China–Zim’s 40-year relations

catriona-laing2.jpg

Rapprochement ... Finance minister Patrick Chinamasa and British ambassador to Zimbabwe Catriona Laing at a recent press briefing in Harare.

Owen Gagare/Tinashe Kairiza

ON May 15 1981, former president Robert Mugabe – then Zimbabwe’s prime minister – held a meeting with legendary Chinese leader Deng Xiaoping in Beijing, China, which could have changed Zimbabwe’s course had the country’s founding father listened to words of wisdom concerning governance and reforms.

After assuming power in 1978, following the death of chairperson Mao Zedong, Deng outlined reforms that combined socialist ideology with free enterprise, under the rubric “socialism with Chinese characteristics”.

The sweeping reforms resulted in the country opening to trade, foreign investment and ideas. They unleashed the creative and entrepreneurial potential of the Chinese people, which is being felt globally today.

China, once a poor country, has evolved into a global economic powerhouse, thanks to Deng’s visionary leadership.

Deng, a pragmatic leader, who presided over China from 1978 to 1992, ushered bold and far reaching reforms, which set the Asian country on an unprecedented growth trajectory and is thus often called the “Architect of Modern China”.

Senior government officials with knowledge of the Beijing meeting, say Deng told Mugabe that ideological dogma would no longer work going forward, pragmatism would. The West-East paradigm was not helpful and a capitalist developmental state, with socialist dimensions and characteristics, was a much better model for growth.

Deng like Mugabe was a socialist at heart. In short, he told Mugabe that “it doesn’t matter whether the cat is black or white, as long as it catches mice”.
Needless to say Mugabe did not listen.

China, on Tuesday celebrated its 70th anniversary amid pomp, fanfare and joyous scenes because of the country’s unmatched progress in modern day history, largely attributed to Deng’s successful reforms.

The country celebrated 40 years of reform and development last year.Zimbabwe will also celebrate 40 years of Independence next year, but the paths the two countries have travelled since that historic meeting are a sharp contrast.

While Deng and successive Chinese leadership are credited with ensuring the Asian nation developed into one of the fastest-growing economies in the world for several generations, raising the standard of living of hundreds of millions of its citizens, Zimbabwe on the other hand went on a downward spiral due to Mugabe’s ruinous and ill-thought economic policies. Many have been plunged into abject poverty.

His predecessor Emmerson Mnangagwa, who assumed power through a military coup in 2017, also seems to be travelling on the ruinous path trodden by his mentor.
As highlighted by former World Bank Group president Jim Yong Kim during the First China International Import Expo in November last year, the Asian country has made tremendous and unmatched progress in four decades.

“By embracing reforms and openness in its development model, China has increased its per capita income 25-fold, and more than 800 million Chinese people lifted themselves out of poverty as a result—more than 70% of the total poverty reduction in the world,” Kim said.China is the second biggest economy in the world with a Gross Domestic Product (GDP) of US$13,61 trillion.

When Deng rose to power in 1978, China’s GDP was 11th in the world but in 2010, it leapfrogged Japan to become the second largest economy.
China has also been a major driving force of world economic growth.

Data from the China’s National Bureau of Statistics shows that from 1961 to 1978, the country’s annual contribution to global economic growth was a mere 1,1%, but from 1979 to 2012, the average annual contribution rate was 15,9%, ranking second in the world.From 2013 to 2018, the average annual figure climbed to 28,1%, ranking first globally.

In 2018, the ratio of China’s contribution to global economic growth was 27,5%, which is 24,4% higher than in 1978 and a testament of the success of Deng’s reforms.

The Asian country has held the largest foreign exchange reserves in the world for 13 consecutive years. China holds a whooping US$3 trillion in reserves.
China’s output of more than 200 industrial goods ranks first in the world.

By contrast, Mugabe inherited a currency at par with the British pound sterling and stronger than the United States dollar in 1980, but totally decimated the currency. He was removed from power in 2017, when Zimbabwe had no currency.

Mnangagwa has introduced chaotic currency reforms which have perpetuated the country’s cash and currency crisis.At Independence, Zimbabwe had solid and functional state companies, which were driving the economy, but the enterprises are now in the doldrums.

Ziscosteel was the envy of sub-Saharan Africa, producing steel essential for the country’s infrastructural development, while the National Railways of Zimbabwe provided the wheels for economic growth, carrying tonnes of goods annually. Hwange Colliery Company was providing coal and coke to fire up the economy and help in the generation of much-needed electricity and steel.

The Zimbabwe Electricity Supply Authority was well run and producing sufficient power.The four companies have, however, virtually collapsed and are sinking in debt due to mismanagement and looting.

From inheriting 18 planes from Air Rhodesia at Independence, Air Zimbabwe is now flying just one plane, highlighting the astounding regression over the years.
Leadership failures and a cocktail of ruinous policies and practices, which include nepotism, patronage, corruption, breakdown of the rule of law, property rights violations, policy inconsistence and a chaotic and often violent land reform programme, sunk the economy while hyperinflation decimated the Zimbabwe dollar, before it was hastily ushered back in June without conditions necessary to sustain a currency.

So bad was the inflation situation that Zimbabwe broke hyperinflation records in the 20th century — notably Germany in the 1920s, Brazil in the 1980s, Argentina and Angola in the 1990s. By November 2008, Zimbabwe’s highest monthly inflation peaked at 89,7 sextillion percent, according to leading economist Steve Hanke.

Zimbabwe went on to adopt a multi-currency regime in 2009, after its currency became worthless, helping to steady the economy and putting a lid on inflation.
But because of the currency volatility, Zimbabwe’s inflation is on the up again and was at 300% as of August, according to the IMF.

Analysts say the progressive leadership of successive Chinese leaders, their zero tolerance to corruption and passion for attracting and protecting investment and policy consistence have driven the country to success. Zimbabwe’s economy on the other hand has regressed because of leadership failure, failure to invest in infrastructure and corruption among other things.

Economist Prosper Chitambara says Deng’s “visionary leadership” cannot be overemphasised.“In China, they did things differently; they were able to articulate a shared vision under Deng. That is unity of purpose. Deng brought in transformational leadership and visionary leadership,” Chitambara said.

“China in those 40 years has had financial discipline in terms of allocating resources to key investment areas. There was also a strategic opening up of the economy.

They opened up the economy in a strategic way through the setting up of Special Economic Zones (SEZ). Importantly, they have zero tolerance on corruption which is not the case in Zimbabwe.”

Chitambara said following the death of Mao Zedong in 1976, and the ascendancy of Deng to the helm in 1978, China made rapid progress by investing heavily towards setting up a robust infrastructure network, which is now the cornerstone of the world’s second largest economy.

“During that period, they have invested heavily in infrastructure like energy and transport which are key pillars of economic development. China has also been able to build strong institutions which are a key driver to economic development. This is something that Zimbabwe has to learn,” Chitambara said, highlighting that the southern African country, borrowing from the Asian economic powerhouse, should also respect property rights and have policy consistence to attract FDI.

By the end of 2018, FDI inflow to China ranked second in the world for two consecutive years.Over 960 000 foreign-invested enterprises had been set up in China by the end of last year, with the accumulated foreign direct investment exceeding US$2,1 trillion.

By contrast, Zimbabwe recorded FDI inflows of US$745 million in 2018 which is lower than its peers in Sadc, figures from the United Nations Conference on Trade and Development World Investment Report show.

FDI flows to neighbouring South Africa were US$5,3 billion in 2018 while Mozambique received FDI flows amounting to US$2,7 billion.

Bindura university commerce lecturer Felix Chari noted that while China has made rapid progress in the last 40 years, accumulating the world’s largest foreign currency reserves through a culture of disciplined savings, Zimbabwe’s economy teeters on the brink of collapse, owing to a shambolic infrastructure system, among a plethora of challenges.

“To start with, Zimbabwe’s dilapidated infrastructure explains the gap in development with China. Zimbabwe’s railway network, roads and power generation infrastructure is old, dilapidated and have not seen any major sprucing up in recent times. Zimbabweans also have poor savings rate due to instability in the economy.

In the past few years, Zimbabwe has witnessed high inflation,” Chari said.“On the other hand, the Chinese people’s culture of savings has helped China fund many grand infrastructure projects. They have also invested heavily on innovation, reducing the country’s reliance on foreign products.”

Last year, China’s research and development expenditure was 2,18% of GDP, or 1,97 trillion yuan (US$280 billion.
If only Mugabe had listened to Deng during that crucial meeting in 1981.

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