China consolidates stranglehold on Zim

ON arrival at the Harare International Airport entrance terminal visitors to the Southern African country, a former British colony led by a president who has been described by some as a “fine English gentleman” even if he says he is not a British clone, are struck by an unusual welcome inscription above immigration counters.

Chris Muronzi

Visitors now have to contend with what on the surface are scribbled and indecipherable configurations that look like calligraphy — a practice of design and execution of lettering — which is strange in this part of the world.

They are greeted by these calligraphic strokes (Huānyíngdàojīnbābùwéi).

It’s Chinese for “Welcome to Zimbabwe” as written below the caligraphy in English.

Such is the policy shift and conversion which President Robert Mugabe’s government has embraced as part of its controversial Look East policy.

Zimbabwe officially declared a Look East policy in 2003. While initial statements about developing strong relations with Malaysia were made by government at the time, the focus later shifted to China.

In this context, meetings between the Chinese and the Zimbabwean governments have multiplied.

Mugabe was in China the whole of this week looking for a comprehensive financial rescue package, funding for projects and investment from a country which is now increasingly becoming his sole benefactor and pillar of survival.

When Zimbabwe became independent in 1980, it was quickly an international darling, with Mugabe visiting Western capitals continuously and hobnobbing with the rich, famous and powerful in that part of the world. He even got an honorary knighthood from Britain which has now been withdrawn due to policy squabbles and human rights abuses.

Despite his socialist rhetoric during the liberation struggle, Mugabe, despite his autocratic tendencies, proved to be a pragmatic policymaker who employed a number of strategies to engage all relevant countries to boost economic development.

However, by the turn of the century, Zimbabwe’s reputation had taken many hits. Mugabe actively suppressed opposition political parties. He unleashed a North Korean-trained military crack unit to massacre his supposed political enemies in the south-western parts of the country.

His party, Zanu PF, used violence as a political tool, rigged elections and took steps to create a legislated one-party state. His regime imprisoned and tortured its opponents. Corruption became endemic. The economy after land invasions in 2000 experienced a meltdown as the West moved to sanction and isolate Mugabe over farm seizures and gross human rights violations.

So the Look East policy is both politically motivated and a response to economic imperatives in the absence of investment and donor support from the West.

Chinese authority’s responsiveness has to be understood as a broader initiative undertaken by Beijing after launching the China-Africa Cooperation Forum in 2000.

This itself is part and parcel of a global strategy that emphasises multilateralism and South-South coalition building as a path to achieve reforms in the international system. The United States and European Union have their own arrangements with Africa.

Zimbabwe as a country is not a key partner in these considerations. However, Harare expects to benefit in political terms internationally and domestically by engaging with China on a bilateral basis in this context. Economically the expectation is China will replace Western investors and donors in the long term.

This is also motivated by the fact that China does not come clad in moral principles and universal values but is pushing clearly defined economic objectives. So the co-operation will only be sustained if Zimbabwe can deliver on its promises and repays its debts.

Mugabe specifically adopted the policy shift after falling out with mainly the British and the Americans following a disputed presidential election in 2002, condemned by observers as fraudulent against a backdrop of a blood-spattered land reform process.

Zimbabwe, which had relied largely on European and American funding and investment since colonial times and after Independence in 1980, began to see Chinese imports ranging from shoes, buses to machines. There are also now Chinese shopping malls, hotels and restaurants across the country.

“We have turned East where the sun rises, and given our backs to the West where the sun sets,” Mugabe said on Independence Day of 2005. His announcement was merely cementing an already announced policy.

Since then Chinese companies have invaded Zimbabwe and an influx of cheap goods have flooded the country, wrecking local industries, especially in manufacturing and textiles.

The biggest highlight of Chinese investment since the advent of the Look East Policy came in 2007.

Sinosteel Corp, China’s biggest chrome importer, acquired 92% stake in Zimasco Consolidated Enterprises Limited, a Mauritius-based holding company of Zimbabwe’s Zimasco in a transaction worth over US$200 million.

While it was a huge transaction by Zimbabwean standards, this deal has unfortunately become the symbol of Chinese investment into Zimbabwe so far since government adopted the Look East policy — a monument to failure.

Over the years the Chinese have invested in diamond mining through its Anhui, a joint venture between government’s Zimbabwe Mining Development Company (ZMDC), the military and the Chinese company. The deal is one of the most opaque and has fuelled distrust in Chinese investors as it failed to remit taxes to government.

Despite dubious deals, slavish labour practices and pillaging of the country the Chinese have been marching onto Zimbabwe like an invading army.

But this has not deterred Mugabe and his government from inviting them more.

Just this week Mugabe was on his 13th visit to China to look for funding and attract investment. The two countries signed nine agreements that will see the Asian global giant providing financial support for key sectors such as energy, roads, national railway network, telecommunications, agriculture and tourism. This is not the first time this was done.

In June 2006, state-owned Zimbabwean enterprises signed a raft of energy, mining and farming deals worth billions of dollars with Chinese companies after Vice-President Joice Mujuru’s visit to Beijing.

The agreements highlighted Zimbabwe’s dogged campaign to lure Chinese investors to replace western capital which has been withdrawn or reduced due to the political and economic crisis.

The largest deal announced was with China Machine-Building International Corporation. The company signed a US$1,3bn agreement to mine coal and build thermal-power generators in Zimbabwe.

Designed to reduce Zimbabwe’s electricity shortage, the deal was signed by representatives of Ele Resources, a local mining company.

A memorandum signed by the parties aimed to set up a joint-venture coal mine in Dande in the Zambezi Valley and two power plants in the area. The Chinese firm has built thermal-power stations in Nigeria and Sudan, and has been involved in mining projects in Gabon.

Xie Biao, president of the Chinese corporation, said at the time his firm would help Zimbabwe to recover from its energy crunch. “We believe we can play a great role in the power sector in Zimbabwe,” he said.

A further deal between the ZMDC and China’s Star Communications was signed to form a joint venture to mine chrome, with funding from the China Development Bank.

The country was expected to import road-building, irrigation and farming equipment from the China National Construction and Agricultural Machinery Import and Export Corporation and China Poly Group.

As a result Zimbabwe consolidated its reliance on China for imports of telecommunications equipment, military hardware and many other critical items it could no longer import from the West. Wankie Colliery also signed an agreement with the Chinese company to establish a coal mine and a power station in Zimbabwe.

During her official tour, Mujuru visited China National Aerotechnology Import and Export Corporation headquarters for talks with senior executives of the group. The company had been supplying Zimbabwe with passenger and military planes, scanning machines and electricity transmission equipment.

This is similar to this week’s deals. Several delegations of Chinese officials and businessmen have since then made forays to Harare to strengthen ties. Mujuru said Harare would continue to use its mineral resources to attract investors from China.

In 2012 government trumpeted that China Railway would invest US$1,2 billion to develop a high-speed train route between Harare and Bulawayo, but senior officials with China Railway in Zimbabwe knew nothing of the project.

Just last year a US$180million agriculture support facility was unveiled by the Chinese. Government claims it has since scored dividends for the food security and nutrition cluster, putting the country on a path of national food self-sufficiency.

According to state media reports, Finance minister Patrick Chinamasa, who was also in China with Mugabe, this week signed two master loan agreements with the China Export and Import Bank and the China Export and Credit Insurance Corporation.

He said agreements with the China Exim Bank had helped put into place a framework under which Zimbabwe could secure funding for projects in the productive and infrastructural sectors on a case by case basis.

But behind the camaraderie speeches, China means business and will not be doling out money like confetti. It expects returns from its investments and the result for Mugabe has been mortgaging of Zimbabwean assets to China and allowing Chinese companies and investors to invade the country even at the risk of creaming off its wealth unscrupulously through modern-day colonial-like exploitation.

Although China agreed to funding agreements and feasibility studies of power projects, road dualisation and railway line construction, saying they would be no cap on how much Beijing can avail to Harare, the catch was the projects have to be viable.

A consortium of private Zimbabwean and Chinese companies, China Africa Sunlight Energy, signed an integrated project worth over US$2 billion that will see the firm constructing a 600-megawatt thermal power station in Gwayi by 2017, producing 2,4 million tonnes of underground coal per year, constructing the Gwayi-Shangani Dam as well as the Gwayi-Insukamini Power Station transmission line.

The company is a joint venture between Oldstone Investments, a Zimbabwean company, and a Chinese firm, Shandong Taishan Sunlight Investments, with its consortium HCIG Energy Company Ltd and Cad Fund.

Government also signed an agreement for feasibility studies on coal exploitation and construction of a thermal power station that was expected to add 600MW to the national grid.

Chinamasa reportedly signed other MoUs for feasibility studies on dualisation of the country’s highways, among them Beitbridge-Harare, Harare-Nyamapanda, Harare-Chirundu and Mutare-Harare.

But this is not the first time Mugabe has been on official visits to China and signed such deals. His previous visits dating back to a decade ago have been eventful and followed with announcements of such deals which came to naught even though Chinese always demand their pound of flesh.

Some of the previously announced deals which went nowhere include, for instance, Guangdong Bureau of Coal Geology which was said to be planning to invest US$3,5 billion to build a 1 200 megawatt thermal power plant in Zimbabwe.

China was also supposed to spend US$1,2 billion upgrading water supplies in the south east of the country and China Railway would build a high-speed train between the capital and the industrial city of Bulawayo, 439km to the south-west.

The United Nations Conference on Trade and World Investment Report 2011 show that Zimbabwe recorded foreign direct investment (FDI) of US$105 million, compared to another Southern African country, Angola’s US$9 billion for the same period. According to information from China’s Commerce ministry, annual FDI from China to Zimbabwe was between US$35 million and US$45 million annually between 2008 and 2010.

Although trade volumes between China and Zimbabwe has ballooned from US$310 million in 2003 to US$1,1 billion last year, Zimbabwe is only ranked 26th out of 58 African countries trading with China.

However, the same figures which show that good things have been happening between the two countries, taken together with other pieces of evidence, also indicate China is taking over Zimbabwe by other means and Mugabe is the conduit.

Mugabe has been to China 13 times and three Chinese vice-premiers have been to Zimbabwe in the past three years. Trade volumes are now US$1,1 billion, up from US$562 million in 2010.

Zimbabwe’s exports to China in 2013 were US$688 million, while China’s exports to Zimbabwe were US$414 million. Chinese investment in Zimbabwe is US$602 million.

Zimbabwe has been able to get preferential, concessionary and commercial loans from China in recent years amounting to US$1 billion.

These have funded projects including the US$100 million National Defence College just outside Harare, US$144 million Harare water project, medical equipment for hospitals, Victoria Falls airport expansion and the Kariba South hydropower expansion. Chinese official assistance to Zimbabwe — being grants and interest-free loans — over the past three years has been US$100 million.

These are all good things but also sweeteners to mortgaging the country to the Chinese.