ZIMTRADE, the national trade development and promotion body, has postponed signing a trade deal with China over concerns of a widening trade deficit that is heavily tilted in favour of the Far East giant.
Kenzias Chibota, ZimTrade director on Monday told businessdigest on the sidelines of a function to promote the Chinese trade fair to be held later in the year, that Zimbabwe favoured an agreement that would capacitate local industry.
“They (Chinese counterparts) want to sign an agreement with ZimTrade. I have the draft. We were supposed to sign it today but I said we won’t sign it. I want that agreement to emphasise that issue of helping us capacitate our processing capabilities so that we export finished items rather just a one way trade,” said Chibota at the Promotion Conference of the 109th session of the China Import-Export Fair, scheduled for China later in the year.
Zimtrade, according to Chibota, is wary of the expanding trade deficit, with Zimbabwe exports valued at US$54 million to imports from China at US$129 million in 2009.
The 2010 figures are likely to show an even wider gap, Chibota said.
“Certainly this gap worries us because we cannot have such a deficit when our little resources are going out but we have nothing coming back. It just doesn’t balance and it is unsustainable. But again we need to be aggressive as Zimbabweans. We need to engage in joint ventures not just focus on finished products,” he said.
Chinese imports to Zimbabwe increased by 24% in the four years to 2009, according to official statistics.
South Africa continues to be the dominant trade partner, accounting for 60% of local imports.
The increase in imports is despite government tariffs discouraging imports of finished products. Government levies up to 5% import duty for raw materials while imported finished products attract 40% in duty.
Experts, however, say while Zimbabwe exports to South Africa are mostly mineral resources, the country’s manufacturing industry has the capacity to increase market share for value added products in furniture, textiles and clothing, horticulture products and arts and crafts.
Chinese investors have in recent years intensified investments in retail and mining — with interests in extraction of chrome, nickel and platinum.