A growing number of Chinese investors are turning to Egypt for a shortcut to international markets thanks to the Suez Canal, the country’s generous tax incentives and its location at the junction of Asia, Africa and Europe.
In recent months, Egypt has secured investment deals with Chinese companies worth more than US$8 billion for its Suez Canal Economic Zone (SCZONE).
It was jointly built by the governments of China and Egypt as part of the Belt and Road Initiative, Beijing’s global infrastructure plan.
The zone, covering more than 455 sq km (176 square miles), was built by the Tianjin Economic-Technological Development Area (Teda) and has since attracted hundreds of companies, most of them Chinese.
China reported a deeper-than-expected drop in both exports and imports in July, raising concerns beyond the current wave of global economic downturn, as the trend of supply chain relocation consolidates.
The slump points to worsening overall prospects, analysts said, with exports expected to contract at a similar scale until the end of the year, meaning growth will take time to rebound.
The broad-based fall also exposes China’s mounting challenges as it struggles to revive domestic demand and reboot business sector confidence amid a sputtering post-pandemic recovery, threatening the annual growth target of around 5%.
Exports fell for the third consecutive month, with the 14.5 per cent drop from a year earlier to US$281.76 billion marking the deepest decline since February 2020, according Chinese customs figures released on Tuesday.
Imports, meanwhile, fell by 12.4% from a year earlier to US$201.16 billion, with China’s total trade surplus rising to US$80.6 billion in July compared to US$70.62 billion in June, 2023.
Millions of small business owners are struggling to keep their firms afloat due to an absence of sustainable income growth prospects, among them a Shenzhen-based housewares exporter surnames Luo.
China, though, is not alone, with all of Asia’s major exporting powerhouses suffering from a slump in trade in recent months due to the broad global economic slowdown and weak consumer demand.
Taiwan’s exports also plunged by 10.4% in July, marking the 11th consecutive monthly decline and the steepest slump in almost 14 years. Shipments from Vietnam also declined for the fifth straight month in July after falling by 2.1%.
Countries like those in Asean are increasing their exports to US and EU, while increasing their imports from China, and there is a potential turbulent industrial chain transfer taking place behind the trend, and this is detrimental to China’s exports in the long term.
China should, therefore, continue to expand its economic relations with European countries amid rising tensions with the USA.
For Chinese imports, despite the sharp decline in terms of value, the quantity of key commodities – such as iron ore and oil – increased in July compared to a year earlier due to a higher base of prices last year.
The problems in real estate, infrastructure, and consumer sentiment are still challenging. I would not be surprised to see an annual decline of China’s exports and imports in 2023 for the first time since 2016.
Therefore the Suez Canal Economic Zone (SCZone) has received a business delegation from the Jilin Province of China to probe investment opportunities to expand the scope of bilateral cooperation in several fields, the SCZone stated on July 9, 2023.
The SCZONE is considered China’s gateway for many European and African markets, where investors of SCZONE enjoy access to global markets through trade agreements that link Egypt with various countries.
Vice President of the SCZone for Investment and Promotion Affair Ibrahim Abdel Khalek stressed the zone’s keenness to further cooperate with the Chinese side, praising the success stories that already exist on the ground, foremost of which the Chinese industrial zone Teda-Egypt, which has more than 137 industrial and service projects.
For his part, Director of the Outward Investment and Economic Cooperation division at the Ministry of Commerce in Jilin Province An Chuan Li expressed the delegation’s aim to further cooperate with the SCZone in the fields of automotive and food industries.
ABC Flash Point News 2023.