyptian market in exchange for preferential access for Egyptian sodium and rice to the Chinese market.

Samir Radwan, Economic Research Forum executive director, says Rachid s visit indicates the ministry is planning for the future and recognizes the growing Chinese need for raw materials such as steel, cement and cotton. Still, he says it s hard to predict a dramatic increase in bilateral trade between the two countries in the near future.

How can you have strong trade with china when china is the biggest competitor to Egypt? says Radwan. China is very competitive even when it comes to your local market. It is almost Ramadan and the Minister of Trade and Industry himself has gone into the market and seen the Chinese fawanees (Ramadan lanterns) selling at a very low prices.

Last month, Chinese auto maker Cherry Automobile Co. announced its plans to establish a vehicle assembly plant in Egypt and begin production in 2007. Talks are also now underway between a group of Chinese and Egyptian investors and the Egyptian government to establish a $4.5 billion aluminium manufacturing plant in Ismailia.

In making the case to Chinese investors, Rachid emphasizes Egypt s location and trade relations as assets, with hardly a mention of the competition between the two countries industrial sectors.

Egypt, China’s most longstanding partner in the region, is in a prime position to support China as it engages with the region, and to benefit from this growing rapprochement, says Rachid. Geographically, Egypt is located at the crossroads of Europe, Africa and the Middle East, and enjoys preferential trade agreements with each of these regions. Add to that Egypt’s plentiful supply of skilled labour, low cost energy inputs, large consumer market and investment friendly climate, and you begin to see the ‘value proposition’ we can offer China as trading partner and a manufacturing hub.

Part of the future-planning strategy, Radwan says, should also include learning from the Chinese model for producing rapid economic growth implemented since the early 1970 s.

If you want to produce and compete, you have to produce on a massive scale and there must be complete coordination and between the feeding and manufacturing industries, he says.

At the end of Q1 2006, Egyptian exported $15.6 million in goods to China relative to $372 million in imports from what is widely regarded as the fourth-largest economy globally.

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