Libya and China: The Show Must Go On?

August 28, 2012 1:33 pm

Despite African states’ leadership changes, China still wishes to cooperate with Libya. Post-war reconstruction could be the new big business.

“China will encourage its companies to participate in Libya’s reconstruction,” said Xi Jinping, Vice President of the People’s Republic of China after the visitation of the Libyan Foreign Minister, Ashour Ben Khayil in June. During their talks, Mr Ben Khayil made it clear that his country is still committed to cooperate with the Far East communist state.

Before the Libyan civil war, China signed several contracts with the Gaddafi-regime, in order to control some of Libya’s oil fields. They had to abandon their facilities when the war broke out. The number of Chinese companies operated in the North African country was 75, with almost 36, 000 employees. Despite China having no direct investment in Libya, Chinese companies were interested in multiple construction projects. Many of these projects had been suspended and some of the construction sites were badly damaged during the war.

In June, Mr Khayil promised a fair compensation, and asked China to help in the reconstruction. But the real question is whether China is keen to deepen its relations with Libya? In recent years, the communist Far East country made several contracts with a significant number of African states, such as Nigeria, Angola and Zambia.

However, the relationship has been mutually beneficial; China provides new technologies that help to develop Northern African infrastructure.  Many analysts argue that China is working towards Africa becoming a satellite-continent, which may supply China with key resources, in order to sustain the country’s economic growth. The institutional background of this cooperation is the Forum on China–Africa Cooperation. The fifth ministerial meeting was held in Beijing this month, with the participation of many African heads of state and high-ranking diplomats – this is a clear sign of the African leaders’ open commitment.

Libya is yet to be involved in this large-scale cooperation. China imported much less oil from Libya than from Angola or Zambia. North Africa is a contender for business relations with China due to its geographical location as a Mediterranean hub. Chinese companies had begun to invest in the area in the recent decade, particularly in Egypt, Algeria and Syria.

According to Eugenia Pecoraro, who examined relations with China, North Africa’s geographical position and their EU agreements, provide a platform for China to approach Europe.  China are able to exploit local benefits and test the quality of export products before their distribution to European markets.

These conditions and the potential advantageous benefit from reconstruction could make business with Libya even more desirable than it was before the revolution.  If Libya joins Euro-Mediterranean partnerships this would make the partnership even more attractive, as this would simplify the trade between Europe and North Africa. Large-scale cooperation between China and Libya under the post-Gaddafi regime seems to be probable.

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