On Wednesday, Chinese President Xi Jinping concluded his first official visit to Egypt in a decade, holding high-level talks with Egyptian President Abdel Fattah el-Sisi in Cairo that produced a wide-ranging package of signed agreements, memoranda of understanding, and a formal joint statement guiding future bilateral cooperation.
The landmark trip was deliberately scheduled to coincide with the 70th anniversary of formal diplomatic relations between the two nations, and it ran parallel to the joint Egyptian-Chinese “Eagles of Civilisation” air force exercise, which launched on August 22 to deepen military cooperation and interoperability between the two countries’ air services. It also came on the heels of a public report revealing that Chinese tech giant Huawei had submitted a bid to deliver more than 2,000 artificial intelligence computing chips to Egypt for a national data center project.
Xi arrived in Cairo on Tuesday, greeted at the airport by Sisi alongside a ceremonial welcome that featured folk performances, and young Egyptian attendees waving both national flags and wearing shirts printed with Xi’s portrait. Cairo authorities temporarily shut down multiple major arterial roads to secure Xi’s itinerary, which included visits to Ittihadiya Palace and the Grand Egyptian Museum.
At the core of the new cooperation agreements is Sisi’s formal announcement of the third expansion phase of the Egyptian-Chinese Suez Canal Economic Zone (SCZone), a flagship joint infrastructure project that already hosts roughly 200 operating companies and holds a total of $4 billion in cumulative investment. Beyond trade and industrial development, the new accords expand bilateral collaboration in renewable energy, artificial intelligence, and Egypt’s ongoing digital transformation, while reaffirming the two countries’ commitment to aligning Egypt’s national Vision 2030 development plan with China’s Belt and Road Initiative.
Raphael Angieri, managing director and co-founder of the Sino-Arabica Project, explained the strategic logic of China’s investment in regional economic zones to Middle East Eye: “China is building these economic zones as a way of spreading the Chinese model of development.” Angieri added that the offshore zones simplify export logistics for Chinese firms, while also allowing China to bypass international sanctions and other trade barriers by expanding manufacturing capacity outside its own borders.
The expansion of the SCZone comes at a defining economic juncture for Egypt. In 2024, Suez Canal toll revenue plummeted to less than $4 billion, down from a record high of $10.3 billion in 2023, after repeated Houthi attacks on commercial shipping in the Red Sea forced global carriers to reroute around the Cape of Good Hope amid the ongoing Israel-Gaza war. More recently, rising tensions that have threatened Iran’s closure of the Strait of Hormuz have pushed a growing number of oil tankers back to the Red Sea shipping lanes, setting the stage for a potential rebound in canal traffic.
For Egypt, these new Chinese-backed industrial clusters within the SCZone offer far greater operational efficiency that will help Cairo capitalize on projected growth in Suez Canal traffic, Angieri noted. Islam Alhalawany, principal at QFLA Advisory and a leading specialist in Asia-Middle East relations, added that Chinese investment in the SCZone integrates with existing regional trade corridors designed to bypass the Strait of Hormuz, most notably the Europe-Egypt-NEOM-GCC Corridor. This Saudi-backed mixed land-and-sea route connects European and Gulf markets without requiring transit through the Strait of Hormuz.
In the formal joint statement released after the talks, Egypt reaffirmed its longstanding commitment to the One China principle, explicitly describing Taiwan as an “integral part of the territory of the People’s Republic of China,” voicing full support for China’s 2027 BRICS presidency, and pledging not to interfere in any of China’s internal affairs. In return, China addressed Egypt’s core priority of Nile River water rights, a sticking point in Cairo’s years-long dispute with Addis Ababa over the Grand Ethiopian Renaissance Dam, which Egypt argues will drastically reduce critical downstream water flows. China affirmed its “awareness of the vital importance of the Nile River for Egypt as the main lifeline” of the country.
Alhalawany emphasized that with both Egypt and Ethiopia now holding BRICS membership, “China has a great opportunity to mediate and guarantee agreement over the Nile water.” He added that China’s potential mediation role could also extend to other long-running conflicts across the Horn of Africa region.
On the technology front, Huawei’s public tender offer for 2,008 Ascend-series AI chips – 1,408 of which are the company’s top-tier Ascend 950-series processors – has emerged as a new test of Egypt’s delicate balancing act between Washington and Beijing. According to reporting from Bloomberg, U.S. officials are currently pressuring American tech giants including Microsoft, Nvidia, and Advanced Micro Devices Inc to submit a competing counteroffer to secure the Egyptian contract. However, despite discussions of AI cooperation featuring prominently in Wednesday’s bilateral talks, Huawei’s specific bid was never mentioned by name in any of the official government documents released after the visit.
Bloomberg also reported that Huawei’s bid includes a partnership with Chinese tech firm iFlytek Co, a company that has appeared on the U.S. trade blacklist since 2019 over alleged involvement in the surveillance of Muslim minority groups in China’s Xinjiang region. It remains unclear what specific use cases Egyptian authorities would have for iFlytek’s technology under the proposed deal. While technical reports note that the computing performance of Huawei’s AI chips lags behind that of top products from Nvidia and other U.S. manufacturers, the acceptance of Huawei’s bid would still mark a major strategic shift in the global contest for control of AI infrastructure worldwide.
A U.S. State Department spokesperson told Bloomberg that Egypt is “one of dozens of countries” with whom Washington is currently discussing AI cooperation. But Alhalawany argued that Egypt is unlikely to secure a viable, affordable offer from U.S. firms. “Financially stressed Egypt will likely afford the Chinese option in light of the intensifying AI catch-up race, especially that Beijing bundles digital infrastructure projects with lucrative financing packages,” he told Middle East Eye. He added that the premium pricing of U.S. AI solutions makes wealthy Gulf economies far more attractive customers for American vendors than cash-strapped Egypt.
Even so, Bloomberg reports that U.S. officials view Egypt’s consideration of Huawei’s bid as a significant strategic development, given Egypt’s status as Africa’s second-largest economy. The omission of Huawei’s bid from all official statements after Wednesday’s talks could signal two different outcomes, analysts note: it may reflect Cairo’s reluctance to publicly align with China on sensitive AI infrastructure issues, or it may indicate that Egyptian officials are still weighing multiple competing offers, including a potential proposal from a U.S. firm.
Angieri noted that Egypt has long prioritized maintaining its strategic flexibility, holding U.S. military support and security guarantees while also drawing significant investment and infrastructure financing from China. Alhalawany echoed this assessment, stating that “Cairo is emerging as one of a few points of convergence between Beijing and Washington.” He added that “talks are significant but in ways that do not conflict with Egypt-US relations.”
This balancing act is not new for Cairo. Since taking office in 2014, Sisi has traveled to Beijing eight times, with his most recent visit taking place in 2024. China has already served as the primary financier for some of Egypt’s most high-profile recent projects, including the new administrative capital’s central business district and the light rail line connecting the new capital to Greater Cairo. Bilateral trade between China and Egypt reached roughly $20.8 billion in 2025, compared to total annual U.S. foreign assistance to Egypt of roughly $1.4 billion and a 2025 bilateral U.S.-Egypt trade volume of just over $12 billion.
The joint statement also included a shared call for reform of “the international system and international financial institutions to make them fairer, more representative of developing countries.” As Alhalawany put it, “China favours change as an aspiring global power, and Egypt views that the current system is unfair to developing countries.”
Looking forward, how Egypt navigates the competing demands of Washington and Beijing remains an open question. Cairo has not yet announced a final decision on Huawei’s AI chip bid, and no U.S. company has formally confirmed a competing offer. For now, the most concrete outcome of Xi’s visit – the expansion of the Suez Canal Economic Zone – is set to take shape along the banks of one of the world’s most critical waterways, a visible marker of China’s deepening strategic footprint in the Middle East.