A huge housing estate on the outskirts of Benghazi that had been under construction by a Chinese contractor. Officials said that now is not the ideal time for Chinese companies to return to Libya, as there are many uncertainties and the government is still transitional. [Photo/China Daily]

Commerce Ministry says time not yet right for rebuilding, investment

BEIJING - China has been preparing to help its enterprises return to invest in Libya, but the time is not yet right for them to do so, officials from the Ministry of Commerce said.

"Although the situation seems to have become clearer in Libya since the death of Muammar Gadhafi, now it is not an opportune time for Chinese companies to go back and invest in Libya as there are many uncertainties and the government is still transitional," said Xie Yajing, commercial counselor of the Department of West Asian and African Affairs of the Ministry of Commerce.

But there are huge opportunities ahead for Chinese companies, she added.

On Sunday, as Libya's interim government announced the nation's "liberation" after Gadhafi's death, many believed the reconstruction of Libya is drawing near, which would present opportunities for Chinese companies.

But officials don't think it good time to go back. "We have been in the process of preparing for measures and possibilities on how to help Chinese companies go back to Libya during the past few months, and we are still engaged in discussion," said Xie Zhongmei, director of the ministry's Department of West Asian and African Affairs.

Wu Fang, a senior researcher on African issues at the Chinese Academy of International Trade and Economic Cooperation with the ministry, said: "Not only companies, but also the Chinese government should closely watch how the situation develops."

But Wu agreed with the ministry's assessment: "We needn't rush returning, because the security in Libya is worrisome. The National Transitional Council has not set a specific target for its economic development, and changes will happen with the interim administration in Libya."

China Communications Construction Co Ltd said that going back to Libya is a systematic program that requires multilateral coordination and effort, according to an Economic Information report. The company also reportedly said that the investment prospects in Libya are not optimistic now.

"Issues of security and a lack of building materials are the two top concerns," said Zhang Baozhong, deputy director in charge of the company's overseas projects.

Chinese media have reported that the country's leading communications companies Huawei Technologies Co Ltd and ZTE Corp have returned to Libya. But executives from both companies said they have always had staff working in the nation since the political turbulence broke out.

After Gadhafi's death was announced, the Ministry of Foreign Affairs said in a statement on Friday that China expects that the "transition to an inclusive political process would start as soon as possible, to restore the social stability and rebuild the economy."

Last month, China recognized Libya's National Transitional Council as Libya's ruling authority, saying the council had pledged to respect China's economic interests.

China has no direct investment in Libya, but it has various contracted projects there. In 2009, these projects were worth $5.84 billion, 4.6 percent of China's total overseas contracted projects, which are worth $126.21 billion, according to the Ministry of Commerce.

Before the conflict in Libya broke out eight months ago, Chinese companies had 50 contracted projects there worth $18.8 billion.

"Opportunities for the Chinese companies will be huge, in both contracted projects and commodity trading, as Libya has no reason to exclude China, and it needs China," Wu said.

In 2010, the bilateral trade was $6.58 billion, just 0.22 percent of China's total trade volume, and 11 percent of Libya's crude oil was sold to China, accounting for 2 to 3 percent of China's total oil imports, according to a report by the Chinese Academy of International Trade and Economic Cooperation.

Ahmed Jehani, a senior official for reconstruction in the National Transitional Council, said in an interview with Reuters that Libya will honor all oil and gas contracts signed during the Gadhafi era, including those with Chinese companies.

Li Jiabao and Chen Keyu contributed to this story.