Can China help Lebanon rebuild?
Lebanon's recent 14-month conflict with Israel has left the nation grappling with extensive devastation, necessitating a comprehensive reconstruction effort. The World Bank estimates that Lebanon requires approximately $11 billion for recovery, with $3 to $5 billion expected from public financing and the remaining $6 to $8 billion from private investments. Of the $11 billion in reconstruction and recovery needs, the report estimates that $3 to $5 billion will need to be publicly financed, including $1 billion for the infrastructure sectors covering energy, municipal and public services, transport, and water, wastewater, and irrigation. Meanwhile, $6 to $8 billion will require private financing, mostly in the housing, commerce, industry, and tourism sectors.
In the face of mass destruction, the recent freeze on U.S. foreign aid has further exacerbated Lebanon’s challenges in delivering essential services to vulnerable populations. The three-month suspension has disrupted funding for infrastructure projects, large-scale NGOs, and municipal services, including energy and water access. In 2024, Lebanon received $219 million through USAID and approximately $17 million via the State Department, with military aid constituting only 4% of the total, while the remainder primarily supported civilian sectors. The aid freeze has already forced organizations like UNICEF to cut nutrition programs in regions like Bekaa and Baalbek, where over 50% of children under two are experiencing severe food poverty. With Western support diminishing, Lebanon may find itself forced to turn to alternative partners, including China, to fill the gaps left by diminished U.S. assistance. While China may find an open door for engagement, it will face competition from European partners who are also looking to expand their role in Lebanon’s reconstruction. A country with such severe economic and social needs may not always have the luxury of choosing its preferred partner, making China’s ability to provide rapid investment and infrastructure support an attractive, if complex, option.
China's longstanding relationship with Lebanon positions it as a potential key player in this reconstruction phase. Since establishing diplomatic ties in 1971, China has become Lebanon's top trading partner, accounting for 40% of Lebanese imports as of 2013. Lebanon's strategic location in the eastern Mediterranean aligns with China's Belt and Road Initiative (BRI), offering avenues for infrastructure development and economic collaboration.
China’s involvement in Lebanon’s post-war market could extend across several critical sectors. Infrastructure and construction will be a primary area of engagement. Given Lebanon’s estimated $11 billion reconstruction needs, China could gain access to large-scale projects in road networks, port rehabilitation, and urban redevelopment. More specifically, housing has been the hardest hit sector with damages estimated at US$4.6 billion. Chinese state-owned enterprises (SOEs) have gained experience in post-conflict reconstruction through the BRI, including in Iraq and Syria, and could bid for contracts to rebuild critical infrastructure and housing. Lebanon’s ports, especially Beirut and Tripoli, hold strategic value as potential logistics hubs for Chinese trade in the Mediterranean, making them prime candidates for Chinese investment.
Energy and power generation present another opportunity for Chinese involvement, particularly given Lebanon’s chronic electricity shortages. Chinese firms, particularly those with expertise in renewable energy, could provide solutions for Lebanon’s decaying power grid. China’s recent donation of solar panels for Lebanon’s telecommunications sector signals an interest in expanding its role in sustainable energy. Additionally, Chinese companies could explore partnerships in Lebanon’s offshore gas sector, though this would require careful navigation of local political dynamics and international competition.
In telecommunications and digital infrastructure, Lebanon's efforts to modernize its digital economy create potential openings for Chinese tech firms such as Huawei. These firms could play a role in rebuilding telecommunications infrastructure, expanding fiber-optic networks, and enhancing Lebanon’s digital connectivity. However, U.S. pressure on Lebanon to limit Chinese technology’s role in critical infrastructure may pose obstacles.
China could also deepen economic ties through expanded trade agreements and financial assistance. Lebanon’s reliance on imports, coupled with its economic crisis, could make it more receptive to trade deals favoring Chinese products and investment in industrial zones. China might also increase financial cooperation, either through direct investments or soft loans via institutions like the China Development Bank.
The healthcare and medical sector is another area where China could expand its footprint, particularly in response to Lebanon’s struggling healthcare system. China could play a role in pharmaceutical supply chains, medical equipment provisions, and hospital reconstruction. During the COVID-19 pandemic, China provided Lebanon with medical aid, and a post-war context could offer opportunities for expanded cooperation in medical technology and vaccine production.
Education and cultural diplomacy are also potential aspects of China’s engagement with Lebanon. China’s ongoing investment in cultural diplomacy, including the construction of Lebanon’s National Higher Conservatory of Music, suggests an interest in expanding its soft power. Increased scholarships for Lebanese students, Confucius Institutes, and deeper academic exchanges could further entrench China’s influence in Lebanon’s educational landscape.
In recent years, Beijing has tacitly signaled its readiness to expand China’s role in Lebanon’s development, particularly as U.S. financial engagement declines. Initial gestures included a $62 million donation to fund the construction of the Lebanese National Higher Conservatory of Music and a pledge to supply solar panels to Lebanon’s telecommunications centers to bolster the country’s infrastructure. However, deeper Chinese involvement in Lebanon’s economy remains constrained by political and geopolitical barriers.
The enduring influence of the United States presents a significant challenge to China’s expansion, as Washington continues to hold considerable influence over Lebanese financial institutions and military cooperation. Internally, Lebanon’s chronic political instability and external pressures have repeatedly derailed Chinese investment projects, making large-scale economic commitments risky. Despite these constraints, Beijing has signaled its intent to remain engaged, suggesting that Lebanon will remain a site of cautious but persistent Chinese outreach.
China's recent actions indicate a continued interest in supporting Lebanon. Following the recent Israel-Hezbollah conflict, China provided emergency medical supplies to Lebanon, underscoring its readiness to assist in times of crisis. Additionally, Chinese President Xi Jinping conveyed congratulations to Lebanon's new President Joseph Aoun, reaffirming China's commitment to supporting Lebanon's sovereignty and economic development.
It is too early to say the extent to which China will involve itself in post-conflict Lebanon, but it is safe to say they will play a role. Furthermore, as the Syrian market reopens, China is may use Lebanon as an access point (among others) to reconstruction opportunities in Syria.
Bibliography
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