Igniting A Digital Gold Rush: Cairo and Beijing Forge a Game-Changing Financial Alliance

In this explainer, Team NorthStar details what closer Egypt-China ties mean for the global geopolitical landscape, particularly in light of the de-dollarization movement's increasing momentum.  

Image: Kuwait News Agency 

Executive Summary: 

• Egypt and China are strengthening their economic partnership through new MOUs aimed at increased financial collaboration and integrating Egypt into China's financial influence. 

• A key element is the shift to local currency trade, reducing FX volatility and advancing de-dollarization efforts. 

• This strategic alignment, including Panda bond issuance and UnionPay integration, projects China's financial influence and recalibrates global economic power dynamics, potentially moving away from an America-led world order. 

  
  

In an era of shifting global alliances, Egypt and China are forging a deeper economic partnership, creating new opportunities for investors in North Africa and effectively bridging regions. While global attention has been focused on President Trump’s trade policies, this China led geoeconomic realignment is quietly underway. On Thursday, July 10, Hassan Abdalla, Governor of the Central Bank of Egypt (CBE), met with Pan Gongsheng, Governor of the People's Bank of China (PBOC), signing three consequential Memorandum of Understanding (MOUs) with the clear intent to elevate their financial collaboration effectively bringing Egypt into the Chinese sphere of influence.

At the core of these discussions is the strategic shift towards settling trade in local currencies which is the Egyptian pound and the Chinese yuan. For businesses engaged in bilateral trade, this directly translates to reduced exposure to foreign exchange volatility and potentially lower transaction costs currently associated with third-party currencies. Investors should note this as a critical step in both nations' efforts to de-dollarize trade, a growing trend with broader geopolitical implications for global reserve currencies. This move enhances Egypt's financial resilience while significantly boosting the yuan's international standing.  

While Washington hasn't officially commented on these signed MoUs, our analysis indicates a high chance that the White House may not be pleased. President Donald Trump previously labeled BRICS as "anti-American" alliance and threatened retaliation against the bloc if they pursue a strategy of de-dollarization. While European Central Bank President Christine Lagarde and U.S. Treasury Secretary Scott Bessent are actively engaged in reinforcing the established Western financial services sector, with Lagarde championing the euro's broader global role and Bessent steadfastly working to maintain the dollar's unparalleled reserve currency status, China is pursuing a distinctly different path. 

Beijing is systematically tapping into burgeoning opportunities across emerging markets, many of which are rapidly ascending to become significant regional powers. This strategic focus is deeply rooted in China's long-term aim: to cultivate partnerships that subtly but deliberately facilitate a calculated move away from a United States-led world order, creating a more multi-polar financial and geopolitical landscape. Thus, it is no surprise that Beijing has extensively engaged Cairo to pivot away from the dollar-led financial system. Given its growing renewable energy sector and youthful population (i.e. 60% of its population is under 30), Egypt serves as China's strategic gateway to untapped markets, particularly those less reached by Western influence. 

A key highlight for the investment community is Egypt's upcoming issuance of Panda bonds in the Chinese financial market. Panda bonds, yuan-denominated loans from non-Chinese entities, open a vital new funding avenue for Egypt. For international investors, this provides a direct gateway to participate in Egypt's growth story through yuan-denominated assets, diversifying portfolios beyond traditional markets. From Beijing's perspective, facilitating these bonds is a calculated move to bolster the yuan's role as a global investment and reserve currency, subtly but effectively projecting its financial influence. While America continues to turn inwards, China’s ability to fill this vacuum is a highly calculated strategy. Through geopolitical and economic leverage, China continues to assert its role as a key player in global markets and a leader of the Global South. 

Further bolstering digital financial infrastructure, Chinese payment giant UnionPay's agreements with Egypt's Electronic Banking Services (EBC) and Paymob are set to modernize Egypt's digital payment ecosystem. This will ensure wide acceptance of UnionPay cards and enhance electronic payment solutions for Egyptian businesses and e-commerce platforms. This widespread adoption not only facilitates trade but also integrates Egypt more deeply into China's digital financial sphere, a move with potential long-term geopolitical ramifications for data flow and financial influence.  

This evolving financial landscape between Egypt and China is not merely about trade figures; it represents a strategic alignment that could recalibrate regional and global economic power dynamics. Businesses and investors should closely monitor these developments for both direct opportunities and their broader implications for the future of international finance. It is our assessment that China will continue to pursue a policy of turbocharging the departure from an America-led world order resulting in opportunities as well as risks.  

If you would like to learn more about what this means for your business, please contact us at ceo@northstar-insights.com