Achieving gains for all

An MoU between China's and Egypt's central banks strengthens banking and financial relations, and consolidates cooperation without one party monopolizing the other

Monetary cooperation between China and Egypt is witnessing significant development, with both sides agreeing on the need for further cooperation to address the challenges arising from successive global crises and the resulting imbalance in global supply chains.

Egypt also seeks to attract Chinese companies to its market in various sectors, particularly petrochemicals and electronics. Monetary cooperation between Egypt and China represents an important step in strengthening economic relations between the two countries. It is expected to increase the volume of trade between Egypt and China, contribute to attracting more Chinese investments to Egypt, and support sustainable development through innovative financing tools, strengthening the decade-long comprehensive strategic partnership between the two countries.

Cooperation between the central banks of Egypt and China has increased recently, raising the volume of trade in local currencies, away from the dominance of the dollar in trade and investment transactions between the two sides. On July 11, Hassan Abdalla, governor of the Central Bank of Egypt, signed a memorandum of understanding with Pan Gongsheng, governor of the People's Bank of China, at the Egyptian Cabinet headquarters. The MoU aims to enhance cooperation and coordination between China and Egypt in various areas of mutual interest.

Joint agreements were signed to promote the use of local currencies in financial and trade settlements, facilitate direct investments and enhance cooperation in the field of central bank digital currencies. This cooperation also aims to support financial innovation and the exchange of expertise between the two countries. The most prominent aspects of monetary cooperation between Egypt and China include the use of the Egyptian pound and the renminbi in settling trade and investment transactions between the two countries. This means enhancing financial cooperation to support direct investments between Egypt and China, and strengthening the exchange of expertise and information in financial technology and innovation.

In addition, encouraging Egyptian-Chinese cooperation within the framework of Egypt's membership in the Forum on China-Africa Cooperation also indicates a focus on implementing priority projects and supporting sustainable development through innovative financing tools.

Major projects between China and Egypt, within the framework of China's Belt and Road Initiative and Egypt's Vision 2030, include the Central Business District in the New Administrative Capital and the China-Egypt TEDA Suez Economic and Trade Cooperation Zone in the western axis of the Suez Canal, an industrial cooperation model comprising 185 companies. To develop joint projects between Egypt and China, there are several financial initiatives to boost trade and investment between the two countries. The most prominent of these initiatives are exploring payment settlements in the local currency, exploring the issuance of Egyptian bonds in the Chinese market, exploring how to link Egyptian-Chinese payment systems, encouraging the presence of Chinese banks in Egypt and vice versa, and signing an agreement to use the renminbi in the Suez Canal Special Economic Zone, which is heavily populated by Chinese projects. China UnionPay is expanding its operations in Egypt to increase the acceptance of its cards. In addition, UnionPay has signed a partnership agreement with the Egyptian company Paymob to expand electronic acceptance services for merchants.

In recent years, thanks to the strategic partnership of Egypt and China, trade and economic cooperation have witnessed significant development, becoming a model of solidarity, cooperation, and mutual benefit between China and Arab, African and other Global South countries. By aligning China's BRI with Egypt's Vision 2030, the two countries have drawn up a promising action plan and achieved remarkable results in various sectors, particularly the financial and innovation sectors. China also provides concessional loans to Egypt to finance development projects, and Egypt participates in the Asian Infrastructure Investment Bank, of which China is the largest shareholder. Joint investment has recently witnessed a remarkable boom, especially after Cairo moved to encourage foreign investors with recent economic reform measures. As a result, most foreign investors who expanded their investments in Egypt were from China, a result of the strength of economic cooperation between the two countries.

Cooperation in the fields of innovation and technology transfer between China and Egypt is key to sustainable development. By strengthening Egyptian partnerships between research institutions and Chinese companies, and simplifying procedures related to the transfer and localization of Chinese technology in Egypt, Egypt can stimulate innovation. There are more than 1,000 Chinese research institutions cooperating with Egypt in the fields of higher education and scientific research, and there are nearly 10,000 scientific papers have been published by Egyptian and Chinese researchers. This reflects the close ties between academic institutions in the two countries and enhances the scientific, technological and innovation capabilities of both countries. Egypt and China specifically announced on June 25, 2023, the completion of the assembly and testing of the MisrSat-2 satellite. This project represents a new exemplary achievement in Sino-Egyptian cooperation within the framework of China's BRI.

The Chinese side proposed training a team of Egyptian scientists during the implementation of Egypt's satellite project and providing them with rich experience, particularly in the ground testing phase of the satellites and longrange remote sensing control after the launch of the satellite.

The Egyptian side is currently interested in strengthening and supporting mechanisms for expanding trade exchange between small enterprises in both countries and supplying the Chinese market with the goods and services it needs from small enterprises in Egypt. This gives these enterprises the opportunity to enter one of the largest and most important global markets, gain exposure to it, and enhance their expertise in developing new products or increasing and expanding their production.

The memorandum marks an important step toward strengthening banking and financial relations between Egypt and China. It embodies Egypt's efforts to consolidate monetary, banking and innovation cooperation with China across all fields and sectors. This is in line with the slogan of achieving gains for all, without one party monopolizing the other.

The author is a professor of political science at Beni-Suef University. The author contributed this article to China Watch, a think tank powered by China Daily.

Contact the editor at editor@chinawatch.cn.