Sino deals — Chinese look beyond Mugabe

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WHILE Zimbabwe and its “all-weather-friend” China are consolidating their historical ties by signing a number of deals worth a reported US$4 billion, Zimbabwe needs to implement far-reaching structural reforms and ensure leadership renewal if it is to fully benefit from the relationship.

Taurai Mangudhla

The two countries signed a number of infrastructural deals between August last year, when President Robert Mugabe, 91, visited the Asian country, and last week when his Chinese counterpart President Xi Jinping came to Harare on a reciprocal visit. However, Chinese officials say many of the agreements will be fruitless if Zimbabwe fails to introduce political, social and economic reforms, including leadership change, fighting corruption and ensuring policy consistency.

Unlike Mugabe who by acts of commission or omission has allowed corruption to flourish, Xi is synonymous with accountability and transparency, and has been fighting graft in his homeland since he assumed office in 2013. This year, the Chinese leader promised deeper reforms and the rule of law, equating them to “a bird’s two wings”. The 61-year-old leader also reiterated his “zero-tolerance” policy towards graft, vowing to keep “waving high the sword against corruption” and “fastening the cage of regulations”.

On the other hand, the Communist Party of China (CPC)’s central commission for discipline inspection, headed by politburo standing committee member and key Xi ally, Wang Qishan, has played a central role in the anti-graft campaign, in which hundreds of officials across the nation have been investigated and prosecuted. This has seen Xi break powerful cliques involving an intricate web of officials, cronies and tycoons as well as billions of dollars’ worth of deals and bribes.

He took down former domestic security czar Zhou Yongkang; General Xu Caihou, once the military’s second-in-command; and Ling Jihua, a top aide to ex-President Hu Jintao.

But Mugabe, on the other hand, has occasionally made noise threatening to act on corruption, but has dismally failed to walk the talk. This has led to suggestions that he is not sincere about fighting graft, possibly because most senior Zanu PF officials and his cronies would be caught up in the web.

Apart from the inaction on rampant corruption, Mugabe has failed to introduce much-needed reforms to breathe life into the ailing economy despite being repeatedly urged to do so. He blames the current economic malaise on sanctions imposed by the West rather than his disastrous policies.

The international community, including China, business delegations from the likes of the European Union, United States, Scandinavian countries, Australia, African states, and the International Monetary Fund through the Staff-Monitored Programme as well as local business have repeatedly called on Zimbabwe to initiate reforms and uphold property rights and the of rule of law. They also want clarity and consistency on the indigenisation law which has scared away potential investment, and improvement on the ease of doing business, but these pleas have largely fallen on deaf ears.

Officials such as Finance minister Patrick Chinamasa have tried to push for reforms, but Mugabe and Zanu PF hardliners have not been very supportive, hence the slow pace of change.

So while the Chinese have signed the deals, possibly to seal their interests in the post-Mugabe era, they have not hidden the fact that they are worried about Zimbabwe’s investment climate and the country’s political risk, emanating mostly from Mugabe’s decision to cling onto power despite his advanced age and a record of failure.

CPC officials told Zanu PF chairpersons who visited the Asian country for ideological and mass mobilisation training in 2012, ahead of the 2013 general elections, that Zanu PF should change or die.

The Chinese also highlighted the same message to Mugabe when he visited Beijing last year, and to Vice-President Emmerson Mnangagwa during his visit in June this year.

Officials from the National Development and Reform Commission of China, who were in Zimbabwe in January, also urged the government to reform parastatals so as to plug revenue leakages as well as to promote transparency and accountability. IMF has been calling for similar reforms.

Xi and Chinese officials who were in the country last week, like many other business delegations to visit Harare over the last few months, emphasised the need for economic reforms to ensure clarity on investment laws, improving the ease of doing business, fighting corruption, introducing investment friendly policies and, ensuring the country’s credit ratings improve as well as reducing the country’s sovereign, political and economic risks.

The Chinese’s biggest worry could be the country’s failure to have a clear succession plan, according to Zimbabwe National Chamber of Commerce chief executive officer Takunda Mugaga said. This has seen Zanu PF bigwigs expending so much energy and time strategically positioning themselves for the post-Mugabe era through factional fights at the expense of the economy.

“The major and perhaps in some way only risk the Chinese would be really worried about is that if government changes and we have a party or leader who is pro-West, is there going to be space for the Chinese,” he said. “Because of this, Zanu PF needs to show that it is able to renew itself, consolidate power and remain strong going forward because it is unlikely to have a pro-Western leader”.

Oxford University’s NKC African Economics (NKC) has interpreted the recent deals signed between China and Zimbabwe as the Asian county’s tightening of its grip on Zimbabwe.

NKC said the deals had been agreed, but “with Pied-Piper undertones.”

“China does not share foreign investors’ general concerns about putting cash into Zimbabwe, and this has prompted civil rights sources in Harare to question what the real price of the investments may turn out to be in the long-term. At some point, the fear is, the time will come to pay the piper,” said NKC, adding that China’s interests were agreements for cooperation between state-owned enterprises and taxation modalities for Chinese companies.

NKC said Zimbabwe should cast its net wider for foreign investment to create some form of negotiating advantage, while at the same time closely evaluating terms of the agreements to maximise value.

“Zimbabwe is in no position to pick and choose investment partners and even less able to negotiate terms,” said NKC. “The breakdown of two generating units at Hwange on the same day as the investment deals were signed underscored this disadvantage. Because of its poor bargaining position, this week (last week) ’s deals with China may cost Zimbabwe far more in the long term than it may gain, but clearly the Zanu PF regime believes it worthwhile.

“Of course, if and when the time does come to pay the piper it is more likely than not that even the apparently indestructible Mugabe and much of his old guard will not be around to care.”

However, former economic planning minister Tapiwa Mashakada feels China pays lip service to governance issues and has no genuine interest in reforms as long as their economic interests are guaranteed.

“The Chinese foreign policy is very clear — they support ruling parties at any one time whether they are democratic or undemocratic. All China wants are government guarantees on state-led deals and insurance for private sector deals,” Mashakada said.

But given Zimbabwe’s desperation for foreign direct investment it is likely to effect reforms, even if quite reluctantly, to secure investment and debt relief in abid to save the economy from collapse.

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