The sight of busloads of Chinese tourists visiting Egypt’s ancient sites has been lifting the spirits of the country’s hoteliers and travel officials who relish the prospect of a new and vast source of potential visitors. Chinese tourism in Egypt has been growing fast since a “comprehensive strategic partnership” was agreed between the two countries in 2014 — an initiative which encompasses trade, investment and political ties.
China and Egypt are growing their economic relationship from a low base. The strengthening ties appear rooted in that political decision made by both authoritarian governments four years ago, when Abdel Fattah al-Sisi became president a year after overthrowing his elected Islamist predecessor, Mohamed Morsi.
At the time, Egypt started drawing closer to Russia and China to diversify its foreign relations and find allies other than its traditional partners in the US and Europe, who signalled unease about a popularly-backed coup followed by a crackdown on dissent. Cairo values China’s stated policy of non-interference in other countries’ affairs and is keen to attract Chinese investors to the big infrastructure projects that are a major part of Mr Sisi’s economic policy.
“There are economic powers who have the ability to help us but not the desire, and others who have the desire but not the ability,” said Mostafa Ibrahim, deputy head of the China committee in the Egyptian Businessmen’s Association. “China tops the list of those who have both the ability and the desire.”
Total worth of deals with Chinese companies signed by the president of Egypt last month
Since 2014, China’s president, Xi Jinping has invited Mr Sisi to China five times, and visited Cairo himself in 2016. “This has not been the pattern before and it has given a crucial impetus to the economic co-operation,” said Han Bing, minister counsellor of economic and commercial affairs at the Chinese embassy in Cairo.
During Mr Sisi’s latest visit to Beijing in September, he signed deals worth some $18bn with Chinese companies covering a railway, real estate, energy projects and an oil refinery.
Although cumulative Chinese investments in Egypt totalled some $700m by mid-2018, according to Egyption investment ministry figures, Mr Han says Chinese companies have close to $6bn of investments in Egypt. “More than 80 per cent of these [were made] in the last four years,” he adds.
According to data compiled by fDi intelligence, a division of the FT, cumulative Chinese foreign direct investment in Egypt totalled $24.3bn. fDi intelligence noted this figure was skewed by a $20bn investment announced but not yet realised by Shanghai-listed China Fortune Land Development in the planned new administrative capital in the desert east of Cairo.
Separately, China State Construction Engineering Corporation (CSCEC), has been contracted to build 20 towers in the new city, including what is billed as the tallest tower in Africa. The president hopes to move the seat to the new city, one of his megaprojects, from mid-2019.
Chinese banks are expected to finance some 85 per cent of $13bn in costs cited in reports mentioning CSCEC. A Chinese company has also signed a memorandum of understanding with the government to build a rail link to the capital. The Chinese conglomerate TEDA-Suez is expanding its industrial zone near the port of Ain Sokhna on the Red Sea says Mr Han. He notes that Egypt’s location, and the Suez Canal, are an incentive for increased co-operation within China’s Belt and Road Initiative.
Belt and Road, a massive infrastructure plan to link China with trading partners in Asia, Europe and Africa, has been the target of mounting scepticism about the viability of some projects and the resultant increase in debts to Beijing by recipient countries.
Responding to these concerns, Sahar Nasr, Egypt’s investment minister, told Reuters earlier this month that her country accepted Chinese investments only in projects that were mutually beneficial. “If we have more Chinese industries in Egypt, creating jobs for us, making us less dependent on certain imports and in fact exporting to Europe to Africa, it’s a win-win,” she said.
She told the news agency that Egypt was taking care to diversify its sources of financing, even within individual sectors, noting that while China was involved in building a railway in Egypt, locomotives and train carriages were being bought elsewhere.
Parallel to the expansion in investment, there has been an increasing flow of Chinese tourists coming to Egypt. Their numbers more than doubled last year to 300,000 from some 130,000 the year before.
“We have seen a very significant increase of Chinese tourists,” said Selim Shawer, manager of the Sofitel Luxor Winter Palace. “We are now getting some of our staff to learn Chinese to serve them better.”
The main reason for this growth, says Ahmed al-Kholy, head of Solar Empire Travel, an Egyptian company focused on the Chinese market, is more charter flights from China. He says there are 14 charters a week to Egypt and the market could grow faster with more flights.
“The Chinese market has its advantages and drawbacks,” he says. “It is low-budget, but it provides volume. In addition, it is not as sensitive to [political] events as the European market. The Europeans take fright when something happens, but the Chinese are not so easily affected.”
Egyptian exports to China remain tiny in comparison to imports from China, but they have also been rising — a result of the recent rapprochement, says Mr Han. Egypt exported $408m worth of goods to China in 2017 — 60 per cent more than the year before, according to Egyptian official figures.
“Last year Egypt was the third exporter of oranges to China,” he says. “We are expecting this year good agricultural exports, besides oranges there will also be grapes, which have had access to the Chinese market since last year.”
This article has been amended to clarify that investment figures were from the Egyptian investment ministry not the Chinese investment ministry.
Get alerts on Egypt when a new story is published