MIDDLE EAST

Sisi smartly rekindles Egyptian-Sino relations

In August 2012, only two months after assuming the presidency of Egypt, former President Mohammad Mursi visited China. From there, he declared that Cairo is looking to strengthen its relations with emerging powers, China in particular. Two years later, the Egyptian officials announced that President Abdel Fattah al-Sisi is scheduled to visit China on December 23, just 5 months after he became president. Although the two presidents, the current and the former, stand on opposite ends in Egypt's political spectrum, but both share one goal: the need to develop strategic relations with China.

The two visits within the last two years are very important as they give strong indications about the future trajectory of Egyptian-Sino relations. Although the ties between the two countries date back more than 58 years, bilateral trade has only blossomed in recent years. Over the past decade, trade between Egypt and China has increased significantly. It has increased almost tenfold, jumping from only $1.089 million in 2003 to nearly $10.21 billion at the end of 2013, according to the latest International Trade Centre. Tellingly, Egypt's Minister of Trade and Industry, Mounir Fakhry Abdel Nour expects commercial exchange between Egypt and China to stand at US $ 11.5 billion by the end of 2014, with Beijing becoming Cairo's top trade partner.

However, the trade balance tilts considerably in favor of China with $ 8.38 worth of Chinese exports to Egypt in 2013. Manufactured items such as textiles, clothing, machinery. electrical and electronic equipment, plastics and articles and vehicles form the bulk of exports from China to Egypt; while petroleum, crude, natural gas, liquefied gas, glassware, marble and cotton form the bulk of Egypt exports to China. Not surprisingly, cooperation in energy is a driving force in Chinese-Egyptian trade ties. According to the American Enterprise Institute and the Heritage Foundation's "China Global Investment Tracker," between 2005 and the end of 2013, China's investments and contracts in Egypt reached $ 8.4 billion, where $ 5.6 billion (66.6%) went to the energy sector, $ 1.4 billion (16.3%) to real estate, $ 940 million (1.1%) to metals and the rest to transportation.

Economic growth first
 

Acknowledging China's importance as one of the largest and fastest growing economies in the world, Cairo expressed its readiness to engage Beijing on a long-term basis. For Egypt, China is the 17th largest market for its exports, accounting for nearly 2% of its global exports. Consequently, there is considerable scope to increase Egyptian exports to the Chinese market. In terms of imports by Egypt, China ranks first and is the source of around 10.5% of Egypt's total imports.

Over time, we may witness a growing Chinese role in Egypt

Dr. Naser al-Tamimi

For Egypt, boosting economic growth, attracting more foreign investment, and providing jobs for the unemployed, are the most important priorities. In this regard, the United Nations Conference on Trade and Development (UNCTAD) shows that Egypt's inward foreign direct investments (FDI) in 2013 was $ 5.55 billion, compared to $ 6.88 in 2012 and pre-crises (200-2010) annual average of $ 8.3 billion. Looking forward, Egypt is hoping to attract investments (http://www.icn.com/en/article/2014/11/23/Egypt-seeks-new-investments-at-March-economic-conference/index.aspx ) worth $10-12 billion in 20 projects in the areas of energy, transport, water and grain storage, when it hosts a three - day international economic summit in the Red Sea resort of Sharm elSheikh on March 13, 2015. To underscore Cairo's view of Beijing as a critical partner, Egypt has pushed back that summit meant to boost investment and aid from February 2015 to mid March to avoid it conflicting with Chinese holidays.

Political Dimensions
 

Although the economy is the top priority for Cairo, but the political dimensions of the Egypt-China relations are impossible to ignore. Egypt looks to China as an attractive alternative to balancing its' foreign policy to give more focus to its relations with the East. Interestingly, Egypt's International Cooperation Minister, Naglaa al-Ahwani, told the Chinese news agency Xinhua that the "main purpose of President Abdel Fattah al-Sisi's expected visit to Beijing is to create a kind of strategic partnership with China." Indeed, Cairo attaches great importance to its relations with Beijing as Egypt has recently established a cabinet unit specified for China led by Prime Minister Ibrahim Mahlab to strengthen relations with Beijing.

Through Cairo's lens, China could be regarded as a valuable source of political support as Egypt continues on a path of economic reforms whilst also seeking to deflect Western pressure in the area of democratization. Most importantly, China may play an important role in supplying Egypt, especially with weapons that the United States refuses or is reluctant to sell, such as long-range missiles, unmanned planes and satellite and nuclear technology. In this regard Meng Jianzhu, secretary of the Commission for Political and Legal Affairs of the Central Committee of the Communist Party of China, who is also the Chinese President Xi Jinping's special envoy, met recently with Egyptian President Abdel Fattah al-Sisi and expressed China's willingness to strengthen mutual political trust with Egypt and deepen bilateral cooperation in infrastructure, new energy, security and law enforcement.


As for China, access to a consumer market of over 90 million people is very attractive. At present, Egypt is China's third largest export market in Africa (after South Africa and Nigeria) and could soon become the top one. More importantly, relations with Egypt enhance the Chinese presence in Africa and the Mediterranean region or to put it in Chinese President Xi Jinping words "Egypt is a leading country in the Arab world, Africa and the Islamic world, and a country that has traditional friendship with China". At a strategic level, gaining a foothold in Egypt may prove to be of vital importance to China's long-term Maritime New Silk Road strategy. The Chinese Foreign Minister, Wang Yi, has expressed this sentiment in his last visit to Egypt openly by saying "China's strategic conception of building the - one belt and one road - tallies with Egypt's strategy of national development". Egypt is wary also of the Israeli so- called Red-Med project. The project that would connect by rail links more than 300 kilometers between "Eilat" on the Red Sea and "Ashdod" Port on the Mediterranean Sea. Cairo may seek more clarifications and assurances about the Chinese participation in this project.

 

Difficult road ahead

Against this strategic backdrop, The IMF, in its latest report, praised the Egyptian government's policies, but said the road to recovery is still difficult. Egypt's economic prospects "have improved significantly", the IMF said at the end of Article IV consultations with Cairo, the first since April 2010. However, IMF warned that "The main downside risks are domestic, and stem from possible setbacks in the political transition which could delay the recovery of FDI and tourism. Most importantly, the World Bank urged Egypt to amend its investment regulations and implement promised legal and bureaucratic reforms ahead of an international conference in March. In the World Bank's Doing Business 2015 Index Egypt ranked 112 out of 189 economies so there is much scope for improvement.

Despite these obstacles, Sino-Egyptian relations will surely be enhanced during the coming period. Over time, we may witness a growing Chinese role in Egypt.

______________
Dr Naser al-Tamimi is a UK-based Middle East analyst, and author of the forthcoming book “China-Saudi Arabia Relations, 1990-2012: Marriage of Convenience or Strategic Alliance?” He is an Al Arabiya regular contributor, with a particular interest in energy politics, the political economy of the Gulf, and Middle East-Asia relations. The writer can be reached at: Twitter: @nasertamimi and email: nasertamimi@hotmail.co.uk

 

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Last Update: Sunday, 21 December 2014 KSA 13:10 - GMT 10:10
Disclaimer: Views expressed by writers in this section are their own and do not reflect Al Arabiya English's point-of-view.
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Over time, we may witness a growing Chinese role in Egypt
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