China’s Return To Libya

China had commercial interests in Gaddafi’s Libya and will pragmatically rebuild its presence in the country once the end-game of the overthrow of the colonel has played out. Before the civil war started, some 75 Chinese companies, including 13 large state owned enterprises, were working on $19 billion worth of projects, mainly in oil services, railways, housing construction and telecoms. Evacuating more than 35,000 Chinese nationals from these in March was a source of some pride in Beijing.

What they left behind was contract work so there would have been billions of yuan of business losses and damage to work camps. The three big oil SOEs, CNPC, Sinopec and CNOOC, all had engineering projects in Libya, but no oil production. China was buying oil from Libya, not extracting and shipping it. China gets 3% of its oil from the country, a significant if not critical supply (and accounting for about 10% of Libya’s exports).

Some within the new Libyan leadership have suggested that China could be punished for backing the Gadaffi regime. In response, China has urged the new leadership to protect its interests in the country and promising “to play an active role in future reconstruction” under the aegis of the U.N. Wen Zhongliang, deputy head of the trade department in the Ministry of Commerce, says “we hope to continue investment and economic cooperation with Libya…China’s investment in Libya, especially its oil investment, is one aspect of mutual economic cooperation between China and Libya.”

China, along with Russia and Brazil, which also neither supported NATO airstrikes against Libya nor provided the anti-Gaddafi forces with military aid, will be attending the Libya reconstruction conference being convened in Paris by French president Nicholas Sarkozy on Sept. 1. “It is true that some Chinese companies are considering exploring opportunities or resuming their business in Libya, but the time is far from ripe, as there are still short-term risks,” Xie Yajing of the Commerce Ministry’s west Asian and African affairs department told the China Daily. Beijing has yet to officially recognize the Transitional National Council (TNC) as Libya’s government, though it is signaling that that will come, and it has maintained back-channel contacts with the TNC throughout the conflict.

Beijing has a lot of experience in operating in politically volatile parts of the world. It knows how to change horses, as it has shown in post-Saddam Hussein Iraq.

Update:  Representatives of the Gaddafi regime visited three Chinese state-owned arms manufacturers in July, long after the imposition of UN sanctions on Libya, China’s foreign ministry spokesman has confirmed, but neither contracts were signed nor any arms shipped, she said. The firms involved are China North Industries Corp. (Norinco), China National Precision Machinery Import & Export Corp. (CPMIC) and China XinXing Import & Export Corp.

Leaders of the National Transitional Council in Libya say that they have evidence that other shipments of weapons were made. “We found several documents that showed us orders, very large orders, of arms and ammunition specifically from China, and now we do know that some of the things that were on the list are here on the ground, and they came in over the last two to six months,” according to Abdul Rahman Busin, NTC’s military spokesman.

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3 Comments

Filed under China-Africa

3 responses to “China’s Return To Libya

  1. I think you will find reporrtage that existing PRC contracts will be honoured, but China won’t be participating in new projects.

    • China Bystander

      Chinese companies will probably be frozen out of oil production, not that they are in it already, but we expect them to work their way back into involvement with new infrastructure projects over time. — CB

  2. Pingback: China Seeks Compensation For War-Damaged Libyan Projects | China Bystander

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