Xi and Sisi Agree a Third Phase for the Chinese Zone Beside the Suez Canal

Egyptian President Abdel Fattah el-Sisi and Xi Jinping agreed on Wednesday 2 September to expand Chinese investment in the Suez Canal Economic Zone, as Beijing deepens its ties with Cairo against the backdrop of the conflict in the Gulf.

Xi, on his first visit to Egypt in a decade, was received for talks at the Ittihadiya presidential palace with a 21-gun salute. Sisi's office said the two BRICS members signed an agreement to launch the third phase of the Egyptian-Chinese industrial zone, which officials say already hosts 200 companies and investments worth around $4bn. Egypt has not announced a figure for the new investment.

The location is the point. A manufacturing and logistics zone beside the canal gives Chinese firms a production base inside the Mediterranean and Red Sea trade system, and it gives Beijing a physical stake in a waterway whose throughput has been shaped by security conditions for three years. The expansion arrives while the war around the Strait of Hormuz continues to threaten global maritime trade, and while carriers are cautiously testing a return to Suez routings.

The talks also covered the six-month conflict, with both presidents urging diplomatic solutions towards a comprehensive agreement to end the war. A series of additional agreements was signed without details being provided.

The economic relationship is already substantial and lopsided. China is a major exporter to Egypt, with its trade surplus reaching $12bn in the first seven months of 2026 on Chinese customs data. Beijing has played a central role in Sisi's megaprojects, above all the New Administrative Capital 50 kilometres east of Cairo, large parts of which are bankrolled by Chinese investment. Across the city, major streets were lined with Chinese and Egyptian flags and with billboards showing the two leaders, and street signs advertised generations of Egyptian-Chinese friendship flowing like the Nile.

Analysts read the summit as Cairo underlining its strategic autonomy, showing it can leverage close ties with both Washington and Beijing. In a column published in Egyptian media the day before, Sisi wrote that Egypt and China were partners in strengthening the role of the global south in an increasingly polarised world.

The balancing act is being tested. Washington vowed last month to isolate Iran economically, threatening expanded sanctions that could also reach Chinese banks, while China, a major buyer of Iranian oil, has said it will safeguard its interests. In the run-up to an expected meeting between Xi and Donald Trump this month, Beijing has also sought to shore up ties with US-friendly regional states. Egypt is one of the largest recipients of US military aid and historically a key Middle East mediator, and last week the US Treasury announced sanctions on the Emirati branch of Egypt's Banque Misr over alleged support for Iran. Egypt, now one of the world's largest weapons buyers, hosted major joint air combat exercises with the Chinese military in August. For shipping, the practical question is what the zone does to cargo generation at every Egyptian port of call once the security picture settles.