Libyan Unrest Prompts China to Rethink No-Strings Investments | The Jakarta Globe
Hong Kong. As Libya's political turmoil continues to affect Chinese business interests in the country, the potential loss is shaping up to be one of the gravest lessons for Beijing's decade-long "go-out" policy, analysts say.
China has been aggressively promoting investment abroad, especially in the resource-rich African continent.
It became Africa's largest trading partner in 2009, with total direct investment of more than $9 billion. a sum expected to soar 70 per cent by 2015, the South China Morning Post reported Friday.
While China's trade with and investment in Libya is modest, they have been expanding since the UN lifted sanctions in 2003. Two-way trade reached $6.6 billion last year.
Libya, Africa's third-largest oil producer and fourth-largest natural gas producer, has some 36,000 Chinese working on 50 multimillion-dollar projects, mostly in oil, railway and telecommunication.
Risk management and investment analysts said the situation in Libya, where a popular uprising against strongman Muammar Gaddafi has left hundreds dead, is forcing Beijing to take a harder look at the dark side of its "no strings attached" investment strategy in Africa.
Dr Cui Shoujun, director of Renmin University's international energy research centre, said many of China's energy projects in Africa were based on bilateral ties between authoritarian regimes, rather than rational business contracts in which political risks were usually factored into the equation. "This sort of relationship makes China very vulnerable to their domestic upheavals," he said.
"This is a risk that can take away all your potential gains and knock down overnight all you have built - through a new government decree or simply a change of government," said Associate Professor Zheng Wei, director of the department of risk management and insurance at Peking University's School of Economics.
"The government should not be just encouraging companies to go out; they should be asked to go out with better risk management skills and awareness," he said.
China's Commerce Ministry said on its website that as of Wednesday, 27 Chinese construction sites and camps in Libya have been "attacked and looted." It did not give a monetary value for the losses, but said there had been some injuries, the Post reported.
China Railway Construction Corporation saw its assets in Libya looted, as "attackers wielded clubs and knives but carried no guns," its manager Yu Xingxi said. She added that the firm has suspended all its projects in Libya.
China National Petroleum Corporation said that some of its facilities were attacked in the unrest.
About 12,000 Chinese have so far been evacuated, Chinese Vice-Foreign Minister Song Tao said Friday.
Reprinted courtesy of Straits Times Indonesia. To subscribe to Straits Times Indonesia and/or the Jakarta Globe call 2553 5055.
Hong Kong. As Libya's political turmoil continues to affect Chinese business interests in the country, the potential loss is shaping up to be one of the gravest lessons for Beijing's decade-long "go-out" policy, analysts say.
China has been aggressively promoting investment abroad, especially in the resource-rich African continent.
It became Africa's largest trading partner in 2009, with total direct investment of more than $9 billion. a sum expected to soar 70 per cent by 2015, the South China Morning Post reported Friday.
While China's trade with and investment in Libya is modest, they have been expanding since the UN lifted sanctions in 2003. Two-way trade reached $6.6 billion last year.
Libya, Africa's third-largest oil producer and fourth-largest natural gas producer, has some 36,000 Chinese working on 50 multimillion-dollar projects, mostly in oil, railway and telecommunication.
Risk management and investment analysts said the situation in Libya, where a popular uprising against strongman Muammar Gaddafi has left hundreds dead, is forcing Beijing to take a harder look at the dark side of its "no strings attached" investment strategy in Africa.
Dr Cui Shoujun, director of Renmin University's international energy research centre, said many of China's energy projects in Africa were based on bilateral ties between authoritarian regimes, rather than rational business contracts in which political risks were usually factored into the equation. "This sort of relationship makes China very vulnerable to their domestic upheavals," he said.
"This is a risk that can take away all your potential gains and knock down overnight all you have built - through a new government decree or simply a change of government," said Associate Professor Zheng Wei, director of the department of risk management and insurance at Peking University's School of Economics.
"The government should not be just encouraging companies to go out; they should be asked to go out with better risk management skills and awareness," he said.
China's Commerce Ministry said on its website that as of Wednesday, 27 Chinese construction sites and camps in Libya have been "attacked and looted." It did not give a monetary value for the losses, but said there had been some injuries, the Post reported.
China Railway Construction Corporation saw its assets in Libya looted, as "attackers wielded clubs and knives but carried no guns," its manager Yu Xingxi said. She added that the firm has suspended all its projects in Libya.
China National Petroleum Corporation said that some of its facilities were attacked in the unrest.
About 12,000 Chinese have so far been evacuated, Chinese Vice-Foreign Minister Song Tao said Friday.
Reprinted courtesy of Straits Times Indonesia. To subscribe to Straits Times Indonesia and/or the Jakarta Globe call 2553 5055.
