China-Zimbabwe Relations

In addition to trade, aid, and diplomatic ties, China – Zimbabwe relations are strengthened by a mutual desire for development

By Fraderick MujuruChina-Zimbabwe

Zimbabwe is located in the southern part of the African continent, immediately north of South Africa. The country has a population of 13 million and an area of 151,000 square miles. Zimbabwe gained independence from British colonial rule on April 18, 1980. Zimbabwe’s government is ostensibly a Presidential Republic, with Robert Mugabe being its President since independence. In 2014, Zimbabwe’s economy recorded a GDP of US$ 12.8 billion and an annual growth rate of 3.1%. However, this paints a misleading picture; the economy witnessed negative growth of about 16% during the hyperinflation years (see Figure 1). Though it has recovered since then to post positive growth rates, it must be noted that having a range of over 27% in the growth rate (-16% to 11%) is an indication of macroeconomic instability. There is no better proof of this instability than the episode of hyperinflation where the inflation rate rose to a whopping 231 million percent in July-August 2008.

Figure 1: Showing the real GDP growth of Zimbabwe from 2005-2014. The numbers for 2012-14 are IMF Staff estimates.

Zimbabwe Fig 1

Source: IMF World Economic Outlook Database.

However, Zimbabwe has stabilized since then and there are encouraging signs of growth in the near future. A part of this revival has to do with Zimbabwe’s immense mineral wealth, as it is a source of economic returns. One major factor is the political and economic relationships that Zimbabwe has managed to develop with the fast growing East Asian countries, the biggest of which is the People’s Republic of China.

China has a web of alliances across Africa: there is even a popular mantra to describe the Chinese presence and investments in Africa – “the Chinese are coming”. China’s relationship with Africa has historical roots; in 1971 many African nations supported the claim of the government of the People’s Republic of China to represent China’s seat in the Security Council of the United Nations. This may be because Beijing spent the early part of the 1960s establishing relations with left leaning states such as Ghana, Angola, Zimbabwe, Sudan, etc.

Starting from as early as the 1950s, Africa has seen several large projects spearheaded by the Chinese government that have set the tone of engagement between the two areas. Major projects include the construction of the Tanzam railway joining Tanzania and Zambia. China’s trade with the African continent has increased from US$10 billion to US$120 billion between 2000 and 2014. It has given as much as US$ 5 billion towards at least 800 projects in Africa, an amount higher than the World Bank’s contribution since 2005 (US$3.2 billion).

China-Zimbabwe Political relationship

China and Zimbabwe have cooperated politically in the past. In 2005 the European Union and the USA imposed economic sanctions on Zimbabwe for alleged human rights violations. In response, Zimbabwe crafted its ‘Look East Policy’ which targeted Asian economic giants like Singapore, China, and Malaysia. China responded quite quickly and the communist Chinese government supported Zimbabwe in its ‘Land Reform Program’ which sought to address the predominantly white minority ownership of property.

The pinnacle of China-Zimbabwe political relations was likely China’s use of its veto to axe the 2008 United Nations Security Council resolution that sought to apply additional sanctions on Zimbabwe. The resolution was also vetoed by Russia and they both justified their stance with the argument that the alleged incidents were an internal matter and not a threat to international security.

From Politics to Economics

The economic relationship between the two countries has recently been the source of deepening ties between China and Zimbabwe. In 2010, both countries celebrated 30 years of their relation with over US$ 560 million generated on bilateral trade.

The trade relationship between the two countries is obviously dominated by China; Zimbabwean exports to China are exceeded by Chinese imports in Zimbabwe. Major imports from China include telecommunication equipment, and manufactured goods such as soap, plastics, shoes, etc. Exports by Zimbabwe to China are mainly raw materials such as tobacco, platinum, chrome, steel, and diamonds.

Fig 2: Exports and Imports of Zimbabwe to and from China (US$ thousands)

Zimbabwe Fig 2Courtesy: World Integrated Trade Solution (WITS) 2015

Apart from trade, China has also provided aid to Zimbabwe to help the latter in its developmental efforts. For instance, it provided US$103 million in official development aid to Zimbabwe from 2004-2010, through grants and concessional loans (see Table 1).

Table 1: Summarizing some of the Zimbabwe-China economic deals and aid agreements.

Year Amount (millions) Types Description
2000 $5.8 Concessional loans Used to invest in Cement production plant
2004 $240 Sale 12 jet fighters and 100 military vehicles’
2006 $25 Preferential loans  –                –                 –                   –
2007 $200 Export credit Farming Inputs
2007 $200 Sale SINOSTEEL purchased ZINASCO
2010 $700 Loan Rejuvenating Agriculture sector
2012 $180 Loan Airport Upgrade, neonatal equipment, economic and technological cooperation

 

Extraction: Ministry of Finance and Economic Development of Zimbabwe (2014)

China also funds many infrastructure projects in Zimbabwe. It recently invested US$ 98 million in a military complex entitled the Robert Mugabe School of Intelligence. The trade relationship is not limited to the Chinese government; Chinese companies have invested in Air Zimbabwe, the Zimbabwe Broadcasting Corporation (ZBC) and Zimbabwe Electricity Supply Authority.

Though the China-Zimbabwe relationship may have been more political in its early years, the two countries are currently bound more by economics and diplomatic ties. China has offered loans, grants, concessions, and preferential loans to Zimbabwe. To increase their engagement, Zimbabwe allowed Beijing investors to have a share and invest freely in Zimbabwe. The relation between China-Zimbabwe has been branded ‘all weather friendship’.

China still lags behind other countries in terms of humanitarian and economic engagement with Zimbabwe. The USA remains Zimbabwe’s biggest provider of aid – its contribution (above US$ 2 billion since 1980) is substantially more than other countries; China does not make it to the top ten list of donors. However, China has emerged as Zimbabwe’s fourth biggest trade partner and there is still potential to further strengthen what are already robust economic ties between the two countries.

Fraderick Mujuru is an intern at Takshashila Institution and is presently doing his Masters in International Relations at Christ University, Bangalore

 

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