Europe: Thanks to the Suez Canal, Egypt’s favourable tax benefits, and its location at the intersection of Asia, Africa, and Europe, an increasing number of Chinese investors are looking to the nation for a quick route to global markets. Egypt has signed investment agreements worth more than $8 billion with Chinese firms for the Suez Canal Economic Zone (SCZONE). As a part of Beijing’s worldwide infrastructure initiative, the Belt and Road Initiative, it was jointly constructed by the governments of China and Egypt.

The Tianjin Economic-Technological Development Area (Teda), which created the area, which is more than 455 sq km (176 square miles) in size, has subsequently drawn hundreds of businesses, the most of which are Chinese. As part of a joint venture between the China-Africa Development Fund and Tianjin Teda Investment Holding Co Ltd, China has constructed the 7.34 sq km industrial park known as Teda City within the zone.

More tax breaks and investment incentives are being offered by Egypt to entice investors, particularly in the automotive sector, environmentally friendly Hydrogen fuel projects, and related businesses. It aspires to establish the Suez Canal Economic Zone, a major industrial and logistical complex being built along the canal that includes six important ports and four industrial zones, as a regional centre for the trade of green fuels. It is depending on Chinese businesses to realise this goal.

For instance, the US$5.1 billion green Hydrogen factory that will export Ammonia to European markets is being planned by the Chinese state-owned energy conglomerate China Energy Engineering Corporation, often known as Energy China. The Suez Canal’s strategic location and significance for international trade. It is the shortest sea link between Asia and Europe, Beijing’s largest market, and it connects the Mediterranean to the Red Sea.

Businesses from China have expressed interest in investing in the zone. With this investment, Chinese businesses will be able to reach the European and African markets and profit more effectively from the canal’s advantageous location. A group from the SCZONE travelled to China in late May, stopping in Beijing, Tianjin, Guangzhou, Hangzhou, and Hong Kong. There, more than $3 billion worth of agreements spanning a variety of products, including chemicals, textiles and apparel, power, pipelines, iron and steel industries, and so forth, were signed.

Cairo is relying on the Suez Canal, which sees more than 10% of world trade, or over 18,000 ships, pass through each year. Many of these ships are transporting cargo from China that is headed for Europe, Africa, and the Middle East. During the visit, Jia Shirui, chairman of Xinxing Ductile Iron Pipes, and SCZONE chairman Walid Gamal el Din discussed a potential US$2 billion pipe manufacturing facility in the Sokhna Industrial Zone northwest of the Gulf of Suez. In addition to 15,000 tonnes of castings annually, the investment would create 250,000 tonnes of ductile iron pipes annually, with ambitions to double that output in the second phase.

A delegation from Egypt met with representatives of the Beijing-based Hidier Power Group and signed two agreements with China-Africa Teda Investment Co. for the development of a power plant in the zone and a facility for advanced combustion systems, totalling US$365 million. Shandong Tianyi Company, a producer of petrochemicals, has plans to invest a total of US$310 million in the construction of Bromine, Caustic Soda, and other industrial chemical manufacturing units at Teda City while in China.

In the Suez Canal Economic Zone, Chengfeng Iron and Steel and Sinoma CDI will build a 750,000 square metre (8 million square foot) iron production complex over the course of two phases as part of a US$300 million partnership. According to Gamal el Din, there are 51 factories and 137 registered enterprises that are active within the zone.

Many other Egyptian projects are also being worked on by Chinese firms, such as the construction of a new central business area in the nation’s New Administrative Capital, which is a component of a sizable development by the China State Construction Engineering Corporation.

Chinese investors were drawn to Egypt, according to Dr. John Calabrese, a senior researcher at the Middle East Institute in Washington, because of its location at the confluence of the Gulf, Africa, and Europe.

The commercial arteries connecting China to all three of these regional markets, as well as to energy sources and other essential raw materials, according to Calabrese, are the Suez Canal and multimodal transport linkages that China played a significant role in modernising.

This is the reason why Egypt has played such a significant role in the planning and implementation of the Belt and Road Initiative, according to Calabrese. The arteries of economic cooperation have been strengthened by the political and structural similarities between Beijing and Cairo as well as their shared preference for state-led development. However, Calabrese noted that given Egypt’s economic difficulties, there were risks for China. However, he added it probably helps that nobody else wants Egypt to fail. Companies from Japan, India, and the Middle East have also been interested in potential along the Suez Canal.

Fumio Kishida, the prime minister of Japan, announced that Japanese businesses will invest in the zone when in Egypt in late April. According to Calabrese, he was not surprised that the Japanese were entering the fray given their recent efforts to strengthen their relations with Saudi Arabia and the United Arab Emirates through investment and other means.

Like Beijing, Tokyo very probably sees Egypt as a gateway to Africa. Given the interest in offshore gas development, would anticipate some enhanced EU [or] European engagement as well, according to Calabrese.

Although Chinese businesses had been significant investors in the zone, this did not imply that they controlled all industries.

Japan has economic goals and resources of its own that might help the area prosper.

According to him, depending on the opportunities and incentives offered by the Egyptian government, Japanese businesses may break into the zone as it continues to develop and draw investment.

The SCZONE’s construction intends to draw funding from a variety of sources and foster global cooperation.