Is Beijing’s latest move into Africa a signal it wants a parallel system to the dollar-led order?
Egypt and China have taken a major step toward reducing their reliance on the US dollar, signing a trio of financial agreements which signal deeper economic alignment and ambitious push for cross-border payments in local currencies.
Three Memoranda of Understanding (MoUs), signed on July 10 at the Central Bank of Egypt’s headquarters, focus on boosting digital payments infrastructure and enabling trade settlements in Chinese Yuan, particularly within the China-Egypt Suez Economic Trade Cooperation Zone.
The first MoU, signed by Suez Canal Bank, China-Africa TEDA Investment Company, and CIPS Company Limited, the operator of China’s Cross-border Interbank Payment System (CIPS, lays the groundwork for settling trade in Yuan, bypassing dollar-based channels and reducing third-party settlement costs.
A second agreement between UnionPay International and the Egyptian Banks Company for Technological Advancement (EBC) will expand UnionPay’s footprint in Egypt, integrating its services into the national digital payments ecosystem to boost acceptance across both point-of-sale and online platforms.
Meanwhile, a third MoU with Egyptian fintech Paymob aims to accelerate merchant adoption of UnionPay in Egypt, enabling more businesses to process card payments from Chinese consumers and investors.
Egypt and China’s growing relationship
While this new financial pact between Egypt and China may seem surprising, it reflects a steadily growing economic relationship.
China is Egypt’s largest import partner, with bilateral trade reaching nearly $15bn in 2022, of which $14.4bn were Chinese exports to Egypt. Though Egyptian exports to China remain relatively small, the two nations have expanded cooperation significantly in recent years.
In 2018, Egypt and China signed a broader strategic MoU covering local-currency swaps, central bank digital currency (CBDC) cooperation and payment-system interoperability. Chinese banks such as the China Development Bank and Bank of China have since opened offices in Cairo, while Egypt’s National Bank established a presence in Shanghai.
Undermining USD dominance
The recent Egypt and China payment agreements may appear harmless at first glance, but their effects are likely to ripple across to Washington.
Since being re-elected to office in January 2025, US President Donald Trump has looked to improve the US’ global standing, a goal leading to aggressive tariffs and tighter trade policies.
This new financial deal between Egypt and China signals a challenge to those efforts.
Earlier this week, Trump claimed the BRICS nation cooperative (Brazil, Russia, India, China and South Africa) was “formed to destroy the US dollar.” Shortly after this statement, the US announced 50% tariffs on Brazilian exports.
By enabling cross-border payments in local currencies and bypassing dollar-based channels, the agreements between China and Egypt could be seen to take aim at the central role of the USD in global trade flows.
Each Yuan–Egyptian Pound transaction which clears without passing through New York, reduces the need for US correspondent banks, cutting into their fee revenues and, more significantly, chipping away at the dollar’s long-standing gatekeeper role in international finance.
At the same time, the move enhances financial sovereignty for both Egypt and China.
There are also a plethora of benefits for Egypt. Faster and cheaper settlements in Chinese Yuan will lower transaction costs for businesses and encourage higher trade volumes with its largest import partner.
Additionally, Egypt’s digital payments infrastructure will be enhanced. Expanded UnionPay integration and collaboration with Chinese fintech firms will support the country’s financial inclusion strategy and broader digitisation goals.
Still, the biggest long-term winner is likely China.
These agreements deepen the Chinese Yuan’s presence in Africa and serve Beijing’s broader push for currency internationalisation. Growing and embedding its financial systems, card networks and settlement infrastructure into key emerging markets, China is slowly reducing its reliance on SWIFT.
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