On his arrival in Beijing to take part in the Forum on China-Africa Cooperation (FOCAC) this week, President Abdel-Fattah Al-Sisi and the accompanying Egyptian business delegation signed agreements to increase Chinese investment in Egypt by some $18.3 billion.
The agreements include the construction of an electric train system, initiating phase two of the Central Business District in the New Administrative Capital, and the setting up of a pumping and storage project at Ataqa.
A power station using clean coal technology and generating six gigawatts of electricity will be built at Hamrawein, and the Egyptian Holding Company for Electricity will sign a $4.4 billion deal with the winning bidder that includes Hassan Allam for Construction and China’s Shanghai Electric Company and Dong Fang.
While in Beijing, Al-Sisi met with the heads of Chinese conglomerates operating in Egypt, promoting investment opportunities after highlighting a package of measures to attract investors and fund business activities.
Egypt has launched a number of mega-projects that could yield substantial profits and offer many investment opportunities, prime among them being the development of the Suez Canal Zone, he said.
Direct Chinese investment in Egypt received a 75 per cent boost during the first half of 2017, recording a $106 million increase on the same period in 2016, ranking China sixth among investor countries in Egypt. In 2016, China ranked 15th, according to the Middle East News Agency (MENA).
“The political rapprochement between Egypt and China should also reflect positively on the size of Egyptian exports,” said Mustafa Ibrahim, vice-chairman of the Egyptian-Chinese Council. “Egypt could increase its agricultural exports, such as oranges and grapes and handicrafts, to China.”
China-Egypt trade reached $11 billion in 2017 and recorded a 25.86 per cent increase worth $2.83 billion during the first quarter of 2018 over the same period last year.
China’s General Administration for Customs announced that Cairo-Beijing trade had grown by 24 per cent on an annual basis during the first seven months of this year to reach $7.5 billion, MENA reported.
Ibrahim said that “Egypt should increase its exports to China and limit its imports to production materials. When there were problems with foreign exchange in Egypt, we reduced our imports from China. Importing unimportant items, such as lanterns and toys, was also halted.”
In line with the increased Egyptian exports to China, Beijing’s exports to Cairo recorded a $6.5 billion increase in the past seven months, marking a 22.6 per cent increase on an annual basis. China received Egyptian exports worth $1 billion during the same period, achieving a 34.1 per cent increase.
In 2016 China was Egypt’s biggest trade partner, until the UAE took its place with a slight margin in 2017.
It was also important for Egypt to benefit from the educational grants announced by Chinese President Xi Jinping to African countries, Ibrahim said. “Egypt should try to receive a share of the $60 billion in investments China has said it will spend in Africa,” he added.
Amid rising tensions between the US and China, the latter is looking to the African continent for more investment opportunities.
Diaa Helmi, secretary-general of the Egyptian-Chinese Chamber of Commerce, said that “China aims to benefit from the trade agreements Egypt has signed with its African neighbours to enjoy the merits of products made in Egypt.”
He added that it was crucial “to encourage our Chinese partners to set up projects that can generate job opportunities and provide opportunities for the products to be passed on to the African countries Egypt has signed deals with.”
Egypt has made deals with African countries through the Common Market for Eastern and Southern Africa (COMESA) and the South African Development Community (SADC), for example.
Helmi said Egypt should capitalise on its exceptionally good relations with China to draw in more Chinese direct investment. “The investment deals announced during Al-Sisi’s visit to Beijing are just the beginning of more agreements to follow,” he added.
China is trying to revive the Silk Roads trade routes across Asia that connected China and the Arab world in the mediaeval and later periods. In 2013 Beijing launched its Belt and Road Initiative to revive the ancient Silk Roads.
“Egyptian producers and exporters should study the Chinese market and identify saleable products. The Chinese market, with a population of 1.4 billion people, has numerous opportunities for Egyptian exports, including furniture, clothing and handicrafts,” Helmi said, pointing in particular to the Chinese forum on imports that is due to be held from 15 to 18 October.
* A version of this article appears in print in the 6 September 2018 edition of Al-Ahram Weekly under the headline: Booming economic relations