Egypt's economic recovery boosts China-Egypt production capacity cooperation

Guangming Net-Guangming Daily Cairo, July 20

When "the belt and road initiative" is in progress

Production capacity cooperation between China and Egypt has been in full swing for several years. Under the background of "the belt and road initiative" construction, the production capacity cooperation between the two countries is continuously advancing. From July 18 to 19, the third working group meeting of the China-Egypt production capacity cooperation mechanism was held simultaneously in Beijing and Cairo in the form of a video conference. As a non voting member, the reporter deeply felt the pragmatic, efficient and fruitful production capacity cooperation mechanism between China and Egypt at the meeting site.

Production Capacity Cooperation between China and Egypt After 3 Years

Inspector Wang Jianjun of the Foreign Investment Department of the National Development and Reform Commission of China opened his mouth at the meeting and went straight to the theme of "electricity". China and Egypt are cooperating in the construction of a 500 kV transmission line project. In addition to electricity, participants from China and Egypt had a lively and pragmatic dialogue on specific projects in the fields of transportation, housing, and economic and trade cooperation zones. In response to issues such as financing, policies, and technical indicators in the cooperation process, representatives of Chinese-funded enterprises and representatives of counterpart functional departments of the Egyptian government frequently put forward their own views and propositions, and strive to reach a solution.

At present, China-Egypt production capacity cooperation has gone through three years. In June 2015, a delegation of the China-Egypt Production Capacity Cooperation Working Group visited Egypt. After comprehensively combing the complementary advantages of China-Egypt production capacity cooperation, the representatives of the two sides initially identified a list of 15 priority projects. In September 2015, Egyptian President Sisi visited China, and the two governments formally signed the "China-Egypt Capacity Cooperation Framework Agreement." At present, the China-Egypt TEDA Suez Economic and Trade Cooperation Zone and the China-Egypt 500 kV transmission line project have become brand projects of China-Egypt capacity cooperation.

Important Nodes of "the belt and road initiative"

The "the belt and road initiative" International Cooperation Summit Forum held in May this year achieved fruitful results. In the meantime, China Credit Insurance and the Ministry of Investment and International Cooperation of Egypt signed the "Memorandum of Understanding on Investment Promotion." The China Development Bank, the Export-Import Bank and other relevant Egyptian institutions have signed financing cooperation agreements and project loan agreements on ports, electricity, and industrial parks to help China-Egypt capacity cooperation upgrade.

Former Egyptian Prime Minister Issam Sharaf said that Egypt is an important stop on the 21st Century Maritime Silk Road. Egypt has the Suez Canal, which connects the Mediterranean Sea with the Red Sea. The Suez Canal Corridor development project is not only a channel, but also a series of major projects such as infrastructure and energy. As a returning regional power, Egypt will make important contributions to the construction of "the belt and road initiative.

Egypt's economic reforms provide a better environment

In recent years, Egypt's economic reforms have achieved initial results, which has also created a better environment and conditions for China and Egypt to strengthen economic cooperation.

The World Bank's Global Economic Prospects report predicts that Egypt's economy will grow by 4.3 per cent in 2017 and 5.0 per cent in 2018. According to the report, Egypt's economic growth in the past two years has mainly benefited from the improvement of business environment and competitiveness, but the higher inflation rate will still have a negative impact on recent economic activities.

The International Monetary Fund announced its first assessment of Egypt's economic reform plan on July 13 and agreed to provide Egypt with a second loan of US $1.25 billion, totaling US $4 billion. David Lipton, the first vice president of the organization, believes that Egypt's floating exchange rate system has played a role in curbing parallel markets (black markets) and increasing foreign exchange reserves. Fiscal austerity policies such as energy subsidy reform, new value-added tax and wage restrictions will help reduce the fiscal deficit and expand the space for social expenditure growth.

In May of this year, the Egyptian Parliament passed the new "Investment Law". 70% of the content involves administrative management, mainly simplifying the approval process, shortening the approval time, and unblocking complaint channels. The formulation of the new investment law has achieved significant results in Egypt's structural reforms, which will further promote economic growth, improve competitiveness, and support the development of the private economic sector.

Egypt's foreign exchange reserves rose to $31.305 billion billion at the end of June, close to pre-revolutionary levels in 2011, the central bank said. Egypt attracted $8.1 billion billion in foreign direct investment in 2016. In the past five years, the main foreign investment in Egypt has come from China, the United Arab Emirates, Greece, Italy and Saudi Arabia. Egyptian Minister of Investment and International Cooperation Sahar Nasr said that in the first nine months of the 2016/2017 fiscal year, Egypt's foreign direct investment reached 6.6 billion billion U.S. dollars, an increase of 12% over the same period of the previous fiscal year.

(Reporter: Yu Jiefei)