Libya

Chinese Investment in Africa

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Arab Spring Ramifications

China is showing less “enthusiasm” for making investments in various parts of Africa which has likely been caused by the “ramifications of the Arab spring.” Investments in the past have been extremely popular, due to what has been seen as very attractive conditions such as “lots of autocrats and presidents-for-life, very few rules and regulations, little concern for life or environmental impact.” According to a recent article on the matter, pretty much anything has been possible “as long as the money kept showing up in the appropriate offshore accounts.”

But this was the situation in the past and things are now changing. With a new five-year plan from the country’s Ministry of Commerce (which is still being finalized), investing in Asia just isn’t “what it used to be, according to a quote from the Economic Observer. For example, it is just much harder now to open a mine there as factors such as the environment, employment and economy need to be taken into consideration.

China in Libya

Looking to Libyan investment (which has been a more recent popular jaunt for Chinese investment), there is an anticipated expected surplus of $3bn loss due to the repatriation of approximately 36,000 Chinese employees. As well, over the last four years, Libya has “contracted some 50 engineering projects to Chinese companies, including several image projects to mark the 40th anniversary of the 1969 revolution.” According to the article, being a contractor however, China has been able to manage its “direct losses in the unrest.” Nonetheless, some of its assets in Libya (such as Sinopec) did encounter destruction in the aftermath of the Libyan unrest. In general however, Beijing has had to somehow cope with a big mess of “compensation claims, third party debts and the re-employment of all returned workers.”

Chinese Investment Drop

Figures released from the Ministry of Commerce have shown a huge plummet of new Chinese contracts in North African countries for the first quarter. In Algeria this drop was 70.8 percent and in Libya, 46.9 percent for the same timeframe of 2010.

Substantial Drop in Asian Shares

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Recent world events – New Zealand earthquake, Japan’s credit rating downgrade and continued Middle East and Libyan unrest – led to a significant drop in stock markets across Asia.  For example, South Korea’s Kospi, the Nikkei 225 stock and Hong Kong’s Hang Seng index all plummeted around 2 percent.  As well, Japan had trouble dealing with its huge debt following Moody’s Investors Service downgrading its outlook for the country’s credit rating, citing “increasing uncertainty” over Japan’s capacity to effectively deal with rising debt.  This doesn’t spell good news for the country which only last month had its sovereign debt rating cut by Standard & Poor.  Australia, China, Singapore and Taiwan are currently in the same boat vis-à-vis stock markets. The only good news for the region of late has been the increase in oil prices.