The economic and trade relations between Lebanon and China have improved in recent years but have not reached their maximum capacity yet. Their development depends on a political decision and the adoption of reforms by Beirut.

The relations between Lebanon and China have evolved positively since the mid-fifties and are expected to grow significantly with Beijing’s decision to include Lebanon in its new Silk Road project, the ambitious project that aims to link China to the Middle East and Europe, and that will have a certain impact on the Lebanese economy through the expected investments accompanying it and that are of the order of several billion dollars.

The geographical location of Lebanon interests China, especially since in recent years, the country of cedar enjoyed a certain security and political stability compared to the countries of the region. Several other assets played a role in Lebanon’s favour: the soundness of the banking sector well-tried during the major global economic crises, its economic policy, and the establishment of several international and regional organizations in its territory.

Lebanon is preparing for this by strengthening its relations with China at official level. With the participation in the establishment of a new Silk Road, Lebanon could regain its status as a regional business centre and strengthen its tourist appeal. Recently, the Chinese Council for the Development of International Trade opened a representative office in Beirut. The organisation is present in 30 countries around the world and, according to an official Chinese press release, will work to “implement national development strategies, encourage foreign trade, bilateral investment and economic and technological cooperation”.

Lebanon officially integrated into the new Silk Road at the time of the signing of a bilateral partnership at the Sino-Arab exhibition in September 2017.

Long-standing relations

Trade relations between China and Lebanon date back to the second half of the 1950s. At that time, the People’s Republic of China did not have much access in Western countries. The first Chinese delegation came to Lebanon in 1955, after attending the Damascus Fair. This visit was followed by the signing of the first trade agreement between the two countries, with the aim of developing bilateral economic relations.

In September 1956, China established a business office in Lebanon. This is the beginning of sustained economic relations between the two countries. The trade exchange expanded dealing mainly with textiles, shipping, technology and civil aviation. But it is only in 1971 that diplomatic relations between the two countries was established.

China’s economic cooperation with Lebanon will strengthen in the second half of the 1990s, to the point of granting Chinese loans and grants of few million dollars, especially in the area of telecommunications. In 1981, the first Lebanese-Arab delegation visits China. But it will take more than a decade for an Arab-Chinese Chamber of Commerce to be established in Beijing in 1995.

Joint-venture

The Chinese oil company ‘’Cnoocig’’ had submitted a qualification file for a call of tenders launched by the Lebanese government for the exploitation of oil and gas fields in the Mediterranean. It was not adopted. In January 2016, about 20 Chinese businessmen visiting Lebanon as part of the second edition of the Sino-Arab Business Forum were able to explore investment opportunities in Lebanon. However, the Sino-Lebanese trade relations remain very unbalanced. In 2016, China exported $2.5 billion in merchandise to Lebanon, while Lebanese exports peaked at $63 million.

On a larger scale, China aims to establish relationships with the Lebanese business diaspora, which can enable to open more doors in other countries. But for the moment, China is interested in the Lebanese market. It is one of Lebanon’s largest trading partners. «Made in China» products are flooding the Lebanese market.

according to figures from the Chinese embassy, more than 10,000 Lebanese travel to China each year for business.

Focusing on Tripoli

China has increased the forums, exhibitions, and the trade fairs for the Arab countries. It tries to make it easier for the Lebanese people by simplifying the visa procedure. Since 2000, the Chinese government has also allowed foreigners to hold 100% their companies through WOFE (Wholly Owned foreign entities). This requires a minimum capital of $100,000. Despite this, Lebanese investment in China remains very limited.

The Chinese private sector would be more turned towards Tripoli, which would be «ideally placed» for the reconstruction in Syria.

The stable and growing relations between the two countries have enabled the intensification of contacts in recent months in order to pave the way for Chinese investment in Lebanon. But everything seems to depend on Lebanon’s ability to redress its economic bar and adopt the necessary reforms.

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