As foreign investors evaluate opportunities in Libya, understanding the nuanced commercial landscape is critical. China’s approach to Libya, characterised by strategic patience and a focus on commercial interests, offers a blueprint for navigating this complex environment 

A January 2023 report from the Chinese government website indicates ongoing efforts to strengthen bilateral relations between China and Libya. The Chinese Charge d’affairs in Libya met with the Libyan Vice President of the Presidency Council to discuss boosting these relations, focusing on mutual political trust, practical cooperation, and the steady development of bilateral relations. The Libyan official expressed hope for China’s positive role in Libya’s national reconciliation, social reconstruction, and election processes”

Chinese Government 2023


China’s Sectoral Priorities Going Forward

Of the many countries interested in Libya, China likely has the broadest range of sectoral interests. In addition to pursuing construction and energy sector contracts, China will likely continue to try to increase its exports of consumer goods and industrial inputs to Libya in the post-conflict era. In addition, China will look to protect and expand the dominance of the Libyan telecoms sector already achieved by Huawei.

How Important is Libya to China?

Research suggests that for China Libya is a low priority country in a low priority region.

While China is active in the Middle East, including through the Belt and Road Initiative, the region does not appear to have attracted significant Chinese diplomatic attention in recent years. China has steered clear of embroilment in conflicts in the region, has remained neutral in relation to regional diplomatic clefts and has largely limited its rhetoric to advocacy of respect for national sovereignty and conflict resolution.

Despite being a UN Security Council member, China has not engaged in any meaningful way with efforts to achieve a resolution to the Libyan crisis.

Libya is a source of crude oil for China and it is in its interests that it continues to be able to access that oil. That said, in 2018, a year in which Libya’s oil exports to China almost tripled, Libya provided less than 1.4 percent of China’s mineral fuel imports and was only the 20th largest of China’s mineral fuel suppliers.

Similarly, China is no doubt happy that it was able to export $1.4 billion of goods to Libya in 2018. However, this figure places Libya as China’s 102nd most important export market, receiving 0.06 percent of China’s global exports. While China will realise that exports to Libya could increase substantially if conditions continue to stabilise, the fact that Libya’s population is less than 7 million means that it will never represent a particularly important export market for China. China recognises that its companies could secure valuable reconstruction projects in Libya, however, the sheer scale of Chinese projects across Africa means that the prize of Libyan contracts likely appears slightly less important for them than it would otherwise be.

Support for Chinese Companies Doing Business In Libya

The role of the Chinese state in supporting Chinese companies in Libya is somewhat complicated by the fact that many of the large Chinese companies operating globally are state-owned. This likely gives them the ability to negotiate with some of the kudos of a government entity, and means that they likely enjoy other advantages, such as easy access to cheap financing through the Chinese Government and more flexibility than a private firm to operate at a loss for strategic purposes.

Information suggests that the Government of China does engage directly with the Libyan authorities to help secure larger projects. It is also important to note that historically in 2018 the incumbent Libyan government signed a Memorandum of Understanding with the Government of China setting out its intention for Libya to join the ‘Belt and Road’ Initiative. This could give Libya access to cheap financing for major infrastructure projects, but it is widely suggested that a tacit criterion to admission to the scheme is that the applicant government has shown itself willing to award large contracts to Chinese firms.

The Chinese Chamber of Commerce appears to be active in supporting Chinese companies doing business in Libya: research noted that it has organised numerous trips for Chinese companies looking to restart projects in the country. Libyan Chamber’s also appear to have strengthening relations with the Chinese Chamber of Commerce.

 What Factors Motivate the Chinese Approach to Libya?

Securing compensation for Gaddafi-era contracts and new reconstruction contracts. China’s only real interest in Libya is commercial. The Chinese Government and the relevant Chinese companies will want to restart Gaddafi-era projects where possible and secure compensation for related losses they have incurred. However, their “deep pockets” and the flexibility (in some circumstances) provided by the Chinese Government’s ability to give direction to its state-owned companies in order to fulfill long-term strategic goals mean that they may be more willing and able to trade off old debts for new opportunities.

This may mean that, rather than striving hard to resolve issues related to previous contracts, China may now be more willing to wait and see whether they can be traded off usefully once the situation in Libya is more stable and concrete new opportunities begin to arise.

While other countries have chosen, historically, to back particular sides in the Libyan conflict (likely partly in the hope that this will help them secure reconstruction and energy sector contracts once the conflict is resolved), China likely recognises that its rare ability to provide extensive financing for large projects combined with the price competitiveness of Chinese construction firms, means that it will be able to reap the benefits regardless of who wins.

What Result Do the Chinese Want?

China has an interest in a stable Libya that is able to reliably supply it with oil, can afford Chinese exports, and is able to move forward with projects that Chinese firms can deliver. It is likely fairly indifferent to the result of any conflicts beyond this objective.

How Is China Engaging with Libya?

China appears to have remained carefully neutral in Libyan conflicts. There is no evidence that China is providing financial. In 2018 it signed an MoU setting out a path toward Libyan membership of the Belt and Road initiative, which could see Libya secure access to Chinese financing for major infrastructure projects. 

There is no evidence that China is engaged directly militarily, and it almost certainly is not.

China has adopted a policy of “cautious neutrality” and has continued to engage with all parties, a strategy that has been described as “placing bets on both sides.”

It recognises the incumbent Libyan government, since its international recognition and its control (or rather the CBL’s control) of foreign exchange reserves means that it has the ability to “deploy funds, sign contracts, and distribute capital to partners” which China requires in a commercial partner. In addition, the NOC has direct relations with Chinese SOEs and has visited China.

There have been some reports of engagement by large Chinese companies and one analyst has described Chinese oil companies as “poised to engage”

There is little evidence that China has devoted extensive efforts to cultivating relations with other nongovernmental groups in Libya.

How Is Chinese Engagement Perceived by Libyans?

It is suggested that there was some bad feeling toward China in the aftermath of the revolution due to the perception that it had been too close to the Gaddafi regime.

Indicators suggest that China has “brand issues” commercially in Libya, noting concerns related to the quality of Chinese equipment and products, and suggesting that some tenders even state that Chinese equipment is not accepted. That said, Libyan politicians clearly recognize that China can be a useful partner. As noted earlier with Libya planning to join China’s Belt and Road Initiative various politicians stating that they want to see a greater Chinese commercial presence in Libya.


China’s increasing engagement in Libya, characterised by strategic patience and a focus on commercial interests, presents a complex yet potentially rewarding landscape for foreign investors. China’s broad sectoral interests, especially in construction, energy, and telecom, coupled with its support for state-owned companies, demonstrate a robust commercial strategy. Despite Libya’s relatively low priority in China’s overall global strategy, the country’s potential for reconstruction and development, especially under initiatives like the Belt and Road, offers significant opportunities.

China’s approach of maintaining neutrality in Libya’s internal conflicts, while focusing on long-term commercial benefits, sets a precedent for foreign investors. Understanding the nuances of this approach – balancing political neutrality with commercial engagement – is crucial. However, perceptions of China in Libya, influenced by historical ties and concerns over product quality, pose challenges that require careful navigation. 

As Libya continues to stabilise and grow, the insights from China’s strategy in Libya can guide foreign investors in making informed decisions. The Libyan market, with its potential for growth and development, presents unique opportunities, especially in sectors beyond oil like infrastructure development. For investors, a keen understanding of the political and economic dynamics, along with a strategic approach, could lead to successful ventures in this evolving market.


Commercial Examples 


Libyan oil firms expect to cooperate with Chinese counterparts

China Harbour to help turn Libyan city into “gateway to Africa”

Libya: China to Start Reconstruction Work in Libya’s Flood-Hit Derna

Libya and China explore ways for Chinese companies to return to Libya

The significance of china and Africa in Russia’s foreign policy

Chinese group launches its first company for investing in Libya