CAIRO, July 4 (Xinhua) -- Egypt is set to allow Chinese firms to register and operate using the Chinese currency, the yuan -- an important step to facilitate investment and enhance economic relations between the two countries, according to Egyptian economic experts.
Egyptian Minister of Investment and Foreign Trade, Hassan El Khatib, recently announced that "Egypt will allow Chinese companies to register using the yuan in financial transactions, under the Central Bank of Egypt's support."
The Egyptian investment law generally permits 100 percent foreign ownership in most sectors, according to a statement by the ministry.
Licensing Chinese companies to use yuan in Egypt means these firms can open bank accounts in Egyptian banks with the Chinese currency, Waleed Gaballah, a member of the Egyptian Association for Political Economy, Statistics and Legislation, told Xinhua.
The move will encourage more Chinese companies to pump investments in Egypt, which will further expand bilateral economic relations by facilitating trade in local currencies, he added.
He explained that now the Chinese companies don't have to use mediating currency, such as the U.S. dollars, during transactions. Instead, they can use yuan directly within Egypt and transfer their profits back to China in the same currency.
"Yuan succeeded in making a large international presence in payments in recent years," he added.
The Egyptian economist reiterated that Egypt took this decision to strengthen economic relations between the two countries and to encourage more Chinese companies to enter the Egyptian market and activate trading in local currencies.
Injecting the Egyptian markets with yuan will reduce transaction costs and will help Cairo and Beijing to have direct cooperation, Gaballah added.
He expressed hope that increased Chinese investment and local production would help narrow the trade deficit between the two countries and reduce Egypt's reliance on the U.S. dollar in an indirect way.
Gamal Bayoumi, head of the Cairo-based Arab Investors Union, hailed the move, given that the yuan is one of the International Monetary Fund's currencies and China is a friendly country to Egypt.
He pointed out that Egypt is an important station for the Chinese companies to enter the Arab, African, and European markets.
Meanwhile, Diaa Helmy, a member of the Economic Committee of the Egyptian Council for Foreign Affairs, confirmed that using the yuan in Egypt backs strategic bilateral cooperation.
Egypt seeks industrial development and localization, which could happen in partnership with China, Helmy said, adding that the new decision will ease the pressure on the U.S. dollar in Egypt and the Egyptian cash reserve.
