March 27, 2025

CHINA-MIDDLE EAST

by Joyce Karam

While Washington is preoccupied with Signalgate, the unprecedented leak of a US attack plan through a messaging app, China has been steadily expanding its influence in the Middle East this week — especially in Egypt, Saudi Arabia, Morocco and Iraq.

In Egypt in particular, Chinese dealmaking comes at a precarious moment in Washington-Cairo relations. It’s not that Egyptian President Abdel Fattah al-Sisi is trying to replace the United States with China, but he is certainly expanding his pivot to the East.

Let’s dive into the details below.

Thanks for reading — and Happy Eid to all those celebrating next week.
Joyce (sign up on LinkedIn or online here)

Leading this week

The fallout from Signalgate has been both embarrassing and damaging for US foreign policy and credibility. China, already taking advantage of the turbulence and confusion in US politics, has been using this moment to recruit American federal and science talent — and now stands to benefit from the security breach.

But the content of the leaked chat, including some of the language directed at US partners such as Egypt, is also helping Beijing in its efforts to undermine Washington.

Stephen Miller, senior adviser to Trump, doubled down on the expectation that US partners — mainly Egypt and Europe — would foot the bill for strikes against the Houthis:

💬 “Green light, but we soon make clear to Egypt and Europe what we expect in return," Miller wrote. 

In an earlier message, US Vice President JD Vance downplayed the significance of the Suez Canal for American interests, claiming:
💬 “Only 3% of U.S. trade only passes through canal," Vance texted. 

That’s a curious interpretation of history. Since the 1956 Suez Canal Crisis during the Eisenhower era, the passage has been critical — not just for US trade but also for naval and military movement toward the Middle East and Indian Ocean.

Following the 1978 Camp David Accords, freedom of movement in the canal became integral to both US and Egyptian strategic interests.

But even setting that aside, the strikes against the Houthis are not Cairo’s preferred option. The escalation hasn’t deterred the Houthis and, according to Sisi, is costing Egypt $800 million a month.

Instead, the current dynamic is increasing Cairo’s skepticism of the Trump administration's policies in the region — and giving an opening to China.

➡️ No surprise, then, that this same week the Egyptian government signed a $1.65 billion agreement with a Chinese company to develop multiple metal factories in the Suez Canal zone, further cementing China’s already strong economic footprint in the region. (Read Adam Lucente’s report here.)

This adds to China’s growing presence in Egypt over recent months, just as the United States has taken a more confrontational regional strategy. Since January, China has helped build a satellite lab in Egypt — the first in Africa — and increased its economic investment in Cairo, totaling $5 billion this year.

What is China’s long game?

China isn’t seeking to replace the US military presence in the region. Instead, it is positioning itself as a more reliable political and economic partner than Trump.

Beijing is already Egypt’s top trading partner and the largest investor in Sisi’s flagship project: the new administrative capital.

In the Suez Canal Zone alone, Chinese investments now exceed $4.5 billion.

What is Egypt’s long game?

Cairo sees no real alternative to the US security umbrella and the military aid secured after Camp David. Trump has maintained that aid despite cutting other programs.

Egypt is not seeking confrontation with Trump, either:

• The highly anticipated Sisi visit to Washington in February has not taken place.
• Despite deep reservations about Trump’s rhetoric on Gaza, Egypt has kept its reaction level headed, rejecting the displacement of Palestinians without directly criticizing the American president.
• Egypt is instead proposing its own plans for Gaza’s reconstruction and a renewed truce, as Rina Bassist reports this week.

Joyce's take: In essence, Cairo is doing what it does best: sidestepping and buying time. Trump’s language on Gaza has evolved, and the United States realizes that no lasting arrangement can be achieved or implemented without Egypt’s outsized influence in Gaza.

But when it comes to Egypt-China relations, Cairo is not holding back. It sees in Beijing an enduring strategic alignment. Sisi has visited Beijing four times over the last decade — compared to only two visits to Washington during the same period.

It bears repeating: Egypt is not trying to substitute the US role and aid — but it is also shopping elsewhere. For China it’s a win-win, securing a larger footprint by the Red Sea and access to a major gateway linking Europe, Asia and Africa.

Photo of the week

Egyptian President Abdel Fattah al-Sisi greets Chinese President Xi Jinping during a signing ceremony at the Great Hall of the People on Dec. 23, 2014, in Beijing, China. (Getty Images)

Deals and visits ✈️

• Moroccan, Chinese airlines sign cooperation agreement
• Chinese company to invest $700 million to establish solar panel glass plant in Egypt
• Chinese cement company to acquire plant in Tunisia for more than $100 million
• Egypt and China ink $1.65 billion deal for metal factories in Suez Canal zone
• China, UAE delegations meet to strengthen nuclear regulation cooperation
• Morocco secures $230 million investment from China’s Sunrise Group
• Saudi Aramco to seek further investment opportunities in China
• Kuwait asks China to build six housing projects for foreign laborers
• Two Chinese auto manufacturers to build $32.7 million auto parts factory in Egypt
• Iraq signs $2 billion deal with China’s Shang Xin for major industrial complex
• Chinese car manufacturer GWM to build its first factory in Algeria

Thanks to Al-Monitor's Rosaleen Carroll for helping with this section. 

What we are reading​​​

• AI, aluminum and chips: Decoding UAE's Sheikh Tahnoon's visit to Trump (Al-Monitor)
• Russia and China poor alternatives for Jordan should Washington upend alliance (Wilson Center)

• China sees opportunity in Trump's upheaval (Foreign Affairs)