Zimbabwe has confronted an economic Goliath since the 1990s.⁽²⁾ The problems, which accompanied Zimbabwe's economic quagmire, include hyperinflation, underdeveloped infrastructure, policy uncertainty, large external debt, and insufficient employment.⁽³⁾ This reduced the capacity of the Zimbabwean financial sector substantially, thereby gravely affecting the local currency, the Zimbabwean Dollar. In 2009, the local currency was taken out of circulation⁽⁴⁾ and replaced with a multi-currency economic system that consists of the US Dollar, the South African Rand, and the Botswana Pula.⁽⁵⁾ This radical currency change was attributed to the persistent hyperinflation, and quickly became a logical solution to stabilise the Zimbabwean market by promoting liquidity, and increasing exports, and local retail services.⁽⁶⁾

Furthermore, Zimbabwe has faced significant isolation from the international community through sanctions from the West due to Zimbabwe's contested governance style and reported political violence and human rights abuses.⁽⁷⁾ The unforgiving economic situation that Zimbabwe is currently experiencing typically depicts a scene where Zimbabwe looks towards other nations for salvation. President Robert Mugabe has openly shown his preference to a “look East” policy after being scorned over 2002 Western imposed sanctions.⁽⁸⁾ This provided China with the perfect opportunity to foster warmer economic and diplomatic relations with Zimbabwe, even though it was dubbed the “disaster zone.”⁽⁹⁾ This paper discusses China's involvement with Zimbabwe to discern if this relationship is in fact a boon or bane.

China to the rescue

Chinese-Zimbabwean diplomatic relations are not a recent development. China has been a long time supporter to Zimbabwe's octogenarian President Robert Mugabe since before Zimbabwe achieved its independence in 1980.⁽¹⁰⁾ This support came in the form of training liberation fighters and providing arms.⁽¹¹⁾ Since 1980 to the present day, China and Zimbabwe opened and maintained official diplomatic missions, and relations have remained stable, friendly, and paired with frequent diplomatic visits.⁽¹²⁾ This relationship holds a substantial economic concurrence as both have signed numerous agreements regarding “economic and technical cooperation, trade and investment protection.”⁽¹³⁾ “Yuang Fei” remains a popular Chinese business catch phrase, meaning “Go to support Africa.”⁽¹⁴⁾ This is directly translated into China's Africa policy, which also places great respect and emphasis on African relations, aiming to strengthen and develop trade by supporting relationships through its respect for sovereignty, accepting that internal struggles are just, maintaining solidarity, and providing economic assistance without political terms attached.⁽¹⁵⁾ This sincerity would ultimately foster mutual and long term relationships.⁽¹⁶⁾

China has shown its affinity for the African continent by holding 45 different bi-lateral agreements, providing up to US$ 10 billion in non-preferential loans from 2010 to 2012, coordinating and constructing approximately 500 infrastructure projects, bringing in approximately 4,700 retail products, providing 5,000 scholarships yearly, investing up to US$ 9,33 billion (2009 estimate), and trading with Zimbabwe to the value of UD$ 114.8 billion (by 2010).⁽¹⁷⁾ Chinese importers are mostly interested in Zimbabwean mining, construction, manufacturing, retail, and agriculture sectors, where they are likely to have greater returns because those markets are (mostly) unexplored.⁽¹⁸⁾ Chinese investors are constantly seeking a way to maximise their profits on their investments and often business partners forget that China’s national objectives and social responsibilities are equated with their economic policy. Ultimately, the Chinese remain a focused economic power house, which should not be forgotten due to cordial and warm relations.⁽¹⁹⁾

This point vexed the Zimbabweans as they received an offer for a platinum reserve for US$ 3 billion; however, it was declined, as the value of the reserve was approximately US$ 40 billion.⁽²⁰⁾ As exuberant loans continue to pour into Zimbabwe, a number of questions are raised: Is China entrenching itself in Zimbabwe so that it may control Zimbabwe? Or is it a misunderstanding? Is China indeed a loyal friend and business partner?

The pessimist’s view, unilateral benefits

As mentioned afore, the Chinese economic power house may be polite to its close business partners, but it should be realised that China, like all other states, “will work to suit its own style of expansion.”⁽²¹⁾ Chinese foreign economic interests have long been criticised to being brutal and wholly self serving, and it is possible to assume that the Chinese are taking full advantage of Zimbabwe’s pariah status.⁽²²⁾ While Zimbabwe practices an African culture of Ubuntu, which encompasses a spirit or philosophy of humanity and peaceful coexistence,⁽²³⁾ this holistic approach clashes with Asian values that are economically driven, placing less emphasis on the primacy of the social condition. Chinese and Zimbabwean Governments have had similar criticisms regarding the state of human rights, respectively; therefore, it is assumed that such practices would transcend national borders. Lower level Zimbabwean workers feel this pressure to a greater extent, as there have been reports of human rights abuses in Chinese-run businesses and mines in Zimbabwe,⁽²⁴⁾ which raises the level of social unrest and creates a dislike of the Chinese presence.⁽²⁵⁾

Local business, too, is greatly threatened, because an aggressive Asian attitude towards business is unparalleled to Zimbabwean capabilities and often many small business owners relinquish their businesses to Chinese developers.⁽²⁶⁾ Although this increases Chinese-Zimbabwean economic relations at a top level, it prohibits local economies to develop in Zimbabwe. If local economies were to develop, the Zimbabwean economy would have a stronger base for the national economy to flourish. China contributes to almost half of the Zimbabwean economic activity, and is therefore its largest trade partner.⁽²⁷⁾ At the height of Zimbabwe’s financial crisis, when the Zimbabwean Dollar was taken out of circulation, there was a suggestion that Zimbabwe adopt the South African Rand to achieve economic normalcy. However, even the regional giant, South Africa, experienced currency weakness as the Rand fluctuated to an all time high against the US Dollar. Therefore, as China remained Zimbabwe’s greatest economic supporter, it seemed only logical to adopt the Chinese Yuan as Zimbabwean trading currency instead of maintaining the US Dollar.⁽²⁸⁾

This move towards aligning a country’s currency to another is a drastic step and, in this case, Zimbabwe would be cementing its “look East” policy and possibly alienating its remaining African (and Western) supporters. Although Zimbabwe is aware of China’s position and global power, they remain vigilant in maintaining their mixed currency of the Dollar, Pula, and Rand. Unawares, Zimbabwe seems to overlook China’s other means of encroaching themselves on the economy. Zimbabwe has recently received loans to the value of US$ 10.7 billion to help relieve the agricultural, health, and infrastructure sectors.⁽²⁹⁾

Although the Unity Government of Zimbabwe was grateful to receive these relief loans, which held no political conditions, they remain wary. Zimbabwean Prime Minister, Morgan Tsvangirai, reminded the Zimbabwean Government that the Chinese are not altruistic in their business intentions, as they “are not missionaries, they have their own business interests, they have their own national interests, especially when it comes to resources.”⁽³⁰⁾ Zimbabweans believe that once the Chinese have served their purpose by restoring the economy to normalcy and standards are maintained, Chinese partnerships may fall away. However, this may not be the case as China has managed to encroach itself into Zimbabwean security structures.

China emphasises that Zimbabwe’s political and security structures remain sovereign; however, as China’s economic power increases exponentially in Zimbabwe, “the nation’s independence is becoming harder to distinguish.”⁽³¹⁾ This is predominantly due to the US$ 7.1 billion external debt, which is expected to increase.⁽³²⁾ The next scheduled Chinese project lends an open-ended loan of US$ 98 million to the construction of a new military academy compound in Harare that is to increase reliance on the Chinese, because the military plays an integral part in the Zimbabwean regime.⁽³³⁾ China has encroached itself similarly in various parts of Africa, most notably taking control of lucrative industries; for example, it has taken control of the Mauritanian fishing industry for the next 25 years.⁽³⁴⁾ Although China seems to accumulate and use such key investments for economic leverage, there is a greater possibility it could influence domestic policies and, in turn, foreign policies.⁽³⁵⁾

It is a simple solution to react to encroaching Chinese business strategies negatively and assume that China is in fact a dubious character. However, it becomes clear that China is merely doing something that other states refuse to in fear of greater risks. China is merely banking on the unbankable.

The optimist’s view, a friend indeed

Western-imposed negative sanctions isolated the pariah state to an extreme extent, because Zimbabwe relies heavily on creditors and imports such as gasoline, food, vehicles and industrial machinery, which cannot be sustained unilaterally by Zimbabwe.⁽³⁶⁾ Therefore, the economic relationship with a strong global player such as China may be the blessing Zimbabwe needs to rejuvenate its economy. Chinese-Zimbabwean trade amounted to US$ 560 million,⁽³⁷⁾ and while this amount is not parallel to the amounts Zimbabwe lends from China, it is a positive step forward, because this revenue is not attached to its poor credit record. Although, at present, China seems to be taking advantage of the financial situation by making business deals that remunerate Zimbabwe poorly, the Chinese are bringing in necessary technology for the agricultural and mining sectors that are severely underdeveloped. This should benefit Zimbabwe in a longer term.

Chinese Foreign Minister, Yang Jiechi, explains that because both are misunderstood in the international arena, they complement one another well as they do not interfere with the respective partner's domestic affairs. China and Zimbabwe are “cut out for each other.”⁽³⁸⁾ Chinese-Zimbabwean exchanges have remained warm in the past decades, and each leader welcomes the other with great reverence as Chinese Vice-President, Xi Jinping, recalls President Mugabe as ”a famed leader of the national liberation movement.”⁽³⁹⁾ This warmth and support is further shown through international statements and actions, as China vetoed a United Nations Security Council (UNSC) resolution in 2008 that condemned President Mugabe's human rights violations and additional sanctions, and further lobbied to lift sanctions against Zimbabwe.⁽⁴⁰⁾ This persistence has also allowed for the ban on Zimbabwean diamonds to be lifted, which now account for a large portion of its exports.⁽⁴¹⁾

It may be important to remain optimistic of this economic relationship because along with the Unity Government, inaugurated in 2009, Zimbabwe is making few substantial social and economic changes. The Chinese attitude may have promoted a business orientation in Zimbabwe as diamond revenue is invested back into Zimbabwe by contributing to health, water, and power projects.⁽⁴²⁾ Diamond exports are expected to contribute US$ 4 billion to the Zimbabwean economy by 2012.⁽⁴³⁾ Socially, there is a greater sense in media freedom, as a greater variety of independent newspapers are made available. Although the primary news source in Zimbabwe is radio broadcasting and few networks are granted licences, there is room for optimism that the Zimbabwean situation may begin to improve, as greater opportunities such as cultural, educational, and health improvements are made available.⁽⁴⁴⁾

Concluding observations

The West hopes for a political situation. However, while Zimbabwe cannot bare the international isolation, it eagerly looks to the East, as “China is willing to join hands with Zimbabwe, enhance friendly exchanges, and expand practical cooperation.”⁽⁴⁵⁾ It becomes effortless to criticise China's involvement in Zimbabwe, exclaiming that China is in fact taking advantage of Zimbabwe and stands to benefit unilaterally after it leaves Zimbabwe exploited. The Chinese are “good business people” and Africans are unsure of what to expect.⁽⁴⁶⁾

However, Zimbabwe downplays its political condition because the leaders are aware that Zimbabwe too benefits from this partnership, as octogenarian President Mugabe may sustain his regime, receive non-political credit, and develop agriculture, infrastructure and mining avenues. Perhaps what Zimbabwean leaders ignore is that they accept this interest from China now, but how much will they have to pay for it in the future? Both China and Zimbabwe benefit from this economic arrangement and, in the international arena, a merciful opinion of both is that they are misunderstood. It is important to remain optimistic of Zimbabwe's condition as regimes may eventually change with the correct business partner and the economic help that they request (and need).

NOTES:

(1) Contact Arina Muresan through Consultancy Africa Intelligence’s Asia Dimension Unit (asia.dimension@consultancyafrica.com).
(2) 'Bank regulation and supervision: A case of institutional weakness and regulatory capture in Zimbabwe', Consultancy Africa Intelligence, 2 August 2011, http://www.consultancyafrica.com.
(3) 'Zimbabwe', CIA World Factbook, 8 February 2012, https://www.cia.gov.
(4) Ibid.
(5) 'Will Zimbabwe adopt the Chinese Yuan?', Think Africa Press, 8 December 2011, http://thinkafricapress.com.
(6) Ibid.
(7) 'Zimbabwe, China sign $585-million trade agreement', The Mail and Guardian, 21 March 2011, http://mg.co.za.
(8) Ibid.
(9) 'Friends and business partners (?): The current bilateral relations between China and Zimbabwe', Consultancy Africa Intelligence, 2 March 2011, http://www.consultancyafrica.com.
(10) Ibid.
(11) Ibid.
(12) 'China and Zimbabwe', Embassy of the People's Republic of China in the Republic of Zimbabwe, 16 August 2004, http://zw.china-embassy.org.
(13) Ibid.
(14) 'China in Africa: How well do we know them?', Consultancy Africa Intelligence, 2 November 2011, http://www.consultancyafrica.com.
(15) 'China's African policy', Embassy of the People's Republic of China in the Republic of Zimbabwe, 16 August 2004, http://zw.china-embassy.org.
(16) Ibid.
(17) 'China poised to pour $10bn into Zimbabwe's ailing economy', The Guardian, 1 February 2011, http://www.guardian.co.uk.
(18) 'Zimbabwe: Chinese become unwelcome guests', IBSA, 7 January 2012, http://www.ibsanews.com.
(19) Ibid.
(20) Ibid.
(21) Ibid.
(22) Ibid.
(23) Ibid.
(24) 'Workers claim abuse as China adds Zimbabwe to its scramble for Africa', The Guardian, 2 January 2012, http://www.guardian.co.uk.
(25) Ibid.
(26) Ibid.
(27) Ibid.
(28) Ibid.
(29) Ibid.
(30) Ibid.
(31) 'In Zimbabwe, Chinese investments with hints of colonialism', The Atlantic, 24 June 2011, http://www.theatlantic.com.
(32) Ibid.
(33) Ibid.
(34) Ibid.
(35) Ibid.
(36) 'Zimbabwe puts US$ 600 mil. From diamonds into services', The China Post, 26 December 2011, http://www.chinapost.com.
(37) Ibid.
(38) Ibid.
(39) Ibid.
(40) Ibid.
(41) Ibid.
(42) Ibid.
(43) Ibid.
(44) Ibid.
(45) Ibid.
(46) Ibid.

Written by Arina Muresan ⁽¹⁾