As the geopolitical competition between China and the West intensifies, Egypt finds itself in the midst of strategic fault lines.
In recent days, both the United States and the European Union have engaged China in separate but parallel diplomatic overtures: US President Donald Trump and Chinese President Xi Jinping held a long-anticipated phone call, while China proposed a “green channel” to facilitate rare-earth exports to the European Union.
While these developments appear to signal tentative gestures toward de-escalation, they also reveal deeper structural tensions, particularly over trade, critical resources and technologies, and Taiwan. They also betray an approach where China is adopting a differentiated strategy to benefit from the position gap towards Beijing between the US and the EU.
The call between Trump and Xi, held last Thursday, was the first direct conversation between the two leaders since January. Trump described it as “very positive,” even announcing that Xi had invited him and the First Lady to visit China.
Yet, Beijing’s official summary was more cautious, emphasising Taiwan as a core concern. Xi warned that mishandling the Taiwan issue could “drag both countries into a dangerous situation of conflict and confrontation,” responding to recent US military posturing in Asia including remarks by US Defence Secretary Pete Hegseth describing China a “real and potentially imminent threat.”
Meanwhile, economic frictions have persisted. Despite a temporary truce in May suspending reciprocal tariffs, the US has failed to extract major concessions from China. The Trump administration has tightened visa restrictions on Chinese students and advanced export controls on high-tech goods, moves met with Chinese retaliatory measures. Behind Trump’s upbeat statements lies frustration, captured in a blunt tweet to the effect that “Xi is very tough and extremely hard to make a deal with.”
While US-China relations remain transactional and tense, China has adopted a differentiated approach with Europe. At an Organisation for Economic Cooperation and Development (OECD) meeting in Paris recently, European Trade Commissioner Maros Sefcovic raised alarms over Chinese restrictions on rare-earth exports, materials crucial to the EU’s green and digital transitions.
In response, China’s Minister of Commerce Wang Wentao proposed a “green channel” to expedite compliant export requests from the EU. He suggested this was a gesture of goodwill ahead of the July EU-China summit celebrating 50 years of diplomatic ties.
However, this concession came with expectations: the Chinese official called on the EU to reciprocate by easing restrictions on Chinese technology exports and facilitating lawful trade in electric vehicles. Ongoing EU investigations into alleged dumping by Chinese automakers and China’s sanctions on French cognac remain unresolved, but negotiations are advancing. A final decision on the brandy dispute is expected by 5 July.
For Egypt, these global shifts are not remote power plays; they carry implications and strike at the heart of national economic strategy. Positioned at the heart of Afro-Eurasian trade routes, highly connected to both Western and Chinese economic partnerships, and aspiring to become a regional industrial and logistical hub, Egypt’s industrial modernisation and digital transformation, key pillars of its Vision 2030, depend on continued access to foreign investment, external markets, and critical minerals from both China and the West.
Consequently, Egypt must navigate the opportunities and risks of a rapidly fragmenting international order.
The EU is Egypt’s largest trading partner overall and top export market. As for China, it is among Egypt’s top sources of infrastructure financing and technology imports. Projects like the New Administrative Capital, high-speed rail lines, and industrial zones are deeply linked to Chinese capital and expertise, largely under the Belt and Road Initiative (BRI).
At the same time, Egypt has signed energy and climate cooperation frameworks with the EU and aspires to be a major hub for green hydrogen and electric vehicle manufacturing – both sectors highly sensitive to rare-earth elements availability and global regulatory trends.
The tightening of export controls on rare-earth elements, whether towards the US, Europe, or indirectly affecting third countries, poses a serious risk to Egypt’s industrial plans. A future in which these materials are weaponised geopolitically could undermine supply chains that Egypt is only beginning to localise. From semi-conductors to magnets for wind turbines, critical inputs are turning into a key battleground in global power struggles.
Egypt’s historical strength has been its ability to maintain strategic partnerships with multiple powers without overt alignment. This posture of strategic hedging has served Cairo well, allowing it in the last decade to benefit from Western aid and Gulf alliances while also increasingly expanding ties with Russia, China, and the BRICS group of countries.
Yet, this balancing act is now under pressure. The polarisation of technological and trade regimes between US-led standards and Chinese alternatives will impose harder choices in areas such as 5G infrastructure, cybersecurity, arms procurement, and artificial intelligence. Egypt will need to navigate with strategic agility to avoid falling under Western export restrictions or secondary sanctions, especially as it pursues deepening ties with China.
Still, Egypt is not without leverage. Its large market, control of the Suez Canal, geographical position at the crossroads of three continents, and its traditional regional diplomatic clout offer Cairo bargaining power in global trade corridors. Egypt can use this leverage to position itself as a bridge rather than a buffer, advocating for multilateral cooperation on strategic commodities, inclusive investment frameworks, and diversified supply chains that protect Global South interests.
Moreover, Egypt can push for an active role in forums shaping the future of global trade governance from the African Continental Free Trade Area (AfCFTA) to potentially emerging digital diplomacy platforms, ensuring that developing economies are not merely recipients of great power decisions but active participants in shaping rules.
In this emerging global order defined by competitive interdependence, Egypt faces three main challenges: economic exposure, diplomatic recalibration, and technological vulnerability. But it also possesses a unique window of opportunity. If Cairo can formulate a coherent strategy that aligns its industrial policy, foreign partnerships, and geo-economic positioning, it may not only withstand the actual and coming shifts, but it may also thrive.
This will require enhanced coordination across ministries, further trimming of its foreign-investment frameworks, and assertive diplomacy that secures Egyptian interests in global rare-earth governance and technology access.
The real question for Egypt is not whether or how China and the West can reset their ties. It is whether countries like Egypt can read the fault lines, anticipate the turbulence, and adapt with strategic foresight, neither choosing sides nor drifting passively, but enacting a role as a mediator, partner, and regional pillar in a divided yet interlinked world.
The writer is a professor of political science at New Giza University.
* A version of this article appears in print in the 19 June, 2025 edition of Al-Ahram Weekly
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