Will Chinese President’s Visit to Harare Stabilize Ailing Zimbabwe Economy?

Chinese President Xi Jinping’s visit to Zimbabwe has raised hopes among many in the country that China could help stabilize the country’s faltering economy.

Zimbabwe has over the past decade placed so much importance on China in its Look East policy as the West shut its doors on Harare through sanctions.

There are mixed reactions over Mr. Xi’s visit with many wanting to see the so-called mega deals signed by Harare and China beginning to change their lives for the better.

China is Zimbabwe’s biggest foreign investor, pumping in $600 million dollars into the country in 2013, according to the Chinese Ambassador to Harare, Huang Ping.

With Zimbabwe struggling with mass company closures and lay-offs, high unemployment, food shortages, low liquidity and foreign direct investment, many people are hoping that Mr. Xi’s visit will not just be a symbolic tour but help change their lives.

Chinese President Xi Jinping, right, and Zimbabwean President Robert Mugabe hold hands upon his arrival in Harare, Zimbabwe, Tuesday, Dec. 1. 2015.
Chinese President Xi Jinping, right, and Zimbabwean President Robert Mugabe hold hands upon his arrival in Harare, Zimbabwe, Tuesday, Dec. 1. 2015.

The fact that Mr. Xi brought with him a “strong” business delegation, some say it is a sign that China is serious about helping revive Zimbabwe’s economy.

While some Zimbabweans claim the mega deals may lead to the long-awaited revival of the country’s economy, others have brushed off the Chinese president’s visit saying the relationship between Zimbabwe and China is skewed in favor of China

But President David Norupiri of the Zimbabwe National Chamber of Commerce says Harare and Beijing are in a balanced economic relationship, adding Zimbabwe’s economy will not remain the same after Mr. Xi’s visit.

“It shows that the Chinese government is seeing a brighter future for Zimbabwe and they are showing confidence in the economy. We have to cooperate and make the doing of business easier so that we don’t block this investment. Normally if the Chinese president comes with his team they mean business. This is a win relationship,” says Norupiri.

Former Ambassador to China and war veterans’ leader, Christopher Mutsvangwa, is ecstatic about Mr. Xi’s visit.

Mutsvangwa says China has brought a lot of investment to Zimbabwe, adding the visit is not just a symbolic visit.

“In more than 35 years we have not built a new power station. We are building Hwange 7 and 8. We are building Kariba. A country that gives you power is a dear friend. We have also benefitted in the tobacco sector which has been revived with over 800million going into Zimbabwe pockets. The second largest economy in the whole world coming into your country and you think this man can just come for show off.”

Finance Minister Patrick Chinamasa says the Chinese president’s visit will breathe life into the ailing economy

“The visit by President Xi is significant in terms of the economic recovery. Our president visited China last year and concluded a number of deals. The visit will consolidate and cement these agreements.”

An unidentfied Chinese national and a Zimbabwean man hug while welcoming Chinese President Xi Jinping upon his arrival in Harare, Zimbabwe, Tuesday, Dec. 1. 2015.
An unidentfied Chinese national and a Zimbabwean man hug while welcoming Chinese President Xi Jinping upon his arrival in Harare, Zimbabwe, Tuesday, Dec. 1. 2015.

Secretary general of the Zimbabwe Congress of Trade Unions, Japhet Moyo, is however, dismissing the visit by Xi Jinping. He contends Zimbabwe has not benefitted from the trade relationship between the two countries.

“As a trade union or workers we have not seen much from the Chinese colleagues. We did a study on the Chinese investment in Africa and China, including China in Zimbabwe on what it has brought to the population and the study does not indicate any benefit except that Chinese have brought unfavorable working conditions.”

Prosper Chitambara, an economist with Labour and Economic Research Institute of Zimbabwe, says China is benefitting more from the relationship with Zimbabwe than Harare.

“The visit is just to cement political and economic relations. However, the benefits of the trade and economic relationship are skewed towards China.”

With the hype that has been created by the Chinese president’s visit, Zimbabweans eagerly await to see the much-touted mega deals coming to fruition and changing their lives for the better.

China’s Commerce Ministry recently caused a stir when it publicly admitted that Chinese investments to Africa had fallen by 40 percent in the first half of this year.

Some saw the sharp decline as a sign of the broader impact of China’s slowing economy. Others, however, say it is more related to Beijing’s changing approach to investments overseas.

Chinese President Xi Jinping’s could clear up whether Beijing’s overseas investment strategy is changing when he speaks at the Forum of China-Africa Cooperation in Johannesburg on December 4-5.

Analysts are also asking if Western countries and companies will take this time to recover some of the business ground in Africa they had lost to Beijing in recent years.

“China’s needs are changing. In the past, it has been more concerned about investing in natural resources, but it now wants to invest in technology and innovation as well as investing in mature markets, rather than any slowdown in foreign direct investment,” said Graham Robinson, director of the London-based consultancy Global Construction Perspectives.

The sharp decline in African investments is a reflection of the broader impact of China’s slowing economy, analysts said. The simple fact is that China’s need for natural resources, including minerals produced in Africa, is much less than what it was in the past.

FILE - Tanzanian women wait to welcome China's President Xi Jinping when he disembarks at Julius Nyerere International Airport.

FILE – Tanzanian women wait to welcome China’s President Xi Jinping when he disembarks at Julius Nyerere International Airport.

“Chinese foreign direct investments are down because the major investment sector is minerals and oil, and prices of these commodities are sharply down. This means that any costly FDI is likely to be postponed until prices rise and the investment again looks feasible,” said Deborah Brautigam, director at China-Africa Research Institute and Bernard L. Schwartz Professor of International Political Economy at Johns Hopkins University.

In its new five-year plan, China has adopted a different development stance focusing more on the services sector, and reducing its reliance on heavy industries that consume huge amount of resources, and cause massive carbon emissions.

Explaining the changed circumstances, author and business consultant Robert Lawrence Kuhn said, “There are a number of trends that go against Africa as an investment destination for Chinese enterprises… But China will remain committed to Africa, and continue to support projects in African countries.”

China is conscious about the political influence of African countries in terms of membership at the United Nations as well as its own 50-year long relationship with Africa, Kuhn said.

He expects Xi to announce a new infrastructure project during the coming summit. “Xi has not gone empty-handed in any country. He will definitely offer something useful to Africa.”

FILE - Chinese Premier Li Keqiang, left, and Kenya's President Uhuru Kenyatta applaud after the signing of the Standard Gauge Railway agreement with China at the State House in Nairobi.

FILE – Chinese Premier Li Keqiang, left, and Kenya’s President Uhuru Kenyatta applaud after the signing of the Standard Gauge Railway agreement with China at the State House in Nairobi.

China is often criticized for releasing opaque or unreliable statistics about its economy. So when the Chinese Commerce Ministry’s revealed a somewhat negative story about reduced investments ahead of the China-Africa Forum analysts said Beijing was trying to signal to African leaders to soften their expectations.

“Large scale investment, especially in infrastructure and mining, is by its nature very lumpy. This year some investment decisions may also have been deferred until face-to-face and cross-regional meetings can be held with ease at the Forum on China on Africa Cooperation,” Lauren Johnston, research fellow at the Melbourne Institute of Applied Economic and Social Research, said.

Johnston said the shift in Chinese demand for natural resources is not a China-Africa story but a global commodity story that affects a range of economies, including Australia.

A new trend has emerged in recent months with Chinese leaders successfully tapping collaborative projects in Europe and Latin America. Chinese companies are also eyeing major projects like high-speed rail in the United States. The creation of the BRICS bank, and the Asian Infrastructure Investment Bank with Beijing playing a pivotal role has also opened up new doors for Chinese companies.

This was evident on Tuesday when Chinese premier Li Keqiang addressed a summit attended by heads of Central and Eastern European nations in the southern Chinese city Suzhou.

Li said China was ready to provide more flexible funding conditions to these countries to upgrade their infrastructure, as long as they use Chinese equipment and products, according to the state paper.- voa

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