Why China and Egypt are moving away from the dollar in trade and investment

The agreement was signed Thursday during Chinese Premier Li Qiang’s official visit to Egypt and was witnessed by Egyptian Prime Minister Mostafa Kamal Madbouly. According to China’s central bank, the People’s Bank of China (PBoC), the MoU aims to expand cooperation in areas such as local currency settlement, central bank digital currency (CBDC) development, and digital innovation.

The move is part of a push by both countries to reduce exposure to exchange rate risks and transaction costs tied to the dollar. “The agreement will create a better environment for financial cooperation by supporting the use of local currencies in current account transactions and direct investment,” the PBoC said in a statement.

During his visit, Premier Li expressed China’s commitment to advancing bilateral trade and unlocking new areas of economic growth. “China is willing to work with Egypt to optimize bilateral trade and create new drivers of economic growth,” he said.

Pan Helin, a member of the Expert Committee for the Information and Communication Economy under China’s Ministry of Industry and Information Technology, said the MoU marks “a new milestone” in financial cooperation. “As Egypt diversifies its foreign exchange sources and the Renminbi becomes more prominent in international payments, this cooperation will help both countries reduce reliance on the dollar,” Pan told the Global Times.