China's Xi promises 'billions' in investment during Egypt visit

Thomson Reuters

CAIRO (Reuters) - China signed investment and aid deals worth billions of dollars with Egypt during a visit by President Xi Jinping on Thursday and expressed support for Cairo's efforts to maintain stability, which have included a tough crackdown on dissent.

Xi arrived in Egypt on Wednesday on the second leg of a Middle East tour that signals China's push for greater influence in a region that provides vital oil supplies.

The visit falls days ahead of the Jan. 25 anniversary of the 2011 uprising that ended Hosni Mubarak's 30-year rule and is seen in Egypt as a vote of confidence in President Abdel Fattah al-Sisi's administration, despite widespread criticism of its human rights record.

Xi praised Egypt's efforts to strengthen its economy during talks with Sisi, who has warned his critics not to hold protests to mark the anniversary on Monday of Mubarak's overthrow.

"China supports Egypt's efforts to maintain stability, develop the economy and improve livelihoods, and supports Egypt to play an even greater role in international and regional affairs," Xi said, according to China's foreign ministry.

Heralding a new era of closer political and economic ties, officials from the two countries signed 21 deals at a ceremony in Cairo that could see China significantly ramp up investments in the most populous Arab country.

The deals span several development and infrastructure investments, including the first phase of a new Egyptian administrative capital unveiled last year.

They also include a $1 billion financing agreement for Egypt's central bank and a $700 million loan to state-owned National Bank of Egypt.

As military chief, Sisi ousted Egypt's first democratically elected president, Mohamed Mursi, in 2013 after mass protests and launched a campaign to crush Mursi's Muslim Brotherhood, the country's oldest Islamist movement. In doing this he won the backing of wealthy Gulf Arab countries who oppose the group.

Since then Egypt has largely relied on billions of dollars in aid from Saudi Arabia and the United Arab Emirates to keep its economy afloat, but an oil price slump has raised doubts over whether the OPEC producers can maintain strong support.

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Billions in investments 

Speaking at a news conference with Sisi, Xi said 32 Chinese companies were now working in the Suez Canal economic zone, investing more than $400 million and these figures would rise to 100 firms and $2.5 billion with the next phase of the project.

China and Egypt are also planning 15 projects in electricity, infrastructure and transport with investments that could total $15 billion, Xi said, adding that the efforts should give a new boost to economic growth in Egypt.

Egypt has struggled to restore growth since the 2011 uprising ushered in a period of political instability that scared off tourists and foreign investors, key earners of foreign currency.

China's $1 billion central bank loan could help bolster foreign reserves, which have more than halved since 2011 as it battles to defend the currency against downward pressure, while longer-term investments could help create much-needed jobs.

Mindful that economic discontent helped to unseat two presidents in the last five years, Egyptian security forces have arrested several activists and shut down cultural spaces in recent weeks to prevent protests as the anniversary approaches.

Sisi, who visited China in 2014, said economic and military cooperation had developed quickly to reach unprecedented levels.

"We discussed in our consultations the need to redouble our common efforts in various bilateral and international areas to combat the danger of terrorism and extremism," Sisi said.

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Xi arrived in Egypt from Saudi Arabia and will head next to Iran.

While Xi was in Riyadh, China signaled its support for Yemen's government, which is fighting an Iran-allied militia, and repeated a call for a peaceful settlement in Syria.

China, the world's second biggest economy, relies on the Middle East for oil but has tended to leave regional diplomacy to the other four permanent members of the U.N. Security Council -- the United States, Britain, France and Russia.

However, it has been trying to get more involved, especially in Syria, however, and recently hosted Syria's foreign minister and opposition officials. 

(Additional reporting by Ben Blanchard in Beijing; Editing by Michael Georgy and Gareth Jones)

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