China on the prowl in Zimbabwe

TWO weeks ago, President Robert Mugabe took time off his annual leave to meet his Chinese counterpart, Xi Jinping, to discuss vital bilateral issues between Harare and Beijing, including Chinese investments in his cash-strapped country.

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Xi was the only Head of State that President Mugabe chose to meet, demonstrating the important role that China has assumed in the battle to rebuild Zimbabwe’s decade-long economic crisis, ongoing since a diplomatic war erupted between the country and the West in 2000.

On the day that they met in Beijing, Chinese diplomats in Harare briefed reporters about the inroads made by a cluster of Beijing’s aggressively expanding behemoths into Zimbabwe, emphasising that the “all weather” friendship between the two countries was a “win-win” affair, with Chinese investments into Harare and a flood of Zimbabwean commodities into China’s booming industries.

Chinese Foreign Minister, Wang Yi, had landed in Tanzania a few hours earlier to round up a whirlwind African tour seen as vital in cementing the economic ties that China has been cultivating in Africa, in yet another demonstration of the seriousness with which Beijing is taking its new found romance with the continent.

Zimbabwean reporters at the Chinese embassy, a towering edifice that epitomises China’s influence, did not field many questions.

At the briefing, heads of Chinese corporations operating in the country took turns to paint a rosy picture of their business culture, even against the backdrop of damaging allegations of externalisation of hard currencies in liquidity starved Zimbabwe.

The Chinese claimed they had emerged as the biggest generators of foreign currency in Zimbabwe.

“We are bringing about US$30 million per month into Zimbabwe,” said Xing Shanshan, vice secretary general of the Chinese Federation of Zimbabwe, adding: “China has become the largest source of foreign currency in Zimbabwe”.

A decade since President Mugabe said he would look East to spite the West, China has risen from obscurity to clinch deals cutting across all sectors.

Its business coups include lucrative transactions in aviation, mining, construction, agriculture, tourism, manufacturing and the retail sectors.

A decade ago, talk of Chinese investments would court disdain, with many referring to Chinese goods as “Zhing Zhong”, a derogatory word that disparaged cheap and substandard Chinese products.

Today, that word is almost forgotten because Chinese products are dominating across sectors.

Anhui Foreign Economic Construction Group (AFECC), a conglomerate with a wide sphere of influence, is among firms that have benefitted from the co-operation.

AFECC has interests in project constructing, mineral development, real estate, jewellery processing, supermarkets, hotel chains and building material processing.

It has helped build from scratch a sprawling network of investments, striking joint venture deals with diamond firms, Anjin Investments, Jinan Mining and Sogecoa Construction Company.

This is in addition to the multimillion dollar Longcheng Plaza and the magnificent Golden Peacock Hotel in Mutare, which has introduced Zimbabweans to Chinese cuisine and culture.

AFECC has entered the retail sector through the Horizon IVATO supermarket chain, which is conveniently located at Long Cheng Plaza, built at a reported estimated cost of US$200 million, and is described by the global giant as the “largest commercial plaza in size, trade scale…in Southern Africa currently”.

Chinese firms have emerged as partners of choice not only with Zimbabwean authorities, but across Africa.

But these ties have not been without controversy. China and its global firms, which are seen in other jurisdictions as agents for its hegemony, have been accused of propping repressive regimes.

At their disposal has been unlimited access to the continent’s rich natural resources, even as corruption continues to trap millions in grinding poverty while politicians amass extraordinary riches.

This strategy has earned Chinese firms concrete friendships with African regimes, including Zimbabwe.

AFECC has spiced up its relations with donations.

“We have always been active in contributing to the society, we made lots of donations to (the) local community; donation for Independence Day about US$300 000, donation to southern flood-stricken area of US$20 000, US$70 000 for food, US$30 000 of fuel donated to Food Aid Organisation,” said AFECC general manager, Zhang Shibin.

“By sticking to the operation philosophy of “sincerity, innovation and pragmatism” and (through the) principle of “upholding good virtue and charity to the society and fulfilling responsibilities”, AFECC tries its best to provide a first class service to the friends from all over the world and seeks common development and realises win-win (results) through sincere cooperation,” Shibin told reporters.

After three decades of general decay fuelled by corruption, greedy and mismanagement, Zimbabwe’s national power utility, ZESA Holdings, is in ruins.

Government has looked for funds to aid its reconstruction.

But Western financiers have been wary of extending funding due to a high country risk placed on Zimbabwe.

President Mugabe has looked to China, which has been ready to act.

Reports say to gain access to Chinese funding and technical expertise, the broke government has had to mortgage its mineral resources.
After emissaries laid the groundwork for power rehabilitation projects, Sino Hydro commenced work on the US$550 million Kariba South Hydro power plant in 2013.
It is due for commissioning next year.

The mega deals involve a combination of cheap Chinese loans and domestic financial resources, bringing hope to a country that is spending at least US$20 million per month for power imports.

At the media briefing, Sino said it was working flat out to stem the haemorrhage triggered by the power crisis.

“Sino Hydro will invest an amount of US$176 million as the project’s equity to assist to reduce the capital and the improvement of people’s life,” said Wang Jian, general manager at Sino Hydro.

 

“With the support of the Chinese government…, Sino Hydro is ready to make common effort together with the Government of Zimbabwe and Zimbabwean people to change the current situation and build a nice homeland for the country,” Jian added.

Chinese firms are involved in energy projects running into billions of dollars in Zimbabwe, including investments in coal through Africa Sunlight Energy.

When it is brought on line in March 2018, the Kariba South project will generate an additional 300 mega watts.

“The implementation of the KSE (Kariba South Extension) project creates both economic and social benefits, which has provided…1 500 jobs,” Jian said.

While many analysts have expressed concern over China’s disregard for labour and environmental laws, Africa’s think tanks agree that Chinese investments have helped countries like Zimbabwe, where massive capital flight had crippled the economy.

The Johannesburg headquartered Southern Africa Resource Watch (SARW) said in a recent report that Chinese firms had emerged as the biggest job creators in Zimbabwe’s extractive industries.

China appears to be gunning for control of large amounts of mineral reserves, said SARW, which carried an investigation into the Asian giant’s mineral interest in the Southern African Development Community region.
It said each dollar invested by a Chinese company in Zimbabwe created more jobs than any other country.

However, China’s investments in Zimbabwe have courted widespread criticism, with many blaming the Asian giant for the ‘exploitative nature’ of its strategy.

“China ranks at number one in jobs created for each dollar invested (in Zimbabwe),” SARW said in the report titled ‘Win Win Partnerships? China, Southern Africa and Extractive Industries’.

“Chinese investment creates 17 jobs for every one created by BVI (British Virgin Islands) investment. For every US$49 000 invested by a Chinese company, a job is created. In comparison, BVI (British Virgin Islands) need US$817 000, Mauritius US$337 000 and South Africa US$169 000 to create one job,” the report added.

Many view the Beijing-Harare economic relations as outright exploitation of Zimbabwe’s resources by a global giant using its massive cash holdings to accumulate cheap raw materials for its expanding industries.

In 2011, a local newspaper claimed China had effectively invaded Zimbabwe’s economic landscape after concluding a controversial deal under which Harare had allegedly ‘mortgaged’ US$3 billion worth of platinum reserves.

The deal with China, reportedly sealed through the Export-Import Bank of China (China Eximbank), was expected to give Zimbabwe US$3 billion to resuscitate its frail economy.

In return, China was expected to get platinum deposits in the Selous and Northfields concession estimated at 110 square kilometres.
The concession was estimated to contain 30 million ounces of platinum worth nearly US$40 billion at the time.

The deal was in addition to several others spanning from textiles, telecommunications, construction, agriculture, tourism and general trade.

“They (largely State-backed Chinese corporations) are in most cases protected by government protocols and are generally engaged in joint ventures with State companies. In certain cases, they are exempted from complying with certain rules and regulations,” said SARW.

The report said Chinese companies appeared to have a long-term view to investments in Harare than anywhere else they had invested.

“China’s appetite for Zimbabwean resources is far from fading,” said SARW.

“If anything, it is surging. In Zimbabwe, the thesis that China’s engagement in SADC’s extractive industry presently conforms to a neo-colonial exploitative approach is exaggerated.

“Chinese investment seems geared to the longer term, and is more tolerant to conditions in host countries than investment based in other countries. The chief executive officer of Sino-Steel and chairperson of ZIMASCO (one of the country’s biggest players in the chrome industry) expressed great optimism on Zimbabwe’s economic prospects. He felt that the challenges Zimbabwe was currently facing were of a temporary nature, and that his company was looking into the future and not just the short-term,” the report added.

“The Chinese strategy of involvement seems to be more targeted at controlling mineral resources than actual mining,” it added.

The meteoric rise of China as a formidable economic power in the past two decades coincided with the decline in Zimbabwe and the shift in policy which gave meaning to the relationship.

But this appetite for China’s investment in African resources has not only been confined to Zimbabwe.

The two-way trade between China and Africa has grown rapidly in the past decade, striking past US$100 billion in the past few years. -Fingaz

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