A Chronology of China-Maghreb Relations
Sino-Maghreb relations can be dated back to the 1955 Bandung Conference, when China offered support to Algeria’s ‘Front de Libération Nationale’, Tunisia’s ‘Destour’ and the ‘Mouvement National Marocain' (respectively, Algeria’s, Tunisia’s and Morocco’s anti-colonialist groups), in return for their support in joining the United Nations. This strategy looked to be successful, as four Maghreb States had recognised the Popular Republic of China by 1965 (Morocco, Algeria, Tunisia & Mauritania). Originally centered on an ideological political opposition to Western powers, with an approximation to Algeria and a detachment from Tunisia, the pragmatic economic approach rapidly took over the conception of Sino-Maghreb relations.
Under the leadership of Jiang Zemin (1993-2003), China started allowing its public companies to operate abroad, which explains the multiple economic bilateral agreements signed with Maghreb countries during the years ensuing the president’s statement in July 1996, foreshadowing the “Zouchuqu” policy (Go Global policy) for public companies, officially implemented in 2000. Their relations evolved drastically at that time, also concurring with China’s integration to the WTO in 2001: a myriad of bilateral investment treaties were signed between China and Maghreb countries. From the one signed with Morocco on March 28th,1995 to the agreement with Algeria in 1996, followed by a similar one with Tunisia in 2004, China switched its strategy to an economic and commercial approach rather than purely political relations with the Maghreb. China’s economic expansion was based on a model relying on commercial delegations that accompanied the visits of important figures of the CCP, chambers of commerce and institutions fostering Chinese investments. These operations were mostly conducted under the umbrella of the Forum on China-Africa Cooperation (FOCAC) by the powerful Ministry of Commerce, created in 2003 by the merging of different institutions, both internally and abroad.
Instead of building their own factories as Western companies did in the 80’s, Chinese companies were more likely to proceed through Mergers & Acquisitions (M&A) (Gurría, 2014), carrying on a process of “socialisation through learning” (Pairault, 2017), by which a technological transfer is made from foreign countries towards China. While Chinese companies, initially public but also private ones in the following years, were the ones conducting operations abroad, they gained valuable knowledge in fields relating to construction norms, international business regulations, risk evaluation and risk management or managers’ expertise, that they later on brought back to the mainland.
In 2010, China had 75 companies in Libya, conducting affairs worth around $18.8 billion, with Libyan crude oil exports to China amounting up to 10% and 3% of Chinese imports (Wehrey & Alkoutami, 2020). However, the events revolving around the Arab Spring uprisings in 2011 transformed the presence of China in Libya, but also in the whole Maghreb region for good. More specifically, the crisis in Libya forced China to evacuate over 35.000 of its citizens because of the ongoing violent conflict, conducting its largest non-combatant evacuation operation with the help of Tunisia, Egypt, and Sudan. Those events forced China to add an evaluation of potential risks in their equations and reconsider their investments abroad.
Moreover, an additional effect of the Arab uprisings was that the Chinese government decided to employ its “private” security firms such as China Security and Technology Group (CSTG) to ensure the safety of their companies working abroad. These companies, where China owns at least 51% of their shares, constitute a security body that operates abroad, undermining the State’s monopoly of power (these companies are even sometimes allowed to carry firearms, depending on the country’s legislation).
Nevertheless, Chinese activities in the Maghreb once again reached a higher stratum with the deployment of the Belt and Road Initiative in 2013 and the incorporation of private companies in it since 2015. Pursuing a market economy and abiding to international norms, Chinese economic cooperation strategy in Africa has been “characterised by a business oriented win-win economic cooperation” (Stahl, 2018). In 2018, China ranked 1st and 2nd trade partner for exports from Mauritania and Libya, while it still faces multiple difficulties to access the countries that were more rigidly controlled by France during the colonial era (12th export partner of Algeria and Morocco, 13th of Tunisia).
It is possible to notice the total demise of Chinese contract workers in Libya after the conflict erupted in 2011. This not only affected the former country, but also all those in the region. Historically, Chinese were not very present in Morocco despite the former’s greater investments in the last 5 years, because of Moroccan restrictive policies impeaching China to include the employment of Chinese workers in their investment treaties. When it comes to Tunisia, China simply does not have important investments in that country. Thus, both countries’ amount of workers did not vary largely after 2011. However, Algeria, a country notably disrupted by riots in 2011 and at the same time heavily invested in by China, suffered greatly after the Arab Spring. Due to the reduction of investments in the country, the number of Chinese workers in Algeria has been decreasing swiftly since 2017 – going down to 2010’s figures in 2019, and after having reached their historical peak in 2016 (Figure 1).
Figure 1. Source: chinamed.it
Chinese Investments in the Region
China meets its interests with the presence of multiple assets in the region: a strategic point in front of European shores with possible routes both to the north and to the south, diverse natural resources (iron, phosphates, oil and other hydrocarbons) and a qualified labour force with low employment costs in countries that have the potential to become industrially developed, along with a strong influence in other African countries.
There are relatively low Chinese FDIs in the Maghreb region, 2.17% of Chinese FDIs in 2018 (amounting to $3.1 billion), reduced to 1.9% in 2019 ($2.6 billion). Chinese FDIs in Maghreb countries seem to follow the same decreasing trend as their global equivalent, with a tiny upturn in 2018 that did not prevent the continued reduction of FDIs in 2019 and 2020.
Figure 2. Source: chinamed.it
When compared to the rest of the African continent, China has not only belittled the Maghreb regarding FDIs, but also when it comes to loans. Out of the $153B worth 1141 loans that China delivered to Africa between 2000 and 2019, only $1,86B from 25 loans were headed towards the Maghreb (SAIS-CARI, 2021), that is 1,22% of the African total.
Despite the low amount of loans and FDIs, China is much more present as a service provider in the Maghreb area. Indeed, only in 2015, Chinese service providers conducted operations for 9.94 billion USD (Pairault, 2017) in contrast with $2.92B in FDIs. Those transactions technically cannot be considered as investments, since Chinese companies do not usually hold ownership nor deal with the management, but rather implement the contracts, notably in the BPW sector (Building and Construction Works) in exchange of monetary restitution or privileged access to natural resources.
Algeria is China’s main historical partner in the Maghreb region, with over $6.94 billion in Chinese exports in 2019. Its major interests in the country are its important amount of hydrocarbons: however, these only represent 0.34% of its fuel imports (Observatory of Economic Complexity, 2021). Focused on the infrastructural sector, with enormous projects such as Algiers’ great mosque, Algiers’ airport or the East-West highway, the aim of Chinese investments might turn towards Morocco due to Algerian’s high political instability since President Bouteflika’s health conditions and his eventual dismissal in 2019, coupled to the country’s dependence to hydrocarbon prices (which account for 93% of their exports). Morocco has always been a safer destination for Chinese funds, as it is shown by the loans delivered to both countries since 2000: while they approximate to over $1.2B for Morocco, they only amount to $9M for Algeria (SAIS-CARI, 2021).
Another sign of that shift towards Morocco would be the relay point in the Maghreb for China’s Belt and Road Initiative (BRI). All countries from the UMA are part of the BRI, Morocco being the first to join in 2017. While China’s BRI projects are declining worldwide, the Middle East and North Africa is the only region that is experiencing an increase in Chinese investment and construction projects. By 2019, the region had become the second-largest recipient, second only to Europe (Wehrey & Alkoutami, 2020). Although that relay point was initially planned to be located on the port of Cherchell in Algeria, the Chinese company CHEC (Chinese Harbour Engineering Company) seemed to detach itself from it so to redirect its activities to the port of Tangier-Med because of its higher connectivity (3rd at the world level) (Edouard, 2020).
Thus, China would be interested in two possible routes for goods to reach Western sub-Saharan Africa:
They could arrive from the eastern Mediterranean to Algerian ports, to later on cross the entire country towards the south, running through Niger and reach the port of Lagos in Nigeria (latest events with Niger’s pipeline indicate the possibility of the transit route finishing at Benin’s ports instead of Lagos).
Issued from the same starting point, i.e. the Suez Canal, this second route would cross the Mediterranean Sea to reach the port of Tangier Med. From there, it would diverge in two different directions: part of the goods would cross Spain and Portugal and expand through the European Union, and a second part would follow the path of the Mauritanian corridor to reach western sub-Saharan countries (Edouard, 2020). The modernization of Mauritanian’s Nouakchott Port granted to CRBC in exchange of $93M in 2019v also seems to uphold this alternative as the preferred one by Chinese interests.
To put everything into a nutshell, China-Maghreb relations are highly invested into the economic sphere, with a window opened towards friendly diplomatic relations based on China’s non interventionist position. However, this economic association asymmetrically leans towards China, with a large degree of dependency that does not precisely align with Maghreb countries’ strategy. Moreover, it is likewise disproportionate regarding Chinese involvement in other African regions such as the East, where we can see a greater Chinese activity. Hence, with China refocusing towards a domestic market economy, Maghreb countries would have more to gain from a diversification of their partners together with a revaluation of traditional ones, without disregarding their ties with China.
Marcos González Barastegui is a Franco-Spanish student at the Rey Juan Carlos University. He interned at the Policy Center for the New South in Rabat, Morocco, focusing on China and the Mediterranean region. He is now interning at the political and press section of the Embassy of Haiti in Spain. You can find him on LinkedIn and Instagram.
The opinions expressed here are those of the writers and do not represent the views of European Guanxi.
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