What Xi's tour of Egypt, Central Asia reveals about China's trade strategy

President Xi Jinping’s journey from Central Asia to Egypt highlights Beijing’s efforts to strengthen alternative trade, energy and manufacturing networks across Eurasia and Africa, analysts said, as wars and tariffs expose a reliance on vulnerable supply routes and overseas markets.

Xi arrived in Egypt on Tuesday for his first visit in 10 years after attending a summit of the Shanghai Cooperation Organisation (SCO) in Bishkek, Kyrgyzstan, where state leaders including Indian Prime Minister Narendra Modi and Russian President Vladimir Putin agreed to deepen economic and financial ties.

According to a joint statement issued by China and Egypt on Thursday, the two sides will explore cooperation in renewable energy, data centres, semiconductors and space applications, as well as critical-mineral supply chains, agriculture and car manufacturing.

The two countries also welcomed the renewal and potential expansion of their bilateral currency-swap agreement and called for greater use of the yuan and Egyptian pound in trade and investment settlements.

Ahead of Xi’s visit to the North African country, both he and his Egyptian counterpart, President Abdel-Fattah el-Sisi, signed op-eds that were published in each other’s leading newspapers, outlining their vision for closer bilateral ties, including expanded Chinese investment in the strategic bridge between Africa and the Middle East.

Xi’s journey comes amid a continued U.S.-China tariff war and mounting geopolitical instability, as wars disrupt shipping routes, drive up energy prices, and — together with extreme weather — deepen threats to global food security.

The trip reflects a coherent strategy to diversify trade routes and expand access to resources and markets through Central Asia’s overland links and Egypt’s manufacturing base and Suez Canal gateway, according to Su Yue, principal economist for China at the Economist Intelligence Unit (EIU).

“Alternative trade routes and overseas production give Chinese companies more options and reduce dependence on direct exports from China,” she said.

In Xi’s article, which ran on Tuesday in major Egyptian publications, he called for China and Egypt to capitalise on the latter’s strategic position linking the Arab world with Africa and use it to deepen Chinese engagement across both regions, according to a Xinhua readout.

On the same day, Sisi’s op-ed ran in People’s Daily, a Communist Party mouthpiece, and said that Cairo aimed to attract more Chinese companies and industries, including manufacturers of electric vehicles, energy storage batteries, renewable energy, electronics, desalination equipment, components and shipbuilding.

The two countries should also deepen technology transfers in telecommunications, artificial intelligence and space science, Sisi said, identifying those sectors as priorities for the next stage of bilateral economic and technological cooperation.

The Egypt visit followed Xi’s appearance in Bishkek, where he promoted deeper trade, energy and connectivity ties between China and other SCO economies. Xi pledged continued cooperation with member states on solar and wind projects, the development of an AI application centre, and 100 joint science and technology projects over the next three years.

China will also support upgrades to the Trans-Caspian International Transport Route — widely known as the Middle Corridor — and establish a centre in Tianjin to promote cooperation among ports and border crossings across SCO member countries, according to a Xinhua readout on Tuesday.

A declaration signed by China and the SCO’s other nine members called for reforms to global financial institutions, aiming to give developing countries greater representation and influence at the World Bank and International Monetary Fund.

Furthermore, the declaration called for greater use of the bloc’s transit potential, more resilient energy supply chains, and deeper cooperation on agriculture and food security.

The EIU’s Su said Central Asia’s energy and mineral resources, along with Egypt’s access to African and Middle Eastern markets, formed part of a broader Chinese strategy to localise production and reduce exposure to geopolitical disruptions.

But growing trade through third countries could draw greater scrutiny from the United States and European Union over sanctions evasion and transshipment, she warned.

There was also a political logic to Beijing’s approach, according to Alfredo Montufar-Helu, China-based managing director at Ankura Consulting. That thinking, he said, entails finding partners to support the institutions and initiatives that China has built to compete with the Western-led order, including Beijing’s Belt and Road Initiative and, more recently, its global governance, security, civilisation and development initiatives.

“The offer is transactional: financing and investment without the conditions Western lenders attach,” Montufar-Helu said. “At a moment when the US has pulled back from multilateral institutions and is actively disrupting global trade rules, it’s not surprising that the offer resonates across the Global South.”

The two relationships are already underpinned by rapidly expanding commerce. China-Egypt goods trade rose 19.7 percent to $20.8 billion in 2025, according to Chinese customs data. The surge was said to be largely driven by Chinese exports of machinery and manufactured goods, alongside investment in Egyptian infrastructure and industrial estates.

Similarly, China-Kyrgyzstan trade increased 19.8 percent to $27.2 billion, dominated by Chinese consumer and industrial exports, while minerals, energy and transport infrastructure remained central to their broader economic relationship.

Read the article at SCMP.