Egypt banks on Beijing as premier visit seals yuan, payment deals
The deals were announced during the visit by a senior Chinese delegation led by the country’s premier to Cairo this week.
Egypt and China signed several memoranda of understanding to deepen financial ties this week, including measures to enable Egyptian businesses to conduct more transactions in yuan.
The deals were announced Thursday during a visit by a senior Chinese delegation to Cairo, where Prime Minister Li Qiang met with President Abdel Fattah al-Sisi to discuss strengthening bilateral ties.
What happened: The governor of the Central Bank of Egypt, Hassan Abdalla, also met with his Chinese counterpart, Pan Gongsheng, in Cairo Thursday. The two oversaw the signing of three MoUs aimed at deepening economic ties, according to a statement from the Central Bank of Egypt.
The first MoU was signed between Suez Canal Bank, China-Africa Investment Company and CIPS Limited, the operator of China’s cross-border Interbank payment system.
Chinese payment firm UnionPay and Egyptian Banks Company also signed an agreement to improve Egypt’s electronic payment system and expand UnionPay card acceptance at physical and online points of sale.
In a separate deal, UnionPay agreed with Egyptian fintech PayMob to expand acceptance of its cards among PayMob-affiliated merchants and websites.
The central bank governors also discussed a currency swap agreement, using local currencies to settle payments and Egypt issuing panda bonds for sale in the Chinese market. The officials also discussed linking Beijing and Cairo's payment systems as well as ways to widen the presence of Chinese banks in Egypt and Egyptian banks in China.
Why it matters: Qiang was welcomed by Egyptian Prime Minister Mustafa Madbouly in Cairo Wednesday upon his arrival. The two-day visit was the Chinese premier’s first to Egypt, a strategic partner to China.
The two countries also have strong bilateral ties, generating $17.4 billion in trade last year, according to the Chinese Foreign Ministry. In a statement, Sisi said that he was interested in attracting more Chinese investment in Egypt, particularly in green energy, electric vehicle production and tourism.
Know more: Like China, Egypt is a member of BRICS, a 10-nation bloc that has faced growing tensions with the US in recent months. Speaking at the 17th BRICS Summit in Brazil on Sunday, Madbouly called for closer central bank cooperation and local currency use between BRICS members, which also include Brazil, Russia, India, South Africa, the United Arab Emirates, Ethiopia and Iran.
US President Donald Trump is a critic of BRICS, seeing it as a threat to US global economic and political order. At his Tuesday cabinet meeting, Trump said he planned to slap a 10% tariff on imports from the BRICS alliance for acting against American interests.
Leading politicians in Brazil and Russia have floated the idea of a unified BRICS currency to reduce the dominance of the US dollar on the global economy, though the lofty goal is complicated by factors such as internal resistance and sanctions on BRICS members Iran and Russia. In January, Trump threatened BRICS countries with a 100% tariff if they moved forward on developing a common currency.
