Chinese Manufacturer Deals for Wheels in Morocco

Car-wheel maker Citic Dicastal Co. Ltd. signed a 350 million euro ($409 million) deal to build two factories in Morocco as it looks to capitalize on China’s growing ties to the North African country, Chinese state media reported.

The factories, to be built in the northern cities of Kenitra and Tangier, will produce 6 million wheels a year, 90% of which will be exported, according to the official Xinhua News Agency. The Kenitra factory will open in 2019 and supply a plant that French auto brand Peugeot is also building in the city. The Tangier factory will open at a later date.

Dicastal Chairman Xu Zuo signed the deal with Moroccan officials Mohamed Boussaid, minister of economy and finance, and Moulay Hafid Elalamy, minister of industry and trade, in a ceremony in Morocco’s capital of Rabat on Thursday, Xinhua reported.

Citic Dicastal is the world’s largest producer and exporter of aluminum wheels, according to its website, and is owned by a unit of Citic Group, China’s state investment company.

China and Morocco have grown closer in recent years. In November, the pair signed an agreement to collaborate on projects as part of the Belt and Road Initiative, which aims to expand infrastructure and trade links between China and developing countries with the help of Chinese companies.

While Morocco has not signed any major Belt and Road infrastructure deals on the scale of its African neighbors, it has become a major destination for Chinese tourists since its government introduced visa-free access to the country in June 2016. Tourist numbers have ballooned from around 20,000 a year to 118,000 in 2017, according to the Moroccan tourist office in China.

Chinese banks also increasingly recognize the potential of the Moroccan city of Casablanca to become a leading center for doing business across Africa, with state-owned Bank of China opening its first representative office there in 2016, according to Xinhua. China’s central bank has also signed a bilateral currency-swap agreement with the Moroccan government.

There are also strong reasons for developing ties in the automotive business. It was Morocco’s fastest-growing industry in 2016, and China is the world’s biggest automotive market, Florence Eid-Oakden, founder of consultancy Arabia Monitor, noted (link in Chinese).

Contact reporter Ke Dawei (daweike@caixin.com)