Skip to content Skip to Search
Skip navigation

China shows faith in Egypt with deeper investment

Egypt's PM Mostafa Madbouly greets President Xi Jinping at the Great Hall of the People in Beijing Egyptian Cabinet, Arab Republic of Egypt
Egypt's PM Mostafa Madbouly greets President Xi Jinping at the Great Hall of the People in Beijing
  • Egypt’s PM met Xi Jinping at Belt and Road forum
  • Beijing seems undeterred by Cairo’s economic woes
  • But payment problems have hit some projects

When President Xi Jinping welcomed the prime minister of Egypt, Mostafa Madbouly, to Beijing’s Great Hall of the People in October, it was a signal that China is stepping up bilateral co-operation with Cairo.

Their meeting, on the sidelines of the Belt and Road forum, took place as Egypt grapples with mounting debt and delays to reforms that have put off some international investors. 

Madbouly’s attendance “was very telling”, according to Giulia Interesse, an analyst for Asian business consultancy Dezan Shira & Associates.

Egypt’s Vision 2030 for its economy includes developing sectors that “naturally overlap” with the Belt and Road – “which makes it a win-win co-operation”, Interesse told AGBI.

One key area is green hydrogen. Egypt’s Suez Economic and Trade Co-operation Zone signed a $6.75 billion deal with China Energy Engineering Corporation at last month’s forum. It aims to produce 1.2 million tonnes of green ammonia and 210,000 tonnes of green hydrogen each year. 

China is already the largest investor in the Suez zone and ships 60 percent of its goods to Europe via the Suez Canal. Thanks to Egypt’s free-trade agreement with the European Union, Chinese companies pay few, if any, tariffs.

A China Ocean Shipping Company (COSCO) craft in the Suez Canal. More than half of China's exports to Europe pass through the canalReuters/Mohamed Abd El Ghany
A China Ocean Shipping Company (COSCO) craft in the Suez Canal. More than half of China’s exports to Europe pass through the canal

In August last year, the Egyptian government signed a deal with Hong Kong’s Hutchison Ports to build and operate two container terminals at Sokhna and Dekhila – part of a $800 million project to link the Red and Mediterranean seas.

“Both China and Egypt are trying to build up industries which they can then export globally, which is why it makes sense for them to invest hand-in-hand in the Suez Economic Trade Zone and new ports,” said Interesse. 

From fibreglass to satellites

One of the Suez zone’s successes has been Jushi Egypt, a subsidiary of the manufacturer China Jushi, which was set up in 2012. 

Jushi Egypt is now the largest fibreglass producer in Africa with an annual production capacity of 340,000 tonnes. It has generated over $40 million in tax revenue and brought in more than $1 billion in foreign exchange income. 

The two countries are also co-operating on space technology. The China Academy of Space Technology has worked with Cairo’s space agency to build a satellite assembly, integration and test centre, completed in June this year.

Egypt is the first African country with these satellite capabilities, which can aid “resource exploration, environmental monitoring and agricultural planning”, Interesse added. 

More than 1,500 Chinese companies are registered in Egypt, according to Dezan Shira research. Over 140 of those businesses have invested in the country. In 2022, most of this funding went to industrial projects (55 percent), followed by construction (20 percent) and services (12 percent).

Payment problems at new capital

Chinese businesses are playing a major role in the development of the New Administrative Capital east of Cairo. The Iconic Tower in the central business district is being built by China State Construction Engineering Corp. The skyscraper, due to be completed in 2024, has an estimated cost of $3 billion.

China has also worked on the light rail line that will connect the new capital to Cairo. 

Chinese companies are working on Egypt's Light Rail Transit, which will link the new capital to CairoReuters/Amr Abdallah Dalsh
Chinese companies are working on Egypt’s Light Rail Transit, which will link the new capital to Cairo

However, getting paid for work on the city has not been trouble-free, according to a regional expert. 

“There have been lots of problems with developing the New Administrative Capital – not all known by the market at large – but some of it seemed to be a lack of payment from Egypt,” said Angus Blair, founder of the Signet Institute think tank in Cairo.

As a result, he added, “quite a few of the Chinese companies have stepped back”.

Despite this, the two countries’ central bank governors, Hassan Abdalla and Pan Gongsheng, held talks in September about making it easier for Chinese companies and banks to set up in Egypt.

During their meeting in Beijing, they agreed to explore increasing the use of the yuan, as well as joint financing. 

“If Egypt does decide to start trading more in the yuan, it will find it difficult because the reality is that it’s not as accessible as the dollar,” said Blair. 

Cairo is “currently reaching out to whichever partners it can do business with”, he added. 

“Joining the Brics is part of that. Egypt wants to try to balance East and West interests but, at the moment, it’s having to make decisions out of necessity as well.”

Latest articles

Mads Bo Larsen, vice-president of Novo Nordisk UAE, says a local plant 'will not solve anything' in the face of the country's Ozempic shortage Video length: 3:39

UAE diabetics face Ozempic shortage due to weight-loss users

The manufacturer of Ozempic is “troubled” by the fact the drug, which was designed to help people with diabetes, is in short supply in the UAE because of the high number of consumers using it for its weight loss side-effects. Danish pharmaceutical company Novo Nordisk introduced Wegovy, a drug meant to specifically tackle obesity, to […]

A market in Cairo. The meeting of the central bank’s MPC was its first since Egypt secured $8 billion in financial support from the IMF in March

Egypt holds interest rate hike despite slowdown

The Central Bank of Egypt has kept its key interest rates unchanged despite a slowdown in economic growth. The monetary policy committee (MPC) left the lending rate unchanged at 28.25 percent and the deposit rate at 27.25 percent. Inflation has eased since the annual headline and core inflation peaked at 38 percent in September 2023 […]

The number of electric vehicles in Dubai passed 30,000 by the end of April 2024

Parkin to roll out more green EV chargers across Dubai

Dubai is expanding its network of electric vehicle (EV) chargers as part of the emirate’s push to accelerate smart and green mobility. Parkin, the state-backed parking management company, has signed an agreement with the Dubai Electricity and Water Authority (Dewa) to increase the number of EV green charger stations at prime locations across the emirate. Parkin […]

Pakistan’s prime minister Muhammad Shehbaz Sharif meets UAE president Sheikh Mohamed bin Zayed Al Nahyan in Abu Dhabi

UAE commits to invest $10bn in Pakistan’s economy

The UAE intends to invest $10 billion in various economic sectors in Pakistan. “UAE president Sheikh Mohamed bin Zayed Al Nahyan assured the Emirates’ support in all circumstances and made a commitment of investing $10 billion in multiple sectors,” Pakistan’s prime minister’s office said in a statement. The statement was released after the UAE president […]