China's plans to invest $20 billion in Egypt collapse

Talks between Egypt and China on the development of a new capital city area worth $20 million have halted following disagreements on how to split revenues from the project, it has been reported.

The fall-out raises question marks over Cairo's ability to attract foreign investors, as Egypt continues to suffer from financial woes and poor security.

Egypt and China have for two years been negotiating a deal, which came to an end after Egyptian authorities sent a reply to the final proposal by China Fortune Land Development Co. (CFLD) on developing a new city area of around 15,000 acres (6,070 hectares) over the next 25 years.

Ahmed Zaki Abdeen, who heads the company created to oversee the construction of the new investment project east of Cairo, told Bloomberg News: "We didn't hear back."

"The talks have stopped," he added.

Officials in Cairo have expressed that there could be a substitute to the failed project.

"This could be an alternative to the new capital project," said Khaled Abbas, Egypt's deputy minister for housing and urban communities in a hint that another deal with CFLD may be on the horizon.

Egypt has been struggling to attract foreign investment into the country. During the summer, Egyptian President Abdel Fattah al-Sisi announced austerity measures to qualify for a $12 billion loan from the International Monetary Fund (IMF).

Egypt's economy is still dwindling after the 2011 uprising ushered in political and economic instability.

The measures, which none of his predecessors dared implement, are biting for poor and middle class Egyptians. 

Sisi welcomed the support of celebrities and religious figures in Egypt to justify his austerity measures, including the former grand mufti of Egypt who told people in poverty to eat cake.

"You all complain that meat is too expensive and you say 'oh so what are we going to eat?'" Ali Gomaa said in July.

"A piece of cake is 900 calories. So if you ate two pieces, that's it, as if you have eaten breakfast or dinner or whatever else" he added.

Since taking office, Sisi has overseen the largest crackdown on dissent in Egypt in living memory, jailing thousands of Islamists along with secular, pro-democracy activists and rolling back freedoms won in a 2011 popular uprising.