China eyes heavy investment in Egypt's Suez canal

China eyes heavy investment in Egypt's Suez canal
Egypt's Suez canal is a major artery link for China's 'one belt, one road' maritime investment project and Cairo wants to hoover up more financing and development deals.
2 min read
15 May, 2017
The Suez canal was expanded with a new channel in 2015 [Getty]

China is looking at ways of heavily increasing development projects in Egypt, including in the Suez canal, Egypt's trade minister said on Monday.

China's President Xi Jinping invited his Egyptian counterpart, President Abdelfattah al-Sisi to China in September to continue trade talks, Tarek Kabil said on the sidelines of the "one belt, one road" trade conference.

"The belt and road initiative depends on huge financing capabilities and institutions that stand behind it," Mohammed Fayez Farahat, an economist at the Ahram Center for Political and Strategic Studies told China Daily.

"Egypt could benefit by getting support and loans for carrying out developmental projects with better and easier conditions, unlike the difficult system run by Western financial institutions."

Egypt's Minister of Trade and Industry Tarek Kabil said the talks would be held on 6-9 September in Ningxia.

Kabil also pointed out Cairo's willingness to improve conditions for Chinese businesses amid growing complaints.

China's largest construction contractor pulled out of an agreement to construct Egypt's new administrative capital in February, citing pricing issues.

The Egyptian administrators had complained that Chinese quotes for building work were too high, due to local quotes from Egyptian subcontractors.

Egypt was the first African nation to join China's Asian Infrastructure Investment Bank (AIIB) in 2015.

One belt, one road

The 'one belt, one road' conference, which took place in Beijing on May 14-15, aimed to increase international agreements for China's 'Silk Road Economic Belt' and '21st Century Maritime Silk Road' projects.

China's Silk Road project aims to increase its maritime traffic to the Mediterranean via the Suez Canal, making Egypt an important trade partner with Beijing.

President Xi said China would "promote land, sea and air connectivity" at the conference on Monday.

The president also criticised the US' current policy of protectionism, likening it to "locking oneself in a dark room".

It is expected that China will attempt to replace American investments due to Washington's decreased presence abroad.

One economic advisor at the Suez Canal Authority (SCA) said that roughly a quarter of trade containers passing through the canal were Chinese.

According to the SCA, 1,524 ships passed through the Suez Canal in March 2017, which was an increase of three ships daily on 2016.

China has been careful to market the Silk Road project primarily as a trade stimulus package, rather than an infrastructure development project, due to the world's struggling trade volumes.