Morocco and Tunisia
Research paper
Published 26 February 2020
Updated 30 June 2022
ISBN: 978 1 78413 383 2
Over the past two decades, China has increased its presence in North Africa in terms of trade and investment. This paper looks at China’s policy within the context of its Africa and Middle East policies to better understand its approach to Morocco and Tunisia.
China’s current international relations stem from its global policies of the late 1970s and early 1980s. Its political, economic, military and cultural interactions with the rest of the world derive from the necessity to modernize China. In this context, Africa continues to play a key role,4 particularly as a source of energy and mining resources. The Maghreb accounted for 31.3 per cent of China’s imports from Africa in 1992, whereas in 2018 the share had fallen to 7.76 per cent5 as a result of China’s expanded trade volume with Africa as a whole (see Figure 1). Similarly, Chinese exports to the Maghreb amounted to 20.6 per cent of its overall exports to Africa in 1992, but by 2018 that share was 14.7 per cent (see Figure 2).6 The total trade volume between China and Africa in 1992 was worth $1.8 billion; in 2018, it reached $204.6 billion.7
Since 2013, China’s main trading partner in the Maghreb has been Algeria. Chinese investment is ubiquitous across the continent, and the country is working unremittingly to implement the BRI in much of Africa.
China has financed more than 3,000 major projects across the continent, mostly in infrastructure.8 Between 2000 and 2014, China made commercial loans to African governments worth $86 billion, equivalent to $6 billion per year. At the 2015 FOCAC summit, President Xi announced $60 billion in commercial loans for the region, including an increase of $5 billion each to the China–Africa Development Fund and the Special Loan for the Development of African SMEs, as well as an initial contribution of $10 billion to the China–Africa Fund for Production Capacity Cooperation.9 In September 2018, President Xi pledged another $60 billion for projects in the form of assistance, investment and loans.10 China is now Africa’s main creditor and accounts for 14 per cent of sub-Saharan Africa’s total debt.
Chinese foreign direct investment (FDI) in Africa is relatively low, standing at $32 billion in 2018.11 In recent years, there has been a surge in private investment from China with a continued, more limited, commitment by the state. At present, more than 10,000 Chinese companies are established in Africa, about one-third of them in the manufacturing sector. Most of these companies are small and micro enterprises. This Chinese investment in Africa is increasingly contributing to job creation, skills development and the transfer of new technologies.12
The Chinese government has made clear its intention to make the MENA region an integral part of the BRI. In his speech at the CASCF in 2014, President Xi highlighted the low level of commercial exchanges between China and the region:
In 2013, China’s imports from Arab nations amounted to $140 billion, accounting for a mere 7 per cent of its annual import value over the next five years; its outward foreign direct investment in Arab nations totalled $2.2 billion… The gap signals potential and opportunities. China is prepared to support Arab states in increasing employment, advancing industrialization and pushing economic development. 13
Xi advanced the establishment of a new approach to MENA and the Maghreb, known as the ‘1+2+3’ cooperation pattern. The ‘1’ stands for the main path of further collaboration, which involves closer cooperation in the energy sector. The ‘2’ relates to a focus on two branches of cooperation – infrastructure-building and trade and investment – to intensify China’s relations with the Arab states by collaborating on development plans aimed at improving living conditions. This stage also includes setting up institutions to encourage bilateral trade and investment into various sectors, including energy, petrochemical, agricultural, manufacturing and services. The main objective was to boost trade with the MENA from $240 billion in 2013 to $600 billion within the next decade;14 however, so far, trade volume has not increased as expected.15 Furthermore, according to this approach, China would raise its non-financial investment stock in the Arab countries from $10 billion in 2013 to more than $60 billion by 2023.16 In 2018, China pledged a further $23 billion of FDI in the Middle East (not counting North Africa).17 The ‘3’ in the approach refers to the three high-technology fields of nuclear energy, space satellites and renewable energy. Technology exchanges would assist Arab states in developing nuclear energy for peaceful use, and in replicating the Beidou Navigation Satellite System in the MENA. The BRI will facilitate these transfers of technology.
China’s Arab Policy Paper stresses the country’s willingness to develop relations with MENA countries through ‘strategic cooperative relations of comprehensive cooperation and common development’, while upholding China’s Five Principles of Peaceful Coexistence: mutual respect for sovereignty and territorial integrity; mutual non-aggression; non-interference in each other’s internal affairs; equality and mutual benefit; and peaceful coexistence.18 A wide range of areas fall under this umbrella, including political, legal, economic, energy, healthcare, education, science and technology, environmental, and cultural cooperation.19
Unlike Russia and the US, which tend to see the Maghreb as an extension of the Middle East, China views it as a specific group of countries within the Middle East and Africa with its own characteristics. When dealing with the Maghreb, China considers each country’s relations with its neighbours. For example, it is careful not to take a position on the dispute over Western Sahara, which could damage relations with Algeria or Morocco.20 European countries and the US have expressed concern about China’s increasing presence in the region.21
|
Tunisia |
Morocco |
|
|---|---|---|
|
2003 |
1.56 |
4.31 |
|
2004 |
1.28 |
9.06 |
|
2005 |
2.15 |
20.59 |
|
2006 |
3.91 |
27.01 |
|
2007 |
3.57 |
29.65 |
|
2008 |
3.57 |
28.06 |
|
2009 |
2.27 |
48.78 |
|
2010 |
2.53 |
55.85 |
|
2011 |
6.29 |
89.48 |
|
2012 |
5.69 |
95.22 |
|
2013 |
13.86 |
102.96 |
|
2014 |
14.56 |
114.44 |
|
2015 |
20.84 |
156.29 |
|
2016 |
16.3 |
162.7 |
|
2017 |
15.08 |
318.21 |
Source: China Africa Research Initiative, Johns Hopkins University (n.d.), ‘Chinese FDI Flows to African Countries’, http://www.sais-cari.org/s/FDIData_04Mar2019.xlsx (accessed 21 Jan. 2020).
The Maghreb has historically had close relations with France, the former colonial power, and the EU. Even Algeria, which had close political and military ties with the Soviet Union, has maintained close, multifaceted interactions with France.22 Morocco and Tunisia also have close relationships with France. Nonetheless, China has gradually consolidated its presence in the Maghreb over the past two decades. Trade between China and the five Maghreb countries reached nearly $17 billion in 2017.23 Between 2005 and 2019, the value of China’s investments and contracts in the Maghreb rose from $600 million to $29.6 billion, with Algeria receiving the lion’s share of $23.6 billion.24 Up to 2012, Morocco received Chinese investments and contracts of $680 million; by 2018 the figure was $2.3 billion,25 though a large proportion of this was a single energy investment in 2014,26 and annual investment remains low. Tunisia has received much less FDI from China – $103.5 million from 2003 to 2017 (see Table 1).27 In 2019, according to Tunisian Investment Minister Zied Ladhari, Chinese investment in Tunisia was merely $6 million.28
Although there is some concern about China’s involvement in the Maghreb,29 its presence there is not a new phenomenon. Among the Maghreb countries, Algeria has the closest relationship with China, the two countries established diplomatic relations four years before Algerian independence in 1962.30 Morocco and Tunisia also have a long history with China.31 Diplomatic ties with Morocco and Tunisia were established in 1958 and 1964, respectively. Though decidedly pro-Western, Morocco showed more pragmatism than Tunisia towards communist China during the Cold War, an approach adopted by King Hassan II (1961–99), which King Mohammed VI has developed since his visit to China in 2016.32 This is part of Morocco’s policy of diversification, including a strategic partnership with China and Russia.33
China’s relationship with the Maghreb can be traced back to the rule of Mao Zedong, when close ties with national liberation movements were established. The Bandung Conference in 1955 – attended by Premier Zhou Enlai, as well as delegations from Algeria’s National Liberation Front, Tunisia’s Neo Destour party, and Morocco’s Istiqlal party – cemented these relationships.34 Algeria and Morocco played a key role in supporting the People’s Republic of China taking over the permanent seat on the UN Security Council from the Republic of China.35 In 1963–64, Zhou and Vice Premier Chen Yi visited 10 African countries, including Algeria, Morocco and Tunisia. President Habib Bourguiba of Tunisia was quite critical of Chinese foreign policy36 and was wary not to alienate the US, its main benefactor at the time. During the visits, Zhou and Chen expressed China’s strong support for the fight of African and Arab governments against imperialism, colonialism and neo-colonialism, and encouraged them to pursue nonaligned policies of peace and neutrality, and to achieve unity and solidarity. In the 1960s and 1970s, China did not show any economic interest in North Africa; its drive to offer aid to newly independent African countries aimed to gain diplomatic recognition and to politically and ideologically compete with the Soviet Union and the US.
In 1982, the 12th Assembly of the Communist Party proposed to establish relations with progressive parties and organizations abroad. The party would cooperate with parties that adhered to diverse ideologies, not only with socialist or communist parties.
At the end of the 1970s, China shifted away from foreign relations based on ideology. After the launch of its economic reform policy in 1978, its relations with the outside world became more pragmatic. In 1982, the 12th Assembly of the Communist Party proposed to establish relations with progressive parties and organizations abroad. In other words, the party would cooperate with parties that adhered to diverse ideologies, not only with socialist or communist parties.37 China’s economic relations with the Maghreb countries progressed steadily in the 1980s and 1990s. This included economic and technical cooperation agreements with Morocco in mining, fishing, agriculture and technology, and with Tunisia in the phosphate, renewables and water industries.
In the last two decades, China’s engagement with the Maghreb, and with Morocco and Tunisia in particular, has mainly focused on the economic dimension. Access to natural resources and the exploration of markets for Chinese products have been vital drivers of further cooperation. The Maghreb region, with a potential market of a little over 100 million people, is also important because it is the northern gateway to the African continent. Since 2013, China has designated the Middle East and North Africa as a key geostrategic zone. Given the geopolitical importance of Morocco and Algeria strategic considerations are also part of China’s approach. Although Tunisia has much in common with these countries it is not yet a priority in Beijing’s eyes. The 2016 Arab Policy Paper stresses China’s relations with Arab countries through either comprehensive strategic partnerships, strategic partnerships or strategic cooperative partnerships.38 At the 2018 CASCF, Beijing upgraded its relationship with the Arab world to the level of strategic partnership.39
The Maghreb is an attractive market for Chinese companies and investors.40 But Chinese economic activities there are limited in comparison with its efforts in sub-Saharan Africa. Trade with the Maghreb (except for Algeria) represents only about 14 per cent of China’s total volume with Africa.41 Investments in Africa have been concentrated in oil-rich sub-Saharan countries, like Nigeria and Angola, and in the transport and energy sectors.42 Following the 2015 FOCAC summit, Chinese investments in Africa increased dramatically; however, these were concentrated mostly in countries such as Nigeria, Angola, Ethiopia, Kenya, Zambia, South Africa and Mozambique. China’s relations with Morocco and Tunisia have yet to witness a real take-off.
China’s interest in Morocco and Tunisia goes beyond economic objectives. Beijing highly values the two countries’ strategic locations at the crossroads of the Arab world, Africa and the Mediterranean. However, China faces strong competition from the EU in these countries. The EU signed Association Agreements with Tunisia in 1995 (which came into force in 1998) and Morocco in 1996 (which came into force in 2000). The total trade in goods between the EU and Tunisia reached $23 billion in 2017,43 and trade with Morocco was close to $45 billion in 2018.44 While, over the same time periods, China’s trade with Morocco and Tunisia stood at $5.3 billion and $1.5 billion, respectively. By the end of 2017, China’s total FDI stock in Morocco stood at $318 million, or 0.7 per cent of total Chinese FDI in Africa.45 The limited amount of Chinese direct investment reflects the general lack of investment experience and enthusiasm of Chinese enterprises, which has been a key challenge to cooperation between China and Morocco, in particular, regarding the production of energy.46 Despite much optimism, Chinese investment in Morocco remains very low.47 The bulk of the country’s FDI, $4.2 billion, comes from France, the UK, South Korea and Spain. Investment from France significantly increased by 25 per cent in 2017, led by the renewable energy and automotive sectors.48 It is doubtful that China wishes to establish a hegemony in the region, but it would probably like to see less Western influence there. China offers the countries of the Maghreb an option to diversify their economic interests.
In the last several years, Morocco and Tunisia have been increasingly cognizant of China’s economic rise and have ramped up efforts to strengthen relations with the country in order to diversify economic cooperation. Like other developing countries, they broadly prefer China’s policies to those of the West, as they emphasize equal partnership, mutual benefits and non-interference in each other’s internal affairs.
This facet of China’s international policy has long been attractive to countries of the Maghreb. The Arab uprisings and the fall of various regimes in the region, which were often supported by the West, made China’s policies all the more appealing to regimes and even to the populations to some extent. China offers a new development model with its authoritarian capitalism system.49
China has demonstrated to the Maghreb countries that it follows a different philosophy than that of the West in the region. The perception in these countries is that it does not seek to impose its own political, economic and cultural system on them.
China has demonstrated to the Maghreb countries that it follows a different philosophy than that of the West in the region.50 The perception in these countries is that it does not seek to impose its own political, economic and cultural system on them. They appreciate not only China’s emphasis on its Five Principles of Peaceful Coexistence, but also its pronouncements regarding mutual respect and trust, security and stability, development and prosperity, openness and inclusiveness, cooperation and innovation, non-hegemonic ambitions, leveraging economic development to solve security and humanitarian issues, and support for Arab countries’ development of their national economies. China is aware of the resistance in the developing world to imposed models of development. As President Xi put it at the 6th Ministerial Meeting of the CASCF in 2014, ‘we should not require countries with different cultural traditions, histories and national conditions to follow a single development pattern’.51
After the Arab uprisings, Morocco and Tunisia began to look east to the rich Gulf monarchies – the United Arab Emirates, Qatar and Saudi Arabia52 – for trade and investment. While Morocco and Tunisia are aware of China’s growing global economic power, they have yet to develop coherent policies to guide their interactions, though to satisfy Beijing both have offered support for the ‘One-China’ policy.53 Tunisia and Morocco’s relations with China are still at arm’s length and serve more as a counterbalance to relations with Western powers. For the most part, the foreign policies of Morocco and Tunisia are still oriented towards traditional partnerships with European powers, particularly France, and they have also developed closer ties, especially Morocco, with the US in recent years for economic and security reasons.54 As such, there is still a long way to go before China supplants the West as a partner to these countries.
