China and Egypt enjoy a strategic partnership and have stepped up their economic cooperation. Egypt opens the door for Chinese investments and trade with the Middle East and North Africa (MENA). China’s Belt and Road Initiative (BRI) also aligns with Egypt’s national development plan for 2030. China is also Egypt’s main import partner (US$13.3 billion as of 2022). The two countries will soon focus on cooperation in strategic industries such as AI, space technology, and e-commerce.
China-Egypt relations
China and Egypt, among the world’s most ancient civilizations, have had friendly relations for a long time. At the pivotal 1955 Afro-Asian Bandung Conference in Indonesia, the former Chinese premier Zhou Enlai and Egyptian president Gamal Abdul Nasser established the foundation for contemporary Sino-Egyptian relations. Since then, Egypt has increasingly gained relevance in the Chinese government’s Middle Eastern strategy and is seen as a key force with strategic importance in the Arab world, Africa, and developing countries.
Egypt was the first nation from Africa, the Middle East, or the Arab world to forge official diplomatic ties with China in 1956. Since 1956, Sino-Egyptian relations have gone through ups and downs, but there haven’t been any significant conflicts or outright wars. Egypt and China carried on a close ‘anti-imperialist revolutionary relationship’ between 1956 and 1976, promoting decolonization and self-determination throughout the third world. The two countries united similar views in opposition to hegemony, colonialism, and imperialism and pioneered assistance.
Ties between the two countries substantially strengthened when Hosni Mubarak became president of Egypt in 1981, and in 1983, he visited China for the first time since being elected. Egypt invited the Chinese foreign minister Qian Qichen to visit Egypt in September 1989. The Sino-Egyptian relationship has since been strengthened in cooperation: the two countries created a ‘strategic partnership’ in 1999. After the 2011 uprising against former president Mubarak, the two countries continued to maintain strong ties, upgrading their relationship to a ‘comprehensive strategic partnership’ in December 2014 – signed between Chinese President Xi Jinping and Egyptian president Abdel Fattah el-Sisi.
China-Egypt economic ties
The development plans carried out under Sisi’s and Xi’s governments, known respectively as the Belt and Road Initiative (BRI) and Egypt Vision 2030, mutually reinforce and support one another. On the one hand, given its geographic location and economic potential, Egypt is in a unique position to assist China in advancing the BRI throughout the Middle East. On the other hand, the expansion of the Suez Canal for maritime and inland transportation is given top priority in the Sisi administration’s Egypt Vision 2030, which entered its implementation phase in February 2016 and aligns with the BRI’s goals in the region.
The Sisi administration has also worked to strengthen its economic ties with China to advance Egypt’s industrialization. Considering this, China and Egypt also established deeper financial ties. Many Egyptian-funded banks, as well as Egyptian-foreign equity joint banks, offer Renminbi (RMB) and Egyptian Pound (EGP) exchange services as of 2022, and their ATMs recognize UnionPay cards. As Egypt needed to stabilize the EGP, the People’s Bank of China (PBOC) and the Central Bank of Egypt (CBE) signed an agreement in 2016 on an RMB18 billion (US$2.6 billion) local currency swap over the next three years. The China Development Bank (CDB) also provided loans of US$1.4 billion to Egyptian financial institutions that year, of which US$900 million went to the Central Bank of Egypt.
Egypt is the first Middle Eastern nation to get financial assistance from the Asian Infrastructure Investment Bank (AIIB). Up to US$210 million in loan funding was announced by the AIIB in September 2017 to assist the construction of 11 solar power projects in Egypt. It is precisely through the work of development financial organizations like the China-Africa Development Fund (CAD Fund), the Silk Road Fund, and the AIIB, that China has contributed to and funded significant Egyptian projects.
China-Egypt bilateral investment
Chinese investment in Egypt has dramatically increased during the past 10 years. In 2017, China rose to become the sixth-largest investor in Egypt. A Report from the Arab Investment and Export Credit Guarantee Corporation states that between 2013 and 2019, China invested US$28.5 billion in the Arab region and created 23,930 jobs, making Egypt the recipient of the most jobs overall – most of them created by China.
More than 140 Chinese businesses have made investments in Egypt. Chinese investment in Egypt has been mostly focused on industrial projects (55 percent), construction (20 percent), and services (12 percent).
Egypt is now the third-biggest producer of fiberglass in the world thanks to the Suez Economic and Trade Cooperation Zone (SETCZ), which is by far the largest Chinese manufacturing initiative in Egypt in terms of investment volume. By the end of 2018, SETCZ had drawn over US$1 billion in investment, primarily from Chinese businesses, and contributed to the creation of more than 3000 employment for locals.
The Central Business District (CBD) project in the new administrative capital city is among major infrastructure projects in Egypt’s construction, energy, transport, commerce, and industrial sectors where China has played a significant role. Since March 2018, the China State Construction Engineering Company (CSCEC) has been working on the CBD and it is by far the biggest infrastructure undertaking in Egypt. In particular, the CSCEC is responsible for finishing the construction of a zone of towers in the new administrative capital, including a 345-meter tower that may eventually set a record for height in Africa.
China and Egypt have increased their collaboration in regional port interconnection in addition to continuing the SETCZ’s construction. Sisi was present for the MoU signing between the Chinese company, Hutchison Ports, and the Egyptian Naval Forces in August 2019 to develop a container handling terminal in Abu Qir Port. Alexandria and El Dekheila, Egypt’s two principal commercial ports, are already run by Hutchison Ports.
China-Egypt bilateral trade
Trade between China and Egypt runs in favor of China. Over the past 25 years, China’s exports to Egypt have expanded at an annual rate of 14.4 percent, reaching US$13.3 billion in 2020. On the other hand, Egypt’s exports to China have grown at an average rate of 17.9 percent over the same period, reaching US$754 million in 2020.
The Sisi government has heartily embraced and even emulated the China model. As a result, the Sino-Egyptian economic collaboration has flourished, and China has continuously been Egypt’s top commercial partner during the Xi-Sisi era, becoming Egypt’s biggest importer.
China exported US$13.3 billion in goods value to Egypt in 2020, with broadcasting equipment (US$751 million), non-retail synthetic filament yarn (US$379 million), and LCDs (US$371 million) figuring among the top products.
Egypt, on its end, sold US$754 million worth of goods to China in 2020. Major export items included crude oil (US$255 million), refined oil (US$132 million), and citrus ($75.5 million).
Future prospects
Bilateral cooperation between China and Egypt is expanding to new frontiers, such as the so-called ‘Digital BRI’. To further advance their level of bilateral cooperation and realize benefits for both parties in space technology, the two countries have also decided to intensify their cooperation in satellite development, satellite launch, telemetry tracking & command (TT&C), satellite application, and data sharing. China supports Egypt’s plans to build its space capability and produce remote sensing and communication satellites. The agreement between Egypt’s National Remote Sensing Space Science Bureau and China’s National Space Administration further strengthened the sharing of satellite monitoring data in resource exploration, environmental monitoring, crop yield estimation, and other areas, raising the level of space cooperation between the two countries.
Some considerations, however, are still required. First, Egypt’s economic performance falls short of China’s expectations, despite their successful economic collaboration. Egypt welcomes Chinese investment as it seeks Beijing’s assistance to modernize and industrialize. Yet Egypt also relies on other players, such as financing from Saudi Arabia and the United Arab Emirates, andoffered Russia a US$20 billion deal for civil nuclear power reactors. One of the most widespread concerns about the trade imbalance with China is that Egypt could suffer from Chinese surplus goods or the transfer of certain highly polluting industrial capacity.
Egypt’s commercial environment, on the other hand, presents several difficulties for Chinese companies. The main challenges for Chinese businesses in Egypt include access to capital, customs and trade control, business registration and licenses, and land. At the same time, while focusing less on security issues, China seems to be now solely targeting economic cooperation with Egypt.
Indeed, there are several indicators of the strengthening partnership between the two countries. Reportedly, China is assisting Egypt in getting ready to hold a UN climate change conference in the Red Sea city of Sharm el-Sheikh, while the General Authority for Investment and Free Zones in Egypt co-signed an agreement with the Chinese firm Haier Group Corporation for the construction of an industrial complex for the manufacture of home appliances. Egypt’s Information Technology Industry Development Agency and Chinese tech giant Huawei have closed a deal to collaborate in selecting Egyptian businesses that will receive technical help, cloud, and artificial intelligence technology training from Huawei – primarily targeting businesses in sectors such as AI, data management, gaming, and e-commerce. Meanwhile, Egypt is now working to offer bonds at Chinese yuan exchange rates. All things considered, bilateral commercial and economic engagement is strong, and prospects for investors look optimistic.
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TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
