Libya exposes risks of China’s African ventures

March 02, 2011

BEIJING (AP) — Tens of thousands of Chinese workers are scrambling to escape the chaos in Libya, highlighting the risks taken by Chinese businesses piling into unstable African countries in search of oil, gas and other resources.

Beijing is taking unprecedented steps to aid the evacuation, sending charter flights and ferries along with military transport planes and dispatching a navy frigate to provide security for its citizens in Libya, where increasingly violent clashes are threatening to transform a 15–day popular rebellion into a civil war.

About 32,000 Chinese — most working on construction projects or providing oil field services — have been whisked out of Libya as of Wednesday, with another 3,000 waiting to be airlifted out of the desert in the country’s deep south, according to China’s Foreign Ministry.

Analysts say the crisis underscores the need for contingency planning as China’s investments in Africa soar into the tens of billions of dollars.

While no Chinese have been reported killed or injured in Libya, Chinese businesses and construction sites have been looted and workers forced from their dormitories. Chinese companies stand to lose financially from deals abruptly halted, including a half–finished public housing project being built by state–owned contractor China State Construction Engineering Corp. worth 17.6 billion yuan ($2.67 billion). The company says the project’s future is uncertain.

Another state–run company, China Railway Construction Corp., said it was concerned over the fate of three projects worth a total of more than $4.2 billion, especially losses of equipment and building materials. Other Chinese engineering, telecommunications and energy companies also face losses, although it was unclear what the total figure would be, according to the authoritative China Business News newspaper.

The fighting between rebel forces and loyalists of Libyan leader Moammar Gadhafi isn’t expected to have an impact on China’s burgeoning economic links with Africa, but it serves as a reminder of how conditions can turn dramatically desperate in countries lacking strong institutions and prone to political conflict.

Chasing opportunities where others fear to tread, Chinese businesses have long accepted such dangers.

Chinese businesses drawn to the continent in search of oil, gas, copper and other resources are expected to have invested $50 billion in Africa by 2015, according to a forecast from South Africa’s Standard Bank.

Across Africa, including in countries such as Congo with only partially functioning governments, Chinese companies are building stadiums, roads and railways, projects often funded by low–interest loans from Chinese state–owned banks in exchange for access to mineral wealth.

China’s trade with Africa passed $100 billion last year, boosted by cuts in tariffs on African exports, and is due to more than double to $300 billion by 2015, according to Standard Bank.

The Chinese presence has been largely welcomed by local leaders eager for investment, but has at times fueled resentment over poor treatment of African workers and the tendency of Chinese companies to import labor from China. Increasingly, Chinese private businesses are also playing major roles in retail, food production and manufacturing in Africa, sometimes at the cost of local players.

Among recent incidents, two Chinese mine mangers face attempted murder charges for firing upon striking workers in Zambia, where local unions have long complained about poor pay and working conditions at Chinese–invested businesses. Chinese, meanwhile, have been victims of violence, murder and kidnapping in countries from Afghanistan to Ethiopia.

Chinese companies have also gained a reputation for exploiting corruption and inefficiencies in African states to win contracts for their cut–rate equipment and services.

According to a cable from the U.S. Embassy in Kenya released Tuesday by WikiLeaks, Chinese influence over the local government may be “distorting important investment decisions” in the country, particularly in the telecoms sector.

The cable said Chinese telecom equipment maker Huawei (NewsAlert) was awarded a contract with Kenya’s state–run telecoms company without undergoing the required bidding process and despite complaints about poor after–sales service.

While such gripes may not be easily overcome, Beijing’s swift response to the strife in Libya shows how it is ramping up protection of its citizens — although its options remain limited.

China began focusing more closely on consular protection over the past decade as the numbers of Chinese traveling abroad for work, study and tourism began to soar. The Foreign Ministry established a department dedicated to helping Chinese abroad, and diplomats are increasing their outreach to the expatriate community and contacts with local governments and international organizations, experts say.

“I think that Beijing is only beginning to fully realize the implications of complications of its exposure abroad” to local political instability, said Christopher Alden, a senior lecturer at the London School of Economics who has studied China–Africa relations.

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