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Journal of Economic Studies Exploring

Egypt-China bilateral trade: dynamics
and prospects
Article in Journal of Economic Studies July 2012
DOI: 10.1108/01443581211245892

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JES
39,3

Exploring Egypt-China bilateral

trade: dynamics and prospects

314

Suez Canal University, Ismailia, Egypt and

Northwest A&F University, Yangling, China, and

Assem Reda Abu Hatab

Received 1 August 2010

Accepted 2 May 2011

Nada Abdelhamed Shoumann and Huo Xuexi

College of Economics and Management, Northwest A&F University,
Yangling, China
Abstract
Purpose Bilateral trade between Egypt and China has expanded substantially in recent years. Few
studies however have focused on the understanding of this trade relationship. The purpose of this
paper is to fill a void in the literature by examining and understanding the two countries trade pattern.
Design/methodology/approach In order to achieve the objectives of the paper, and in the light of
the pool of literature and availability of data, the authors relied on qualitative methods to analyze the
composition of trade between Egypt and China. In addition, the authors employed trade intensity
index, intra-industry trade index, and examined the trade complementarity to capture the dynamics
and perspectives of bilateral trade between the two countries.
Findings Results show low values in Egypts trade intensity index, implying that Egyptian trade
with China is less than it should be. The low values of the intra-industry trade index suggest smaller
trade between the two countries firms in the same industry. The study clearly shows that there are
few areas where there is an overlap in the two countries comparative advantage. The trade
complementarity analysis tends to suggest that the complementarity for China to export to Egypt is
increasing, while that for Egypt to export to China is declining.
Originality/value Given the lack of research that examines and compares trade between the two
countries, the paper provides an in-depth understanding of the patterns of trade between them and the
driving forces behind such dynamics, which is pertinent to best capture the opportunities presented by
the Chinese market. Also, the findings can be used to draw policy implications for promoting future
trade and cooperation between Egypt and China.
Keywords China, Egypt, Exports, Imports, International trade, Bilateral trade, Comparative advantage,
Intra-industry trade, Trade complementarity
Paper type Research paper

Journal of Economic Studies

Vol. 39 No. 3, 2012
pp. 314-326
q Emerald Group Publishing Limited
0144-3585
DOI 10.1108/01443581211245892

1. Introduction
Egypt was the first African country to enter into diplomatic relations with the Peoples
Republic of China, in 1956. Over more than a half of decade, the two countries have
been maintaining solid political and economic partnership and presenting an effective
model of fruitful South-South cooperation.
In 1953, before diplomatic relations were formally established, trade exchange was
valued at US$11 million; US$10 million in exports to China and US$600 thousand
imports. With Egypt having recognized the Peoples Republic of China in 1956, new
avenues of cooperation became available. In 1964, the two governments signed an
The authors are indebted to anonymous referees for the helpful remarks and thorough comments
on the earlier drafts of this paper.

agreement of economic and technical cooperation in Beijing. In 1985, a new trade

agreement was signed, stipulating that bilateral trade would be settled with convertible
foreign exchange from then on. By March 1995, the two countries signed an economic
and trade agreement to replace the 1985 trade agreement which smoothed and improved
the development of bilateral trade between the two countries. China and Egypt signed an
agreement on avoiding dual taxation and tax evading in August 1997. In the same year,
the two governments signed letter of intent on mutual-beneficial economic and technical
cooperation to encourage Chinese enterprises to establish joint ventures in Egypt. In
November 2006, the two countries signed a memorandum of understanding and agreed
to enhance all-round cooperation in trade, investment in an effort to elevate bilateral
economic ties. Recently in 2009, Egypt hosted the China-Africa Cooperation Forum for
the purpose of deepening the new type of strategic partnership between the two sides for
sustainable development. This event can be considered a new era of economic trade and
economic cooperation between China and Egypt. The two sides agreed to further
enhance cooperation in customs, taxation, inspection and quarantine, and to conclude
and implement relevant cooperation agreements for the sound development of
China-Egypt trade. An African commodities trade center will be established in China
and preferential policies such as fees reduction and wavering will be adopted for
participating Egyptian enterprises which will promote export of Egyptian commodities
to China.
Nevertheless, the deepness of the economic relations and the large number of trade
and economic agreements and protocols between the two countries, the current volume
of the exchange between them does not reflect these long-aged ties. This, in particular,
can be seen obviously if we looked into the trade volume through the eyes of the
Egyptian side. Egyptian exports to Chinese market have not exceeded US$350 million
in their best cases, and along with their low values, they have characterized by
fluctuation and instability.
It is worth noting that to the authors knowledge there has been no research
conducted on the analysis of trade flow between Egypt and China. Most of literature
related to Egypts foreign trade does not take into account China as a trading
partner, but China is sometimes included or mentioned when it comes to the potential
opportunities for Egypt to expand its overall trade with Asian economies as an
alternative to overcome the geographic concentration of Egyptian foreign trade. By the
same token, Egypt is often being studied as one among the African countries when
Chinese trade cooperation with Africa is investigated.
The rationale behind the present study lies in two main reasons; first, China is a
major and growing Asian market and has become a key player in the world economy.
Besides, Chinas demand for imports is expected to continue, driven by the effects of
fast economic growth, higher incomes and rapid urbanization (Chen, 2004). Therefore,
China presents enormous opportunities for Egyptian exports to this growing market.
The second reason is based on the urgent need for Egypt to diverse its export map.
Nassar (1980) pointed out the importance of Egyptian export promotion and the role of
commercial representative offices in facing Egypts competitors in the international
market. He also argued that besides its traditional export destinations, Egypt has to
explore and open new markets for its exports. Zanaty and Saleh (1997) concluded that
Egyptian foreign trade tends to concentrate in the markets of developed industrial
countries at the expense of other markets, which increases the degree of economic

Egypt-China
bilateral trade

315

JES
39,3

316

dependence of Egyptian economy on the economic systems of those countries and in

addition to political subordination. Fatima (1998) emphasized the necessity of
restructuring of the Egyptian exports geographically and attaching more attention to
the Arab, African, and Asian markets, rather than the almost total reliance on EU and
American ones which absorb more than 65 percent of Egypts foreign trade. Seddiq
and Salah (2002) analyzed the EU-Egypt Partnership Agreement and recommended
that Egypt should focus on more trade cooperation with other economic blocs, such
as; the African or Asian ones while this may give Egypt better situation in the
negotiations with the European side.
What can be concluded from these studies is that Egyptian exports have been
suffering from heavy geographic concentration. In addition, the previous studies suggest
that there is an urgent need for Egypt to expand its export destinations to include more
Arab, African, and Asian markets.
Based on such solid economic relations between Egypt and China, the expected
economic growth and imports demand in China, as well as that need for Egypt to
diversify the destinations of its exports, China therefore can present a proper
mechanism and a sound alternative for achieving the expanding and diversifying
Egyptian exports. Moreover, the lack of research that examines and compares trade
between the two countries requires an in-depth understanding of the patterns of trade
between the two countries and the driving forces behind such dynamics, which
is pertinent to best capture the opportunities presented by the Chinese market.
This paper therefore attempts to fill the gap of the literature on bilateral trade between
Egypt and China. It also aims at investigating the major trends of and changes in the
bilateral trade between the two economies; examining trade intensity, intra-industry trade
(IIT), comparative advantages and trade complementarity associated with the two
countries trade, and draw implications for promoting future trade and cooperation
between Egypt and China. In the next section, we first briefly overview the development in
Egypt-China economic relations and then highlight the trends in overall trade between
them. Section 3 analyses the composition of trade between the two countries. Section 4
examines trade intensity. IIT indexes will be discussed in Section 5. Section 6 addresses
trade complementarity between the two countries and the last section summarizes the
paper and addresses some concluding remarks.
2. Overview trends in bilateral trade between Egypt and China
Egyptian exports into China have grown from US$10.6 million in 1994 to US$342.5 million
in 2008. However, the year-on-year growth rate has been characterizing by sharp
fluctuations. The negative growth rate, of 40.8 percent in 1995, was converted into a
rocket increase in the following two years, valued at 22.1 and 118.3 percent, in 1996
and 1997, respectively. In 1998, exports from Egypt to China declined by around
48 percent, in comparison to 1997, and this was followed by continued ups and downs
until they recorded their peak of 449.1 percent in 2002. Over 2007-2008, exports from
Egypt to China climbed from US$129.1 million to US$342.5 million, recording an
increase rate of 165.2 percent.
On the other hand, Chinese exports into Egypt have shown relative stability. They
increased from US$194.4 million in 1994 to roughly US$642.5 million in 2000, or
230.4 percent greater than their value in 1994. After registering slight declines during
2001-2003, Chinese exports to Egypt have been continuously increasing, while they

climbed from US$675.3 in 2004 to more than US$4.4 billion in 2008, representing an
increase rate of about 656 percent.
It is quite obvious that Chinas exports to Egypt have been far greater than its
imports from Egypt, resulting in a large trade surplus in favor of China (Table I). It is
also noticeable that the year 2008 was a significant one in terms of bilateral trade
between the two countries, while both Egypts exports to and imports from China had
shown a strong increasing rates, which valued at 165.2 and 172.4 percent, respectively,
in comparison to the previous year.
In terms of the share of Egypts imports from China out of its total imports, Table I
indicates that they have been increasing steadily, reaching 8.4 percent in 2008.
In contrast, except for 2002, when Chinese imports calculated for 4.7 percent of Egyptian
total exports, their share has been quite modest, and suggesting that China is not
Egypts major export market. The same phenomenon is existed in the China exports
to Egypt as a percentage of its total exports. Table I also demonstrates that they
have maintained low values, ranging from 0.2 percent in 1994 to 0.4 percent in 2008.
3. Composition of trade between Egypt and China
To gain more insight into the bilateral trade pattern between the two countries, this section
investigates the composition of trade between Egypt and China. The paper uses the
Standard International Commodity Classification (SITC Revision III), which is adopted by
the United Nations Comtrade Database and has been widely used in various researches.
A look at Tables II and III clearly shows that trade between Egypt and China
has been dominated by trade in machinery and transport equipment (SITC7),
manufactured goods (SITC6 and 8), and chemicals and related products (SITC5).
These four commodity groups together calculated for 95.5 percent of Chinas exports to
Egypt and some 32 percent of Egypts exports to China, during the period 1995-2008.
The same table also shows that trade in food and live animals (SITC0) between the
two countries has witnessed a continuous declines across the periods analyzed.
Considerable change in the pattern of Egyptian exports into China in the past decade
has been clearly seen in Table III. Trade in crude materials (SITC2), that dominated
Egyptian exports to China in 1995, recording 92 percent, has shrunk sharply to roughly
62 percent during the period 2000-2005 and reached 31 percent in 2008.
Instead, mineral fuels lubricants and related materials (SITC3) started to attract
Chinese market after 2005 while they amounted to 35 percent of Egypts exports to
China in 2008. Chemicals and related products (SITC5) continued to acquire greater
relevance by growing from less than 2 percent in 1995 to 25.5 percent in 2008. Exports
of manufactured goods classified chiefly by material (SITC6) showed substantially
fluctuations during the study period. In terms of Chinas exports to Egypt, except for
food and live animals (SITC0), which continued declining over years, representing a
150 percent decrease between 2008 and 2000, other commodity groups have generally
maintained their traditional shares (Table III).
4. Trade intensity
Several statistical indices can be used to measure trade between two nations. One such
index is the trade intensity index (TII) (Kojima, 1964). TII appears in two forms, i.e. the
export intensity index (XII) and import intensity index (MII). They can be defined as
follows:

Egypt-China
bilateral trade

317

Table I.
Trends in Egypts trade
with China during the
period 1994-2008

10.6
6.3
7.6
16.7
8.7
13.6
39.3
40.5
222.4
100.1
124.7
109.3
108.5
129.1
342.5

194.4
295.9
283.5
295.6
418.5
620.6
642.5
514.1
562.6
535.4
675.3
914.7
1,199.2
1,627.1
4,432.1

0.3
0.2
0.2
0.4
0.3
0.4
0.8
1.0
4.7
1.6
1.6
1.0
0.8
0.88
1.3

2.0
2.5
2.2
2.2
2.5
3.9
4.6
4.0
4.5
5.0
5.01
4.6
5.8
6.0
8.4

0.2
0.3
0.3
0.2
0.3
0.4
0.3
0.3
0.3
0.2
0.2
0.2
0.3
0.4
0.4

0.01
0.01
0.00
0.04
0.02
0.02
0.05
0.03
0.03
0.04
0.03
0.03
0.03
0.03
0.04

Egypts share in
Chinas exports
Chinas imports
(%)
(%)

100
2 40.8
22.1
118.3
2 48.0
56.6
188.7
3.0
449.1
2 55.0
24.5
2 12.4
2 0.7
18.9
165.2

100
52.2
2 4.2
4.2
41.6
48.3
3.5
2 20.0
9.4
2 4.8
26.1
35.4
31.1
35.7
172.4

Growth rate
Exports
Imports
(%)
(%)

Source: Based on data extracted from United Nations Comtrade Database SITC Revision III, at current prices (available at: www.unstats.org/unsd/
comtrade (accessed February 2010))

1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008

Year

Chinas share in
Egypts exports
Egypts imports
(%)
(%)

318

Egypt trade with China

Exports
Imports
(million $)
(million $)

JES
39,3

SITC

Product name

1995

2000

2005

2008

0
1
2
3
4
5
6
7
8
9

Food and live animals

Beverages and tobacco
Crude materials, inedible, except fuels
Mineral fuels, lubricants and related materials
Animal and vegetable oils, fats and waxes
Chemicals and related products, n.e.s.
Manufactured goods
Machinery and transport equipment
Miscellaneous manufactured articles
Not classified elsewhere
Total

0.0
0.0
92.8
0.0
0.0
1.7
5.2
0.0
0.3
0.0
100

0.0
0.0
63.2
0.0
0.0
0.6
35.8
0.1
0.2
0.0
100

0.6
0.0
61.1
0.0
0.0
23.9
12.6
0.2
1.6
0.0
100

0.7a
0.0
31.0
35.3
0.0
25.5
5.7
0.3
0.5
1.1
100

Note: aAll values are in percentage

Source: Based on data extracted from United Nations Comtrade Database SITC Revision III available
at: (www.unstats.org/unsd/comtrade (accessed February 2010))

Product
0
1
2
3
4
5
6
7
8
9

Product name

1995

Food and live animals

Beverages and tobacco
Crude mater.ex food/fuel
Mineral fuel/lubricants
Animal/veg oil/fat/wax
Chemicals/products n.e.s
Manufactured goods
Machinery/transp equipmt
Miscellaneous manuf arts
Commodities n.e.s
Total

14.9
2.3
3.0
0.0
0.0
15.0
26.9
24.9
13.0
0.0
100

2000

2005

2008

16.4
4.1
2.2
0.5
0.1
11.0
23.5
22.0
20.2
0.0
100

1.1
3.1
1.2
0.0
0.7
14.1
24.4
37.5
17.8
0.0
100

2.5
0.1
1.8
0.0
0.1
11.1
34.2
36.8
13.5
0.0
100

Note: aAll values are in percentage

Source: Based on data extracted from United Nations Comtrade Database SITC Revision III
(available at: www.unstats.org/unsd/comtrade (accessed February 2010))

XII i

xij =X iw
M jw =M w 2 M iw

mij =M ij
X jw =X w 2 X iw

and:
MII i

where XII i is the country is export intensity index, MII i the country is import
intensity index, xij the country is exports to country j, xiw the country is total exports
to the world, M jw the country js total imports from the world, M w the world total
imports, M iw the country is total imports from the world, mij the country is imports
from country j, X jw the country js total exports to the world, X w the world total
exports, and i and j represent Egypt and China, respectively.

Egypt-China
bilateral trade

319

Table II.
Percent distribution of
Egyptian exports into
China by main
commodity groups in
selected years

Table III.
Percent distribution of
Egyptian imports from
China by main
commodity groups in
selected years

JES
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320

Export and import intensity indices reflect the ratio of the share of country is trade
with country j relative to the share of world trade destined for country j. An index of
greater (less) than unity has been interpreted as an indication of larger (smaller) than
expected trade flow between two parties concerned. Table IV demonstrates that
Egypts export and import intensity indices with one exception are smaller than unity,
implying that Egyptian trade with China is less than it should. Thus, there is great
scope to expand trade with China. The table however shows that Chinas exports to
Egypt have increased over the years and have become greater than expected in recent
years. In particular, Egypt imported relatively more from China by1995. Egypt is
increasingly becoming Chinas major export market but China is not Egypts major
export market.
5. Intra-industry trade
Another important feature associated with trade is the dramatic increase in IIT. To
provide an assessment, the following conventional IIT index proposed by Grubel and
Lloyd (1975) is computed:
IIT ic

xic mic 2 jxic 2 mic j

xic mic

where IIT ic is the index of intra-industry trade in commodity group c for country i, xic
the value of exports of commodity group c by country i, and mic is the value of imports
of commodity group c by country i. IIT index has a value range between 0 and 1 or 0
and 100 in percentage form.
A large value implies greater trade between firms in the same industry. Table V
suggests that most IIT (with an IIT index greater than 0.4) has occurred in the
commodities groups of SITCs 6 and 2 at the two-digit level. This reflects lower trade
between two countries firms in the same industry. Other groups are recorded with low
IIT scores calculated using 2008 trade statistics.
6. Analysis of trade complementarity
In this section, trade complementarity between Egypt and China is examined. We first
employ the Revealed Comparative Advantage (RCA) index to assess export potential of
each of the two countries. This is followed by calculation of Trade Complementarity
Index (TCI) to measure how well the structures of Egypt/Chinas exports match the
structures of China/Egypts imports.

Table IV.
Intensity of trade
between Egypt and China

Export intensity
Egypt to China
China to Egypt
Import intensity
Egypt from China
China from Egypt

1990

1995

2000

2005

2008

0.143
0.459

0.067
1.192

0.238
1.435

0.162
1.250

0.179
1.142

0.574
0.135

0.816
0.134

1.155
0.580

0.613
0.281

0.890
0.195

Source: Authors own estimates using data from United Nations Comtrade Database SITC Revision
III (available at: www.unstats.org/unsd/comtrade (accessed February 2010))

Code

Description

IIT

61
26
21
58
66
54
56
68
29
28
33
22
55
25
81
89
86

Leather, lthr. manufs., n.e.s and dress

Textile fibres
Hides, skins and fur skins, undress
Plastic materials, etc.
Non-metallic mineral manufactures
Medicinal and pharmaceutical produc
Fertilizers, manufactured
Non-ferrous metals
Crude animal and vegetable material
Metalliferous ores and metal scrap
Petroleum and petroleum products
Oil-seeds, oil nuts and oil kernels
Perfume materials, toilet and cleansi
Pulp and paper
Sanitary, plumbing, heating and lig
Miscellaneous manufactured articles
Scientif and control instrum, photogr

0.890
0.651
0.468
0.367
0.188
0.135
0.133
0.091
0.064
0.058
0.036
0.028
0.016
0.016
0.014
0.013
0.011

Note: IIT indices are based on the values of Egypts exports to China and Chinas imports from Egypt
Source: Authors own estimates using data from United Nations Comtrade Database SITC Revision III
(available at: www.unstats.org/unsd/comtrade (accessed February 2010))

6.1 Comparative advantage

To compare the competitiveness of each country in trade of a particular commodity
group, the RCA index is often computed using the following formulae:
RCAic

xic =X iw
xcw =X w

where RCAic is the revealed comparative advantage index of commodity group c for
country i, xic the value of exports of commodity group c by country i, X iw the value of
total exports by country i, xcw the value of world exports of commodity group c, and X w
is the value of total world exports. Country i has comparative advantage in exporting
commodity group c when RCAic has a value greater than unity, that is, when country
is export share of commodity group c is large than the world export share of the same
commodity group. On the contrary, if RCAic is less than unity, this means that country
i has comparative disadvantage.
According to Table VI, Egypt has shown strong comparative advantage mainly in
mineral fuel (STIC3), crude materials (SITC2), manufactured goods (SITC6) and food and
live animals (SITC0). However, the comparative advantage for some commodities has
shown a declining, and sometimes greatly over years, for instance; (SITC3). The RCA
index for this commodity groups has declined dramatically and this is a puzzle to us as
one would have thought Egypt has a greater comparative advantage in them. Further
investigation is needed to understand the decline in the RCAs for Egypt. In relation to
Chinas comparative advantage, the same table also reveals that China has relatively
fewer groups of commodities that have comparative advantages, and they lie in
manufactured goods (SITCs 6 and 8), and machinery and transport equipments (SITC7).
It is also clear that in some cases the comparative advantages have in fact declined.

Egypt-China
bilateral trade

321

Table V.
IIT indices, 2008

JES
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322

Table VI.
Comparative advantage
indices

STIC code

Description

1995

Egypt
2000 2005

2008

1995

China
2000 2005

2008

0
1
2
3
4
5
6
7
8
9

Food and live animals

Beverages and tobacco
Crude mater.ex food/fuel
Mineral fuel/lubricants
Animal/veg oil/fat/wax
Chemicals/products n.e.s
Manufactured goods
Machinery/transp equipmt
Miscellaneous manuf arts
Commodities nes

1.329
0.087
1.749
6.765
0.219
0.606
1.839
0.016
0.750
0.000

1.381
0.180
2.051
4.178
1.648
0.734
1.261
0.025
1.324
0.715

1.769
0.228
1.118
3.227
1.363
1.070
1.314
0.129
0.565
0.117

0.945
0.814
0.732
0.651
0.563
0.634
1.329
0.529
2.839
0.077

0.943
0.339
0.587
0.314
0.153
0.540
1.244
0.797
2.818
0.053

0.423
0.141
0.217
0.163
0.072
0.515
1.287
1.316
2.197
0.027

1.629
0.057
1.290
4.174
0.548
0.472
1.128
0.030
0.248
3.031

0.575
0.194
0.310
0.188
0.095
0.440
1.216
1.204
2.207
0.057

Source: Authors own estimates using data from United Nations Comtrade Database SITC Revision III
(available at: www.unstats.org/unsd/comtrade (accessed February 2010))

Apparently, both Egypt and China have shown comparative advantage in different
commodity groups. However, this conclusion is based on calculations at a highly
aggregate level. At a more disaggregate level, the two countries may have different
comparative advantage pattern. In addition, the IIT indices presented in Table IV show
that there may be more IIT in commodities in which both countries have comparative
advantage (e.g. SITCs 61,26, and 21).
Further growth in bilateral trade between Egypt and China is also possible if each
country exploits its own comparative advantage. Table VI clearly suggests that there
are few areas where there is overlap in the two countries comparative advantage and
thus the two countries do not compete with each other and indeed, the two countries
can expand their bilateral trade.
6.2 Complementarity in trade
TCI correlates nation is export specialization pattern with nation js import
specialization pattern across the spectrum of all traded products. TCI is a
trade-weighted measure for sector s of the degree to which the relative-export-share
structures of nation is exports (RXSi) corresponds with the relative-import-share
structure of nation js imports (RMSj) across all k commodities within the s sector
(Vollrath and Johnston, 2001). The formula is:
i
X h
k
k
k
u
TCI sij
RXS
RM
S
5
*
*
i
i
k[s
where:
X k =X s
RXS ki kiw iw
6
X ww =X sww
RXS kj

X kjw =X sjw
X kww =X sww

uk

X kww
X sww

RXS ki is Balassas revealed comparative advantage. RXS kj has the same structure,
except that import rather than export data are used, and. u k is the share of k in global
exports of s goods. In other words, the index can be interpreted as being a trade-weighted
measure for sector s of the degree to which exporter is profile of comparative
advantages corresponds with the profile of comparative disadvantages for importer j.
That is, this index depicts how specialization in the commodity composition of nation is
exports to the global market meshes with the specialization in the commodity
composition of nation js imports from the international market. There is always some
degree of complementarity in bilateral specialization patterns, provided i exports some
goods that j imports within the sectors.
TCI equal to one represents a threshold, with a value greater (less) than one showing
a greater (lesser) level of complementarity in the composition of what exporter i exports
and what importer j imports than occurs between the average pair of countries.
Table VII presents complementarity indices of Egypt export to China and China import
to Australia. They are calculated at the one-digit level, across all commodity groups
according to SITC from 1994 to 2008.
The low values of TCI, presented in Table VII, suggest that trade between Egypt
and China is not complementary, while the highest values of TCIs have not even
exceed 0.5 over the studied period. TCIs for Egyptian export and China import of
mineral fuel (SITC3) shows an upward trend. On the other side, TCIs values for China
exports and Egypt imports of (SITC6, and 7) show an increasing trend since 2002.
Mineral fuel and crude material seem to be the areas in which Egypt may complement
SITC code
Egypt to China
0
1
2
3
4
5
6
7
8
9
China to Egypt
0
1
2
3
4
5
6
7
8
9

1994

1996

1998

2000

2002

2004

2006

2008

0.029
0.000
0.121
0.175
0.005
0.051
0.466
0.006
0.038
0.000

0.058
0.000
0.091
0.275
0.005
0.068
0.334
0.005
0.043
0.000

0.047
0.000
0.151
0.222
0.005
0.120
0.379
0.008
0.061
0.005

0.028
0.000
0.159
0.374
0.007
0.094
0.236
0.011
0.073
0.005

0.025
0.000
0.242
0.232
0.005
0.080
0.257
0.017
0.044
0.014

0.028
0.000
0.252
0.329
0.005
0.060
0.199
0.017
0.032
0.004

0.016
0.000
0.087
0.427
0.001
0.054
0.107
0.008
0.019
0.009

0.023
0.000
0.142
0.370
0.014
0.112
0.133
0.054
0.050
0.001

0.267
0.012
0.054
0.006
0.019
0.067
0.232
0.141
0.113
0.000

0.222
0.012
0.054
0.007
0.022
0.076
0.248
0.157
0.095
0.000

0.141
0.007
0.036
0.021
0.011
0.062
0.222
0.177
0.116
0.000

0.188
0.006
0.037
0.023
0.003
0.060
0.188
0.208
0.119
0.002

0.182
0.006
0.031
0.011
0.001
0.054
0.179
0.199
0.110
0.005

0.101
0.004
0.024
0.018
0.002
0.049
0.194
0.225
0.084
0.006

0.080
0.002
0.016
0.021
0.002
0.041
0.163
0.247
0.067
0.009

0.055
0.001
0.017
0.014
0.002
0.062
0.316
0.337
0.081
0.001

Egypt-China
bilateral trade

323

Table VII.
Source: Authors own estimates using data from United Nations Comtrade Database SITC Revision III
Trade complementarity
(available at: www.unstats.org/unsd/comtrade (accessed February 2010))
between Egypt and China

JES
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324

with China. On the other hand, manufactured goods and transport equipments are the
areas in which China can further complement with Egypt.
The same table tends also to suggest that the complementarity for China to export to
Egypt is increasing while that for Egypt to export to China is declining. This again
emphasizes that Egypt is increasingly becoming Chinas major export market but China
is not Egypts major export destinations. It also can be interpreted as that China seems to
be enjoying more opportunities to export to the Egyptian market. Thus, Egypt is yet
to tap more opportunities to export more to China.
7. Summary and concluding remarks
To sum up, Egypt and China have been enjoying solid economic ties which date back to
more than half a century. However, the current volume of the exchange between them
does not reflect this long-aged economic relation. The volume of Egyptian exports into
China has increased remarkably since 1994, particularly in the last few years. However,
the year-on-year growth rate has been characterizing by sharp fluctuations. Chinas
exports into Egypt have been far greater than its imports from Egypt, resulting in a large
trade surplus in favor of China. This pattern of trade between Egypt and China is
expected to continue and will generate too much shocks to Egypts domestic production.
Egypt chiefly exports mineral fuels, lubricants and related materials, chemicals and
related products, to Chinese market. On the other side, Chinas major exports to Egypt
are manufactured goods, machinery and transport equipments, and chemical products.
The paper indicates considerable change in the pattern of bilateral trade between the
two countries in the past decade. Egypt is increasingly becoming Chinas major export
market but China is not Egypts major export market. While, the importance of the
Egyptian market to Chinese exports is increasing, Chinas imports from Egypt tend to
fluctuate between years and sometimes to a great extent.
Yet the volume of trade between the two countries is still small and the scope of
commodities traded is relatively extensive. Further trade expansion between the two
countries will render huge benefits to both partners. Given that roughly 60 percent of
Egypts exports enter two main destinations, which are the USA and EU, Egypt has a
strong need to open new markets for its exports and diversify export destinations so as
to avoid the economic and political problems associated with the geographic
concentration in foreign trade. China offers a potentially huge market for Egyptian
products. Chinas demand for imports will continue to rise. This is driven by several
important factors such as:
.
limited land and other natural resources;
.
increased demand as a result of income increase, and to some extent, increased
demand by population increase; and
.
the demand for diverse products as consumer tastes and preferences change.
The estimated trade intensity indices in this paper have shown that Egypt and China
demonstrate that Egypts export and import intensity indices with one exception are
smaller than unity, implying that Egyptian trade with China is less than it should.
Thus, there is great scope to expand trade with China. The TII however shows that
Chinas exports to Egypt have increased over the years and have become greater than
expected in recent years. The low values of the index of IIT imply smaller trade
between two countries firms in the same industry.

Growth in bilateral trade is also possible if each country exploits its own comparative
advantage. The study clearly suggest that there are few areas where there is overlap in
the two countries comparative advantage and thus the two countries do not compete
with each other and indeed, the two countries can expand their bilateral trade.
The TCI shows that trade between Egypt and China is not complementary. The index
values tend to suggest that the complementarity for China to export to Egypt is
increasing while that for Egypt to export to China is declining. China seems to be
enjoying more opportunities to export to the Egyptian market. Mineral fuel and crude
material seem to be the areas in which Egypt may complement with China. On the other
hand, manufactured goods and transport equipments are the areas in which China can
further complement with Egypt. Thus, Egypt is yet to tap more opportunities to export
more to China.
Finally, the existing practice has shown that bilateral free trade agreements (FTAs)
offer a second best solution to world free trade. Research findings demonstrate that
FTAs have boosted bilateral trade between partners (Wu and Zhou, 2006). Egypt and
China should explore the possibility of signing a FTA sooner.
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