Tunisia hopes boost in Chinese investment can ease economic woes

As Chinese investment increased in other North African countries, their absence in Tunisia was noticeable. As late as 2015, there were few infrastructure projects bearing Mandarin characters such as those found in Algiers, no shops selling specialized Asian food products like in Cairo, and compared with the crowded streets of Marrakech, there were precious few Chinese tourists in Tunis, Al-Monitor said.

But in the past year, China has been increasingly looking toward Tunisia. Projects in Algeria and Egypt have not been as successful as initially hoped, with delayed permits and declining oil prices stalling investments in Algeria. On the Algerian side, there is mounting frustration over imported labor. With more than 40,000 Chinese nationals working in Algeria, many government officials were concerned about the lack of progress being made on encouraging Algerian employment. Projects in Egypt have also been unsuccessful.

“For the Chinese, it’s a matter of looking for alternatives. In Tunisia they see opportunities — not so much in terms of the local development component, but vis-a-vis Europe,” Faten Aggad, the head of program of the European Center for Development Policy Management, told Al-Monitor by phone.

Though Tunisia is much smaller than its neighbors, with little in oil reserves or large-scale investment opportunities, it — along with Morocco — is the only relatively stable country in the area. Tunisia has deep ties to Europe, both through its colonial past and the ongoing negotiations for the Deep and Comprehensive Free Trade Agreement. Talks were launched in 2015 with the goal of better integrating the Tunisian market into the EU. In this sense, Tunisia functions as an ideal middleman for a China interested in controlling physical passageways between North Africa and Europe as part of the One Belt, One Road initiative. China is apparently interested in Tunisia’s Bizerte port, which offers easy access to Europe and is located at a critical hub of fiber optic submarine network cables, according to Al-Monitor.

China’s interest in Tunisia is mutually beneficial. With national inflation expected to reach between 9% and 12%, crippling IMF and government imposed austerity measures and a devalued dinar and high unemployment, Tunisia’s economy needs help. In a 2016 survey, Afrobarometer found that 47% of Tunisians believe China’s economic assistance is helping to meet Tunisia’s needs.

In an official visit to China in July 2017, Foreign Minister Khemaies Jhinaoui said Tunisia “fully supported” the One Belt, One Road initiative and was ready to be involved in projects. A month earlier, the two countries signed three agreements that would increase commercial cooperation; the agreements included plans to construct a 200,000 square meter (2.1 million square foot), $65 million commercial center in Tunis.

Tourism, one of Tunisia’s economic pillars, is also benefiting from China. “The future of Tunisia’s tourism definitely rests with the Chinese market,” Leila Tekaia, manager of public relations and communication of the Tunisian National Tourism Office, told the Chinese news agency Xinhua Net in September. Last year, Tunisia launched a visa-free travel scheme for Chinese nationals. In 2017, 10,000 Chinese nationals visited Tunisia, a sign of increased cultural exchange — and the first Chinese charter-flight group arrived in Tunis on Feb. 20.

While China and Tunisia’s relationship could continue to grow, one of the biggest challenges will come from the EU. Some Tunisians are worried that as Tunisia’s biggest trading partner, the EU, and France specifically, could undermine a growing Sino-Tunisian relationship.

“It is a legitimate concern,” said Aggad, citing the rules of origin negotiation in the Deep and Comprehensive Free Trade Agreement. “Depending on the negotiated clause, Tunisians, for anything that they want to export — will need to have a certain percentage of the different parts of given products that has to be produced in Tunisia. Relying on sources such as China or pieces coming out of China to be able to develop a certain product that is eventually exported to EU will become problematic.”

For the moment, though, Tunisia remains optimistic that increased cooperation with China will boost the economy, alleviate unemployment and strengthen the country’s trade sector.

TunsianMoniorOnline (Al-Monitor)

 

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