Mubarak in Beijing for trade talks that could represent major policy shift
CAIRO: While Egyptian leaders are keen on increasing Chinese investment, they should do so carefully, warns an economic expert.
Samir Radwan, managing director of the Economic Research Forum in Cairo, says that relying too heavily on Chinese investment and technology could have serious consequences for the Egyptian economy.
The downside, of course, is that Egyptians will not benefit [and] won t adopt any new technology, Radwan tells The Daily Star Egypt.
And that could turn Egypt into a dependent, economic hinterland, some say.
The warnings come as President Hosni Mubarak and 47 other African leaders began a two-day meeting in Beijing yesterday aimed at pumping up trade between the emerging superpower and the world s poorest continent.
Hungry for the natural resources that are feeding its growing industries, China is also investing heavily in other African countries.
New agreements will see Beijing buy phosphates from Morocco and import crude oil from Angola.
Meanwhile, Chinese companies are involved in massive building projects, including a hydro-electric dam in Gabon worth an estimated $2 billion.
But some have warned that China s increasing foreign investment in Africa resembles a sort of economic colonization, where the superpower will use Africa as a source of raw materials and a dumping ground for its cheaper products.
Over the next few years, Egypt is looking to boost foreign investment to $10 billion annually, up from about $6 billion this year.
And with its growing economic clout, China is going to play an increasing part in this plan, analysts say.
Last year, trade between Egypt and China jumped 36 percent to $2.15 billion, with China enjoying a surplus chunk of $1.7 billion.
Still, considering Egyptian trade with the European Union and the US is worth about $17 billion and $5 billion respectively, China still has a relatively minor influence.
Chinese officials, however, are careful to stress that China isn t simply interested in exploiting Africa s energy sources.
Energy resources are important for China, but that s not all. China is a big country, but at the same time, we do need the cooperation of other countries, says Ming Jian Chen, a counselor with the Chinese embassy in Cairo.
She adds that China imports large amounts of Egyptian made chemicals, marble and textiles.
According to Chen, trade between the two countries was up around 40 percent over this time last year. By the end of the year, bilateral trade will swell to just under $3 billion.
I think we have very good cooperation with Egypt, she says.
Still, there are positive aspects of a growing relationship with China, experts say.
According to Radwan, there are three strategic aspects that will dominate discussions between Cairo and Beijing.
The first includes using Chinese expertise to set up a number of new enterprises in Egypt, including two industrial zones east of Suez.
The main objective is to import Chinese technology and investment, of course, says Radwan.
The second proposal could see China relocating some of its manufacturing industry to Egypt, which would allow Chinese manufactures to take advantage of cheaper transport rates to some of their key markets in the European Union.
Currently, about 60 percent of China s exports sail through the Suez Canal, says Radwan.
The third aspect of the relationship is more controversial, and would see China setting up qualified industrial zones in Egypt, where cheaper goods and textiles would be made.
By relocating to Egypt, Radwan explains, China would save billions of dollars a year by evading international quotas.
The new era of cooperation between Egypt and China marks a monumental policy shift. Previously, Egyptian leaders had seen China as a major economic competitor and a potential threat in not only the global market, but also in the Egyptian market.
There seems to be a very different outlook to this relationship.