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Zimbabwe inks deals with China

Harare – Chinese President Xi Jinping – who arrives in South Africa today – signed mega investment deals with Zimbabwean President Robert Mugabe yesterday after a colourful visit to Harare, where he was treated to a 21-gun salute and welcomed by Chinese nationals, school children and ruling Zanu-PF supporters lining the main road to the country’s main airport.

Xi is to meet President Jacob Zuma before co-chairing the Forum for China-Africa Co-operation in Johannesburg. The forum is expected to focus on ways to strengthen the continent’s ties with China, now the world’s second-largest economy.

China is already a major investor in Africa, from technology to infrastructure, health and mining.

Its growing ties with Africa is evident in its increasing share of trade with African countries, including Zimbabwe and South Africa. African leaders have described the east Asian country as an “all-weather friend”.

However, Robert Hill, an economist at Focus Economics, said yesterday that “China’s strategy in Africa has been largely based on resource extraction and is generally characterised by offering mostly yuan-denominated loans, in exchange for permitting Chinese state-owned enterprises access to resources”.

This was evident in the Zimbabwean visit, where Xi signed several investment deals involving key sectors, including power generation, construction and communications.

Officials said that the investment deals signed yesterday were worth more than $4 billion (R57.6bn) and were in addition to China’s existing interests in Zimbabwe’s chrome and diamond mining, as well as cement manufacturing.

“Although this approach has precipitated some benefit to African countries, including Zimbabwe, the advantage is often squarely in China’s favour. President Xi Jinping will likely be seeking new markets for Chinese manufactured goods, access to cheaper labour and production capacity, and securing precious metals, such as Zimbabwe’s gold, diamonds and other minerals that are in consumer manufacturing,” added Hill.

China maintains trade surpluses with many of the African countries, including South Africa, a situation that analysts say should change as China’s investments spur Africa’s industrial capacity and China opens up its markets to goods produced in Africa.

Mugabe looked sharp as he welcomed Xi at the Harare International Airport shortly after 10am yesterday. The two leaders stood side by side as the national anthems were played before a 21-gun salute. Xi, whose presence was honoured with a military flypast, then inspected a guard of honour.

Finance Minister Patrick Chinamasa, who was part of the delegation of Zimbabwean ministers and officials who welcomed Xi, said ties between the two countries were slowly transforming into economic and trade relations. Previously, he said China and Zimbabwe had enjoyed common diplomatic and political ties.

“The Chinese investors are becoming quite strong in terms of their investments in Zimbabwe. We already have more than 100 Chinese companies who have invested in Zimbabwe and there is a lot of interest in all sectors of the economy,” Chinamasa said.

But analysts cautioned that “as China’s economy slows, and rebalances from investment-driven growth to consumption, so too will its demand for resources” and added that this could harm political regimes in Africa that now largely depended on Chinese resource-extraction centred deals.

Among the investment deals that China signed with Zimbabwe yesterday was the construction of Hwange 7 and 8 units that will add 600 megawatts to the country’s power grid. China is also funding the Kariba south extension, which will add another 300MW.

-IOL Business Report

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