China’s expanded global presence has increased the flashpoints where its interests are at odds with those of the United States. As the broader US-China relationship moves in a more adversarial direction, these areas of friction could easily escalate into conflict. This paper begins by documenting the dramatic growth in Chinese investment, construction, and trade in the Middle East. This expanded presence is driven by China’s core interests in the region, including access to oil; security of the region’s trade routes, which are essential for Chinese commerce with the EU (which is China’s largest trading partner); protection of economic and military assets in the region; and protection of over 600,000 Chinese nationals who work in the region. The paper then focuses on China’s expanding presence in Egypt, where its investments have concentrated on the logistical corridor around the Suez Canal and the New Administrative Capital. China has also provided general concessionary financial support to the Egyptian state as well as military assistance. When controlling for size of GDP, Egypt has received more resources from China than any other Middle Eastern country. The paper examines the Egyptian case in detail to identify the key features of China’s strategy to expand its influence, and compares this strategy to China’s strategy elsewhere in the developing world. It also considers the responses of Egypt to the opportunities and risks of greater engagement with China and identifies Egypt’s sources of leverage in its relationship with China. Finally, it considers the options available to the US to respond to this new type of major power competition. The paper proposes a path toward structured competition and selective cooperation between the US and China in Egypt and the broader Middle East. The paper utilizes a variety of sources including strategy statements by the Chinese government, contracts between Egyptian firms and their Chinese counterparts, statements by Egyptian officials, reporting in Chinese and Egyptian media, investment data, financial data, and data on weapons transfers.