Egypt, China edge closer
CAIRO - Multiple agreements signed by Egypt and China will significantly push the Egyptian economy forward, link the country’s development efforts with those of China and attract additional Chinese investment to Egypt, economists and the Egyptian government said.
Chinese President Xi Jinping, making his first state visit to Egypt on January 20th, and his delegation signed agreements expanding cooperation with Egypt in various sectors, including infrastructure, electricity, trade, space, industry and, most importantly, the Suez Canal region.
“Xi pledged to encourage qualified Chinese companies to invest in Egypt,” economist Fakhry al-Fiqqi said. “This is actually very important to our country, which is badly in need of these investments.”
China invests $500 million in Egypt at present, according to the Egyptian government, compared to approximately $25 billion Beijing invests in the African continent.
Egypt, trying to gain a more important spot on China’s investment map, showed Chinese investors a host of planned major projects, including the Suez Canal region, which is foreseen as a mega-international industrial and service investment hub.
A Chinese company was selected to implement most of the infrastructure of Egypt’s new administrative capital, a sprawling mega-city almost ten times the size of Paris. The new capital will include commercial and financial centres, residential areas, shopping malls, recreational parks and a governmental district.
Beside investments, however, Egypt hopes rebalance its lopsided trade with China. Beijing does $251.1 billion in trade with Arab partners each year with about $12 billion involving Egypt. Of that, only $1 billion represents Egyptian goods sent to China.
Egypt’s markets have been inundated with large amounts of cheap Chinese products, ranging from sewing needles and plastic dolls, to cars and tractors. This wipes out Egyptian industry and costs tens of thousands Egyptian jobs.
To redress the imbalance, economics Professor Mohamed Diab says Egypt needs to learn from the Asian economic giant, especially when it comes to mass production and the ability to have a presence in world markets.
“This is important if our country will turn into an exporter from a mere recipient of world goods,” Diab said. “To do this, we should focus on industrial investments when it comes to countries like China.”
Egypt has a lot to interest Chinese investors, experts said. Cairo has embarked on a nuclear power programme in which China could play a role. Egypt also started building enormous solar power stations in the western desert. Egypt’s textile and steel production sectors are, economists said, fertile fields for Chinese investments.
Egyptian President Abdel Fattah al-Sisi has visited China twice. In 2014, he signed an agreement with Xi to raise Egypt’s relations with China to the level of strategic partnership.
In August 2014, Egypt opened a parallel channel to the Suez Canal to allow two-way transits for the first time. Sisi says the canal will be an important landmark on the Belt and Road Initiative, a plan unveiled in 2013 by China to — as officially stated — connect Asia, Africa and Europe. Xi and Sisi signed a document that includes a plan for further cooperation in the next five years. China also pledged to offer training to 2,000 Egyptians in different fields in the same period.
Above all, China deposited $1.7 billion in Egypt’s Central Bank to boost the country’s foreign currency reserves, which had been remarkably affected by its political and security turmoil.
China appears to be starting to play a more active international role, specifically on the Arab stage, one marked with conflicts and wars, political observers said.
In Cairo, the second Arab capital he visited after Riyadh, Xi went to the Arab League headquarters, addressed member state representatives and stipulated his country’s vision for solving the problems of the region.
He said the region’s conflicts should be resolved through dialogue, development and the creation of hope.
Political observers in Egypt said China seeks to pursue an active foreign policy, one that makes it more engaged in conflict regions.
“This is a very important country that speaks, almost for the first time, about its desire to participate in resolving world conflicts, especially in the Arab region,” Tarek Fahmi, a political science professor at Cairo University, said. “This is of huge importance and can significantly contribute to resolving these conflicts after years of fighting.”