One Road to Development

By Sudeshna Sarkar and Ni Yanshuo

When egyptian President Abdel Fattah al-Sisi attends the G20 Summit in Hangzhou， Zhejiang Province， in September， it will be his third visit to China since assuming office in 2014 and will signal， according to Tarek Kabil， Egypts Minister of Trade and Industry， the depth of the relationship between China and Egypt.

“In two years we had three meetings between the two presidents [of Egypt and China]，” Kabil told ChinAfrica during his trip to China in July to attend the G20 Trade Ministers Meeting. “It shows how important the relationship is because Egypt is among the very few countries that China has invited. It also gives a message to the whole world about Egypts stability and readiness for economic growth.”

Though Egypt faced turbulence and saw three governments in the last five years， Kabil says after President Sisi came to power， he implemented his three-pronged political roadmap： holding presidential elections， passing a new constitution and calling parliamentary elections in 2015.

“Today we are on our economic roadmap to revitalize the country in all aspects， [such as] infrastructure， legislation， [and] systems，” Kabil said. “Despite all that happened in the past， our economy is growing at 4.2 percent. Our target next year is 5 percent GDP growth.”

The China card

China， Chinese investments and Chinese tourists are a major focus of that roadmap.

Though currently China is the 23rd largest investor in Egypt with a low-level investment of about $500 million， according to Dalia Khorshid， Egypts Minister of Investment who was part of the visiting delegation， the goal is to increase the amount 10 times.

“We are working with our Chinese counterparts to ensure additional investment in logistics， ports and industrial and infrastructure development to ensure we have the investment climate to attract more investments，” Khorshid said. “We have a target： to ensure that Chinese investment ranks among the top five to 10 investors in Egypt.”

Of the 18 projects discussed between Egypt and China， the power projects， together worth $10 billion， are the ones most on track， according to Egyptian officials. The years of turbulence saw little investment in the sector but now， realizing the importance of a strong power industry to boost trade and investment， Egypt is discussing power projects with China on a priority basis. The Export-Import Bank of China and the private sector are also to be involved in the projects.

A new major development is the planned construction of a textiles city in Egypt， wooing Chinese companies as they seek to relocate in other developing economies to meet the challenges of rising land， power and labor costs in China. After Viet Nam， Bangladesh and Ethiopia， it is Egypts turn to play host to a new textiles city. A memorandum of understanding has been signed between the Egyptian authorities and a private company in China， which has inspected the site in Minya City in Upper Egypt and approved it.

The project will see Chinese investment and technological expertise combine with Egyptian raw material and skilled local labor. “We have missing gaps in textile technology，” Kabil said. “For example， we dont have the dyeing technology. So we make the fabric and send it to be dyed. This is a missing part in the industrial value chain. So we want to have that technology in order to ensure we have a complete value chain.”

It makes sense to relocate textiles industries to Egypt， or， for that matter， other industries as well because Egypt is not just a market of 90 million people but more importantly， a gateway to a bigger market of 1.6 billion.

Kabil said Egypt enjoys several free trade agreements. “Any business happening on the Egyptian soil will enjoy tariff-free access to the [19-member] Common Market for Eastern and Southern Africa， the European Union and all Arab countries，” Kabil said. “We are also having discussions with Russia on the Eurasian market.” The textiles city， for example， he said， could be used to export to all these countries as well as re-export to China， which would also address the $8-billion trade imbalance between China and Egypt.

Capacity cooperation

To develop its industries， Egypt is seeking Chinese cooperation to build up its production capacity. The two sides earlier discussed this in Cairo and last month， in Beijing. The Chinese experience， especially in developing small and medium-sized enterprises， is an area the Egyptian authorities want to learn from. Another is industrial area development. Chinese companies have already built an industrial park along the Suez corridor in Egypt. The Egyptian delegation visited an industrial park in China to learn more about how Chinese industrial parks operate.

Also， as part of production capacity building， the Chinese side is assisting in developing the required infrastructure in Egypt， like power， housing and transportation.

The Belt and Road Initiative announced by the Chinese Government is going to be an important boost to developing the Egyptian economy， all the more so because it dovetails with the Suez Canal Development Project undertaken by Egypt to build one of the biggest logistic hubs in the world.

“The Belt and Road [route] is very， very long， [planning to connect Asia， Europe and Africa]，” Kabil said.“During Chinese President Xi Jinpings visit [early this year]， we signed an MoU regarding the Belt and Road. Egypts role is to help and prepare， with the cooperation of the Chinese side， the infrastructure required to continue the [route]. That includes ports， airports and roads.”

The Egyptian authorities are quietly jubilant that the road project is off to a flying start with about 5，000 km having been built. “We have a highway going through Sudan and it could be going to Ethiopia. The vision is to have it from Alexandria [in Egypt] to Cape Town in South Africa，” Kabil said.

Egypt is also upgrading three ports around the Suez Canal and building three new ones. It plans to discuss with China “how we can start building economic zones around those roads because thats the whole idea，” Kabil added. “How you can develop this and develop the bilateral trade not only between Egypt and China but also between the people around the Belt and Road Initiative.”

Safety from terror acts

Asked how Egypt would offer investment protection， especially in view of terrorist attacks， the minister pointed out that terror attacks had become global： “I dont think terrorist attacks today are affecting Egypt only， you have seen so many attacks happening in Europe， in the United States and other countries.”

But though there was fighting around Egypt - in Libya， Syria and Yemen - and some chaos in one part of Egypt， Kabil said the domestic situation was under control. “Politically and security-wise， Egypt is extremely stable，” he said. “We continue to have investment every year， over $6 billion and growing. A lot of countries are already investing in Egypt. The Chinese president[himself] came to Egypt， so what more message do we want？ If Egypt was unstable or unsafe， he would not have come.”