Chinese President Xi Jinping’s visit to Cairo for the first time in ten years brings Chinese investments around the Suez and the Middle East’s quest for security closer together.[i] Xi’s call on September 2, 2026, for regional countries to develop their own security arrangements against foreign interventions reveals an approach to the political conditions under which economic partnerships can be sustained. Making this call from Egypt while the war around Iran is ongoing demonstrates the weight Beijing assigns to Cairo in its pursuit of regional stability.
In the economic dimension of the visit, the third expansion phase of the Chinese industrial zone in the Suez Canal Economic Zone stands out; goals ranging from renewable energy equipment to automotive manufacturing align with Egypt’s quest to transform its transportation advantage into production capacity.[ii] For China, producing around the canal facilitates access to African and European markets, and can create an investment area where factories and logistics services mutually feed into each other.
The history of the currency swap arrangement supporting this production agenda predates the visit. In June, the central banks of the two countries renewed the existing agreement for three years, increasing its size from 18 billion yuan to 30 billion yuan.[iii] This facility, supported during the September talks, could make it easier for companies to resort to local currencies more often for commercial payments, but the reflection of this provided capacity in commercial life depends on which currency banks and businesses prefer.
In the joint declaration, the emphasis on the responsibility of coastal states in the security and management of the Red Sea adds an important political commitment alongside economic agreements.[iv] While the parties link the protection of maritime trade to regional cooperation, they also place respect for the sovereignty of states at the core of this approach. Thus, Egypt’s geographical location supports its demand to participate in security decisions, while China develops a diplomatic language based on the say of regional countries as it protects its commercial interests.
However, the future of a factory to be built on the shores of the Suez depends as much on events south of the Red Sea as on the order within the canal. A disruption around Bab-el-Mandeb could prolong shipping times and increase insurance costs, thereby reducing the advantage of manufacturing in Egypt. Therefore, as investments grow, Beijing’s interest in maritime security creates more concrete responsibilities, and what an actor demanding the continuation of trade can do in times of crisis becomes increasingly important.
The benefits Cairo will gain from this process may also vary depending on how integrated the facilities to be established are with the national economy. From a development perspective, there is a wide gap between facilities where imported parts are assembled and most of the profits are transferred abroad, and industrial investments that develop local suppliers. While foreign partnerships can nourish the country’s own capacity when Egyptian businesses participate in production and employees acquire technical knowledge, projects sustained by heavy incentives can burden public resources.
To understand the benefits of using local currency, it is also necessary to look at the commercial relationship behind the payments. In a relationship where imports significantly exceed exports, changing the payment currency does not automatically resolve the trade imbalance. In an environment where Egypt can sell more products to the Chinese market, it could become easier to use revenues earned in yuan for new purchases. Therefore, the permanence of the financial arrangement is closely linked to export diversification and the continuity of trade between companies.
Moreover, since the currency swap is not a grant, the conditions for accessing finance maintain their importance. Considering exchange rate fluctuations and repayment obligations, the widespread use of the yuan cannot be read as a development that will completely eliminate Egypt’s fiscal pressures. A reduced need for dollars in eligible transactions can expand payment options, but concentrating these options in a single financing channel could leave the quest for diversification facing new dependencies.
Cairo’s development of relations with China while maintaining military ties with Washington constitutes the security counterpart of this diversification policy. As concerns about the US’s regional preferences increase, working with different partners can provide Egypt with broader room for maneuver. Nevertheless, since defense relationships built over years are difficult to replace with another partnership in the short term, Cairo’s calculus can be understood through its effort to more effectively defend its own priorities while benefiting from its existing ties.
For China, translating economic proximity into political influence is related to the extent to which it can meet the expectations of the counterpart country. For Cairo, which seeks diplomatic support in regional crises while accessing investment and technology, Beijing’s emphasis on sovereignty is important. At the same time, China’s consideration of its relations with other regional countries could affect the scope of support it can provide to Egypt and may lead to discrepancies in expectations over time.
The emphasis on the say of coastal states also raises the question of under what conditions the participation of external partners in security activities will be accepted. Cairo’s highlighting of regional responsibility can be read as a will to determine the form of external support. In this approach, the harmony established between the support China will provide and Egypt’s ability to make its own decisions gains importance. When the demands of great powers benefiting from maritime trade do not align with the priorities of coastal states, the political limits of the partnership can become more visible.
Therefore, when evaluating the security dimension of the partnership, it is necessary to look at the working mechanisms to be established as much as the declared principles. Information sharing in maritime transport, maintaining diplomatic contacts during crises, and coordination aimed at protecting commercial activities can produce concrete results in the daily functioning of relations. Their success depends on the parties’ ability to manage their differing priorities, because the existence of economic agreements does not automatically guarantee acting jointly in the face of regional conflicts.
The extension of cooperation to data centers and advanced technology also makes investment preferences more sensitive for Egypt. The concentration of digital services alongside production facilities around the same external partner can create long-term connections in operation and maintenance processes. Conversely, the training of local experts and Egyptian institutions gaining the knowledge to manage systems can give a more lasting substance to technology transfer, thereby expanding bargaining power against external partners.
Thus, in the short and medium term, the course of these relations will be indicated by the practical outcomes rather than the signed documents. Cairo’s political support for this partnership may strengthen when factories’ contributions to local production increase and financing opportunities align with businesses’ needs. Under conditions where regional tensions raise transportation costs or investments fail to provide expected employment, the economic returns of the agreements may be questioned more. This possibility reveals that the security agenda and development goals cannot be detached from one another.
The China-Egypt partnership developing over the Suez demonstrates how regional influence can gain strength within production and financing relations. The gains Egypt will achieve depend on its ability to support its geographical location with its own industrial capacity and diplomatic maneuvering space. China’s lasting impact will also be evaluated along with its contribution to the development of this capacity. A relationship where the protection of maritime trade and local development support each other can provide a more solid social and economic foundation for both countries’ pursuit of regional security.
[i] “China’s Xi urges new Middle East security framework during Egypt visit”, Reuters, https://www.reuters.com/world/china/egypt-welcomes-xi-beijing-expands-influence-middle-east-2026-09-02/, (Date of Access: 06.09.2026).
[ii] “Egypt, China launch third phase of Suez Canal industrial zone, expand currency swap”, Daily News Egypt,https://www.dailynewsegypt.com/2026/09/02/egypt-china-launch-third-phase-of-suez-canal-industrial-zone-expand-currency-swap/, (Date of Access: 06.09.2026).
[iii] “Chinese, Egyptian central banks renew bilateral local currency swap agreement”, Xinhua,https://english.www.gov.cn/news/202606/03/content_WS6a202aa0c6d00ca5f9a0b633.html, (Date of Access: 06.09.2026).
[iv] “Egypt-China Joint Communiqué on the Further Deepening of their Comprehensive Strategic Partnership”, Mısır Devlet Enformasyon Servisi, https://sis.gov.eg/en/media-center/news/egypt-china-joint-communiqu%C3%A9-on-the-further-deepening-of-their-comprehensive-strategic-partnership/, (Date of Access: 06.09.2026).
