Financial cooperation: Egypt and China sign key trade agreements

The governor of the Central Bank of Egypt, Hassan Abdalla, welcomed his Chinese counterpart, Pan Gongsheng, the governor of the People's Bank of China, on Thursday, July 10.

Key topics discussed included the establishment of agreements to facilitate trade in local currencies and the settlement of bilateral commercial payments in Egyptian pounds and Chinese yuan.

The discussions also covered Egypt's upcoming issuance of Panda bonds in the Chinese financial market, as well as opportunities for better integration between Egyptian and Chinese payment systems.

Panda bonds are loans taken out by non-Chinese entities in the Chinese bond market.

Their uniqueness lies in being denominated in Chinese currency, the yuan, and targeted at Chinese investors or those with access to the mainland Chinese financial market.

For a country like Egypt, issuing Panda bonds means borrowing money in China by directly appealing to local investors, with repayment in yuan.

This mechanism offers several advantages, particularly allowing foreign issuers to tap into new funding sources and diversify their financial partners.

By using yuan in international transactions, Beijing aims to enhance the global role of its currency and promote its adoption abroad.

Additionally, both governors emphasized the importance of increasing the presence of Chinese banks in Egypt and Egyptian banks in China to strengthen joint investments and support stable and sustainable growth for both economies.

Three agreements have been signed, one of which connects the Suez Canal Bank to the China-Africa TEDA Investment Company (the entity responsible for the operation and development of the China-Egypt Economic and Trade Cooperation Zone in Suez) and to CIPS (the operator of the Chinese cross-border interbank payment system), with the aim of promoting the use of the Chinese yuan in the Sino-Egyptian economic cooperation zone.

Located near the Suez Canal in the Ain Sokhna region (Suez Governorate), this zone is part of the larger Chinese Belt and Road Initiative and aims to establish Egypt as a regional industrial and logistics hub linking Africa, the Middle East, and Europe.

Additionally, the Chinese payment giant UnionPay has signed an agreement with Egypt's Electronic Banking Services (EBC) to modernize the digital payment infrastructure in Egypt and to ensure that UnionPay cards are widely accepted at physical and online retail locations across the country.

UnionPay has also partnered with Paymob, one of the leading payment service providers in Egypt, to enhance access to electronic payment solutions for businesses and e-commerce platforms.