HomeNewsChina's role as a lender and investor in Tunisia

China’s role as a lender and investor in Tunisia

China has played an important role in the global economy throughout history, particularly in the industry and production of silk and tea. However, China had not open up to the global economy and adopt market-oriented economic policies until the late 1970s, when it began to emerge as a major economic power.

China is currently the world’s second-biggest economy, accounting for over 18% of global GDP in 20221 ; it is also the world’s largest commodity exporter, accounting for around 15% of global trade in 2020.

In the Arab world, China has worked to strengthen its relationships with the Arab countries, especially in the Gulf region, through various initiatives such as the Belt and Road Initiative and strategic partnerships.

In a study elaborated by IACE, which shows China’s increasing demand for energy, it has been proven that it has shaped its relationship with Arab countries, particularly Saudi Arabia, Algeria, and the United Arab Emirates (UAE). These partnerships are built on increasing trade, investments, and cooperation in a variety of industries such as energy, infrastructure, technology, education, and others.

The objective of this policy paper is to highlight China’s considerable role in expanding in the Arab area as a major investor and lender for certain countries, as well as its impact on both the global economy and the BRICS bloc.

The Chinese Presence In The MENA Region

China’s presence in the MENA region has gradually expanded over the past decades, considering that the MENA region is considered strategically crucial for China due to its significant oil and natural gas reserves and production, as well as its position as a crossroads of Asia, Europe, and Africa.

Regarding North African countries, China’s investments in Tunisia are relatively limited compared to other countries, despite being the third-largest supplier of consumer goods to Tunisia in 2021, with annual imports reaching $2.2 billion (approximately 6.7 billion Tunisian Dinars).

However, China is ranked 35th in the list of countries that invest in Tunisia in 2020, with Chinese companies’ investments amounting to around $34 million3 (approximately 103 million Tunisian Dinars). This is a modest amount compared to France, which is the largest investor in Tunisia, with investments worth $2.4 billion (approximately 7.3 billion Tunisian Dinars) in that year.

All of these Chinese projects and investments in MENA region are part of the Belt and Road Initiative, which aims to enhance connectivity between Asia, Europe, and Africa, to facilitate trade and connectivity through a network of roads, railways, and ports.

In addition, the expansion of China’s presence in the MENA region has been driven by its desire to create new markets for its products, while the slowdown in the growth of the Chinese domestic economy in recent years, China has sought new markets to sell its goods and services.

Chinese Rescue Loans

One important aspect of China’s financial relationship with Arab countries lies in the role of financial institutions, where Chinese banks and financial institutions have actively involved in providing financing for numerous infrastructure projects in Arab countries.

Both the China Development Bank and the People’s Bank of China have played a significant role in providing loans for major projects in Arab countries.

The Chinese rescue loans did not include countries such as Tunisia, but China provided Tunisia bilateral loans between 2000-2012, amounting to approximately 215 million Tunisian dinars (around 68 million dollars) and 54 million dinars10 (about 17 million dollars) as aid.

In 2021, the two countries signed a grant agreement worth 40 million dinars (approximately $13 million), designated to finance projects in Tunisia.

Consequently, China has become a major investor and lender for certain countries in the Arab world. It is also a key player in the BRICS bloc and The New Development Bank, with the goal of expanding its economic power and achieving long-term strategic gains.

Despite Western challenges, many economists predict China to continue consolidating its position and succeeding in the global economy, thus enhancing its place as a major actor in the global perspective.

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