The Report Company: In 2015 China became Egypt’s largest trading partner. What is behind this growth and what is your outlook for the trading relationship this year?

Magdy Amer: The trade and economic relations between Egypt and China are a reflection of the strong ties between the two countries. China has become Egypt’s largest trading partner, with bilateral trade worth more than $11 billion. However, the trade is unbalanced; it is largely tilted in favour of China. We receive Chinese imports worth $10 billion, and our exports are worth only $1 billion. We are now working to enhance trade with a more balanced outlook.

When we speak about the outlook of Chinese investment in Egypt, we can mention many success stories. For example, the Chinese company Sinopec has bought one-third of Apache’s Egypt oil business in Egypt in 2013. The timing of this deal reflects China’s trust in the prospects of stability and development in our country. We have also Jushi Egypt for fibreglass; the production of this project is mainly sold to the European and Middle Eastern markets. The company doubled its investment in Egypt recently.

There are many other opportunities for cooperation in mega projects, such as the Suez Canal Corridor Development Project  and the new administrative capital, which is a large-scale project designed to relieve congestion in Cairo. This mega project will attract many companies in different fields, such as infrastructure, housing, communications, services, and so on.  

Another new development project we would like to highlight is the Golden Triangle. This project aims to create new industrial and mining start-ups on 6,000 square kilometres extending from the Red Sea to Qena in Upper Egypt. The proposed projects for this area include mining projects and the construction of fertiliser factories. Other projects will utilise raw materials to manufacture cement from clay and limestone and produce gasoline from oil-based clay.

We can also find cooperation opportunities in ship building, due to China’s long expertise in the industry. In addition, we can cooperate in establishing logistics centres in the Suez Canal area. There are many infrastructure projects that are open to Chinese developers in the Suez Canal zone.

Another mega project is the 1.5 million-fedans land reclamation project that will encompass agricultural activities and food and packaging factories.

As for medium-sized projects, there is the Chinese investment in the leather industry; a number of Chinese companies are planning to start investment in Egypt, in al-Robeky leather zone, which is specialised in leather manufacturing.

TRC: China has become an important investor into Africa. What does Egypt have to offer China?

MA: The Sino-African official diplomatic relationship started in 1956 when Egypt recognised China. It was the first African and Arab country to do so. But the non-official ties started long before. China now has deep friendly ties with African countries, which serve the best interests of both sides. China helps the countries in Africa to develop through building infrastructure projects, technology transfer, and building schools and hospitals.

Egypt is ideally positioned to help both sides to enhance their cooperation and achieve their full potential. Egypt is the north-eastern gate of Africa, and has long friendly relations with African countries. It is also a member of important economic agreements, such as COMESA, which give Egypt access to African markets. The Chinese investments in Egypt will enjoy the same privilege if they produce in Egypt.

It is noteworthy to say that both countries highly appreciate their growing relations. Those relations can help to facilitate China’s access to Africa. There are vivid examples for the close ties between them. The Egyptian President Abdel Fattah el-Sisi visited China twice in less than one year. Eighty-one soldiers of the Egyptian honour guard forces participated in the Chinese military parade last September, commemorating the victory over fascism in the Second World War. The reciprocal ministerial visits reflect the mutual interest. 

With regard to the areas of attractions in the Egyptian investment outlook, we find that Egypt’s unparalleled location at the centre of the Middle East, near the oil and gas exporting countries, gives it a huge advantage. Its proximity to Europe and the Middle East gives Egyptian products quick and easy access to these markets. There is also skilled and cheap labour.

After two revolutions, Egypt now is looking forward to reviving its economy and renewing its infrastructure. There are numerous opportunities for investors to help in the development projects. The Egyptian government has re-examined and amended many laws, such as the unified investment law and the law of the private economic zones, to draw more investors, and those steps are starting to bear fruit. For example, the electricity ministry has signed a framework agreement with Sinohydro, a Chinese state-owned hydropower engineering and construction company, to set up a 2,100 megawatt pumped-storage hydro plant in Ataka Mount. The plant will cost $2 billion. The project will help meet the growing demand for power and increase the rates of economic growth, and comes as part of the ministry's efforts to diversify sources of energy within the coming period.

There is also a project for an electrical train linking the district of Ain Shams in Cairo and Belbais in Al- Sharqiya governorate, as well as an agreement to establish the first Chinese technical institute for information technology and communication in Suez, which will be affiliated to the Suez Canal University in Ismailia. It will offer distinguished learning opportunities and build technical cadres to enrich the Egyptian labour market, and provide the Chinese companies with qualified labour.

Egypt has established a unit in cabinet, chaired by the prime minister, and includes a number of key ministers as members to study all fields of cooperation with China in order to boost it to the highest level.

TRC: Egypt officially opened its New Suez Canal in August. How would you appraise the impact of this project within the context of China's Belt and Road initiatives?

MA: The Silk Road Economic Belt and 21st-Century Maritime Silk Road initiatives, which were proposed by Chinese President Xi Jinping in 2013, bring together countries in Asia, Europe and Africa via overland and maritime networks with the purpose of boosting infrastructure, financial cooperation and cultural exchange. Egypt supported both initiatives from the very beginning and the Egyptian president confirmed that on both visits. With the inauguration of the new Suez Canal, the movement of vessels between the east and the west has become easier and faster, and now Egypt is in the best position to play an active part in the initiative and make a joint effort with China to promote cooperation and strengthen the comprehensive strategic partnership.

It is noteworthy here to say that around 20 - 25 percent of vessels crossing through the Suez Canal are Chinese, so China is the country which most benefits from the new canal.

There are also large Chinese investments by TEDA Corporation in a special economic zone north west of the Suez gulf. The Chinese investments in this area are mostly export-oriented projects.  China still has great investment opportunities in the New Suez Canal area. One of the suggested projects is to establish a logistics hub to gather exports before delivering them to the final destinations either in Europe, Middle East, or Africa. This hub will ensure quick delivery and give Chinese exports more privilege.

TRC: Chinese President Xi Jinping will visit Egypt in January 2016. What are the key priorities now for the Egypt-China bilateral relationship?

MA: The expected visit of the Chinese leader will be an important step to enhance cooperation and comprehensive strategic partnership between the two countries in different areas. Economic bilateral relations will be a priority during the meeting between the two leaders, and the issue of trade and investment will be discussed as well.  

 The two presidents will also discuss the situation in the Middle East, the peace process, and combatting terrorism, among other issues. It is noteworthy here to say that Egypt and China adhere to the same principles as regards enhancing peace, stability, and combatting terrorism.

Another important issue is the reform of the United Nations to be more efficient and able to perform its missions, to respond to the new international challenges, and achieve the goals of the United Nations Charter.

TRC: What needs to be done to position Egypt as a bridge into Africa and the Mediterranean region for China?

MA: There are major steps being undertaken by the Egyptian government to position Egypt as a bridge for China to reach Africa and the Mediterranean region. Egypt’s location itself, at the centre of the Middle East region and at the north-eastern gate of Africa, makes it a natural bridge into both regions. This was enhanced with digging the New Suez Canal.

Egypt is also a member of many trade and cooperation conventions and agreement with African and Middle Eastern countries, and Chinese products which are produced in Egypt have easy access to African, European and Middle Eastern markets.    

Investment laws have been amended, and procedures to start new ventures in Egypt have been simplified. We have also started to renew infrastructure and to extend services and facilities to new areas. We have started to implement many energy projects to ensure a steady supply of energy for investors. With the discovery of the huge offshore natural gas field in the Mediterranean off the Egyptian coast, building a nuclear power plant in Dabaa in Matrouh governorate, along with exploring other sources of renewable energy, the prospects for energy are promising in Egypt.   

Egypt highly appreciates its partnership with China. It has backed the One Belt, One Road initiative, and joined the AIIB bank as a founding member. We are now looking forward to more cooperation for the mutual benefit of both countries.