Explained: Can Egypt benefit from Chinese tariff exemptions?

In November, China exempted Egyptian exports from tariffs, a development announced at the Egyptian-Chinese Investment Forum in Cairo. The move applies to Egyptian goods entering China and is part of a wider initiative granting tariff relief to over 50 African countries under the Belt and Road Initiative (BRI), said Liaow Lixiang, China’s ambassador to Egypt at the time.

Experts now say the decision could benefit Egyptian exporters, offering access to one of the world’s largest markets. China’s merchandise trade reached $6.16tn in 2024, according to the World Bank. Bilateral trade with Egypt grew to $16.1bn in 2024, up from $14.3bn in 2023, while Egyptian exports fell from $1.08bn to $398m, and imports rose from $13.2bn to $15.7bn.

Egypt’s trade with China remains heavily imbalanced. Exports largely include fuel, mineral oils, and some food products, while imports focus on machinery, electrical equipment, and boilers. China accounted for nearly 7% of Egypt’s total $104.6bn foreign trade in 2023/24, the Central Bank of Egypt reported. 

China's a bigger winner

The tariff exemption complements benefits under regional agreements such as COMESA with several African countries, the Greater Arab Free Trade Area, the Euro-Mediterranean Partnership, and the Qualified Industrial Zones programme, which allows duty-free access for certain Egyptian textiles to the US.

Despite these measures, Egypt faces a persistent trade deficit. The 2024/25 balance of payments shows a $51bn deficit, with exports at $40.2bn and imports at $91.2bn. Chronic trade imbalances continue to strain the local currency.

Industrial capacity in Egypt limits export potential. Currency devaluations since 2016 have not boosted exports, as has occurred in countries such as those in Southeast Asia and Turkey. Partly because many sectors rely on imported machinery, tools, and production inputs, which reduces Egypt’s competitiveness, as higher costs make its goods less competitive internationally. Rising energy and public service costs also increase production expenses.

Egyptian exports to China face several challenges despite the tariff exemption. China imported $2.58tn in goods in 2024, highlighting Egypt’s potential, but capturing a meaningful share of the market will require careful strategic planning. Short-term gains may come from increasing exports of raw and intermediate goods, while long-term success depends on developing high-value products to help reduce the $15bn trade surplus favouring China in 2024. 

Without diversifying beyond energy, minerals, and basic food products, the tariff exemption may have limited effect and place additional demands on exporters to study the market and adjust operations, ensuring that over the next decade China becomes a key destination for Egyptian goods.

China’s tariff exemptions for Egypt and other African countries represent a small fraction of its global trade, which exceeds $6 trillion. Its advanced technology and competitiveness ensure China maintains the upper hand in Africa and globally. The move also aligns with Beijing’s strategy of strengthening ties with developing nations amid economic competition with the United States. In this context, China seeks to gain support from as many developing and emerging countries as possible, presenting itself as a partner that assists and supports them.

Experts say Egypt must develop a clear export strategy to take advantage of such opportunities and reshape an economy that has long depended on external markets.

Reported by Abdel Hafiz Al-Sawi