Egypt-China economic relations anticipate a boost

Doaa Farid
6 Min Read
Photo showing Egypt and Chinese Presidents signing cooperation agreements between the two countries, in December 2014 (Photo Courtesy of Presidency)

A number of agreements that will align the economic interests and development goals of China and Egypt are expected to be signed when Chinese President Xi Jinping visits Cairo in January.

The project will be comprehensive, focusing on the areas of electricity, transportation, construction, agriculture, industry, and education.

According to a statement from the cabinet of ministers, the projects in the transportation sector include constructing the Al-Salam-10 passenger railway line, the Belbis-Al-Robeky commercial freighting railway line, and developing a platform at Alexandria port. These projects are estimated to cost $1.5bn.

In the electricity sector, the government is preparing three projects: Gabal Ataka station which will increase the storage capacity of electricity for $2.3b; two coal-fired power stations in Al-Hamrawein where Chinese companies will construct seven units for approximately $3.6bn; and a project to finance developing Egypt’s national power grid.

The Egyptian government prepared a proposal to establish a centre for agricultural machinery to serve the needs of Egypt’s 1.5m acre project.

Egypt is also expected to sign an agreement that would allow China to participate in reclaiming 100,000-250,000 acres from the 1.5m acres.

The two parties are also expected to discuss Chinese investment in the construction of Egypt’s new capital city, Cairo Administrative Capital, a endeavour that the government announced during its Economic Summit in March 2015. Chinese investment would help to finance the construction of 13 government buildings at the cost of $2.5bn, 15,000 residential units, an amusement park, and a sports city in two and a half years.

Cairo will seek Chinese investment in the development of sanitation networks for 260 villages in the governorates of Menufiya and Gharbeya.

Both countries are also expected to sign a memorandum of understanding (MoU) to exchange 500 educational scholarships for Master’s and PhD degrees in the next five years.

China will commission a study to examine the construction of a training centre in the Suez Canal Economic Zone.

Egypt as a founding member of China-backed bank AIIB

Minister of International Cooperation Sahar Nasr is representing Egypt in the meeting of the Asian Infrastructure Investment Bank (AIIB) that began on 16 January and will last three days.

During her visit, Nasr will endorse the financial and operational policies of the bank before operation.

In 2015, Egypt’s bid to be a founding member of AIIB, the multilateral development bank, was approved. With this agreement, Egypt is expected to gain noticeable benefits, particularly since its main needs are in infrastructure development, which will require billions of dollars in investments.

During her visit to Beijing, Nasr is expected to meet the Chinese Minister of Finance and deputy Minister of Trade to discuss the Egyptian projects that will be proposed to the Chinese President during his trip to Cairo.

Economic relations between both countries   

Trade between Egypt and China amounts to $12bn per year, $11bn of which are imports from China.

There are approximately 1,220 Chinese companies operating in Egypt in the sectors of industry, construction, and services, with $500m in investments, according to the Egyptian Businessmen Association (EBA).

Egypt has officially joined the Silk Road Economic Belt trade union, which encompasses 92 Chinese and foreign associations. In cooperation with the Shanghai Chamber of Commerce, EBA was chosen to represent Egypt in the Silk Road trade union.

China plans to increase its trade volume by $2.5tn through the Silk Road trade union in the next ten years.

In December 2014 Egyptian President Abdel Fattah Al-Sisi signed a comprehensive strategic partnership agreement with his Chinese counterpart. This included three cooperation agreements in the fields of economy and technical cooperation.

The two parties signed a memorandum of understanding (MoU) to establish a joint laboratory for renewable energy, between Egypt’s Ministry of Scientific Research and China’s Ministry of Science and Technology. The third agreement was a cooperation agreement between China National Space Administration (CNSA) and the National Authority for Remote Sensing and Space Sciences (NARSS).

In December 2013, then Egyptian foreign minister Nabil Fahmy visited Beijing where Chinese Vice President Li Yuanchao announced his country would give Egypt a $24.7m non-refundable grant.

In August 2012, former President Mohamed Morsi and his Chinese counterpart signed seven cooperation agreements for major projects that targeted boosting Chinese investment, including industrial and technological development projects.

Morsi was accompanied by seven ministers and many Egyptian businessmen and they signed a $200m loan to be used in investment projects.

China additionally granted Egypt a non-refundable grant worth $70.31m to be used for mutual infrastructure, construction of power plants, and environmental projects. China also donated 300 police cars to Egypt.

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