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| China investments halt in Libya after cos suffer losses |
| Press Trust of India / Beijing Mar 22, 2011, 12:01 IST |
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As allied forces stepped up air strikes to oust Muammar Gaddafi regime in Libya, China has decided to halt all its investments activities in the North African country amid reports that some of its companies may have suffered heavy losses due to the crisis.
China will not make new investments in Libya in the short term until the Libyan situation stabilises, an official with the Chinese Ministry of Commerce was quoted in the official media here as saying.
"Before the situation becomes clear, the exchanges between China and Libya in terms of trade, construction contracts and investment will be seriously affected. I am afraid that China is unlikely to make any new investments there soon," the official said.
China's investment in Libya is mainly in the energy and construction sectors.
Some Chinese project contractors, including China Gezhouba Corp as well as China Railway Construction and Metallurgical Co, have projects in Libya.
China, a permanent member of the UN Security Council, had abstained from voting on the resolution to impose a no-fly zone over Libya expressing serious reservations.
China has pulled out over 35000 of its nationals working in various projects in Libya in what was regarded as the largest evacuation operation by the country since 1949.
"We are closely following what will happen there. But before everything gets back under control, we will not send any people there," said Zhang Hui, spokesperson of ZTE Corp.
ZTE Corp is the largest telecommunication equipment provider in Libya, and has made investments worth three billion yuan (USD 457 million) since 1999.
No official figures have been released yet, but experts predict the losses Chinese companies incur from the Libyan unrest will be big.
Some executives at ZTE Corp said the company will probably lose 100 million yuan in the Libyan turmoil, state run China Daily reported.
The Commerce Ministry official had urged Chinese companies that want to expand business in Africa to raise their awareness of guarding against risks, especially political risks.
"They should establish an early-warning mechanism to minimize risks," the official said.
China Export & Credit Insurance Corp has launched an urgency settlement mechanism after the unrest swept through much of the Arab world, raising the risks in some nations and sending warning messages to Chinese exporters.
However, many experts said China's determination to invest in Africa will not change.
"Although the investment in Libya gets delayed, China's investment in Africa will not be affected," Wu Fang, senior researcher of China-Africa Research Center of International Trade and Economic Cooperation said.
"We are not much worried about the business in Africa, as we have projects in many African nations and could shift the human resources and efforts elsewhere," Jin Chengsan, chairman of the trade union of China Gezhouba Group International Engineering Co said.
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