Egypt Courts China for Suez Special Zone

One of China’s premier investment zones is expected soon to replicate its successful development model near the southern approaches to the Suez canal, according to Egypt’s investment minister. The Egyptian government is negotiating with the Tianjin Economic-Technological Development Area, which it is courting to help build the Suez Economic Zone. Under Egyptian law, TEDA could take up to a 49 % stake in the US$1.5 billion project.

“SEZone is going to be the first of its kind linked to a big investor,” Mahmoud Mohieldin told the Financial Times in an interview. “The final negotiations will hopefully be taking place very soon.” The attraction for the Chinese is partly the large number of preferential trade agreements that Egypt has with Europe, Africa and the Middle East.

The extractive nature of Chinese state companies’ involvement in sub-Saharan Africa and the Middle East, where they seek natural resources in return for infrastructure investments, has courted controversy. Critics fear that China is more concerned with fuelling its own fast-growing economy than fostering development in the region. Chinese companies have also proven adept at seizing market share for everything from cheap consumer goods to telecom equipment in Africa.

But SEZone’s manufacturing focus would make TEDA’s investment much less controversial. The zone’s success back in its home city of Tianjin makes it a natural partner as Egypt seeks to position itself as an export gateway to both Europe and Asia.

“We are not rich in natural resources – they are not after our oil or natural gas,” Mohieldin said on the sidelines of an investment conference in Hong Kong. “Manufacturing is an easier sell because every country likes to see more factories and more workers.”

While foreign direct investment into Egypt fell 40% last year to US$8.1 billion, China continued to pour money into the north African country, becoming its largest investor for the first time.- FT