The Sunday Mail
Africa Moyo
CHINESE President Mr Xi Jinping arrives in Zimbabwe on Tuesday on a two-day state visit amid expectations that the high profile visit – the first of its kind by the Asian tiger’s sitting president – will see a number of cooperation agreements being signed in critical sectors such as water, energy and infrastructure.
China’s President Xi Jinping
A high-powered team of Chinese businesspeople is also part of the delegation and are expected to exchange notes with their local counterparts as they explore possibilities of joint ventures.
There are also indications that President Xi’s visit will result in an accelerated implementation of at least nine mega deals worth billions of dollars signed between the two countries in August last year.
The Zimbabwean delegation led by President Mugabe, signed nine landmark agreements that will see China providing financial support to the economic enablers in critical sectors such as roads, national railway networks, energy, telecommunications, agriculture and tourism.
All the projects dovetail with the aspirations of the country’s economic blueprint, the Zimbabwe Agenda for Sustainable Socio-Economic Transformation (Zim-Asset), which has four key pillars including infrastructure and utilities, food security and nutrition, social services and poverty eradication and value addition and beneficiation.
Last week, the Secretary for Foreign Affairs, Ambassador Joey Bimha confirmed to The Sunday Mail Business that numerous agreements will be signed in various sectors of the economy.
Ambassador Bimha said the agreements will enhance cooperation between Zimbabwe and the world’s second largest economy.
“There is going to be signing of agreements of cooperation in a number of sectors; in the energy sector, water sector and infrastructure.
“These are the agreements that will be signed to enhance our cooperation with China,” said Ambassador Bimha.
He added that President Xi’s visit was important given China’s influence in the world economy and that it is a country “we cooperate with well”.
“So his visit is a reflection of cooperation between our two countries. The agreements that are going to be signed will increase cooperation between our two countries.
“There are also businesspeople in the delegation, so we are hoping that we will have high interaction between our businesspeople (and the Chinese) which might speak to more Chinese investment or joint ventures and business benefits to Zimbabwe,” said Ambassador Bimha.
President Xi’s visit comes ahead of the Forum on China-Africa Cooperation (Focac) penciled for December 4-5 in Johannesburg, South Africa, where the emerging global giant is expected to announce the package of cooperation proposals.
The Asian country’s Vice Commerce, Minister Mr Qian Keming told journalists in Beijing last Thursday that the package will see China helping African countries to upgrade industrial structure, safeguard food security and build infrastructure.
“To that end, China will give African countries more low-interest loans and set up funds to finance the cooperation,” said Mr Keming.
He added that there are plans to increase investment in Africa and buy more non-resources products from the continent, on the back of falling metal prices.
China plans to export advanced industrial production capacity to African countries as it seeks to maintain its stranglehold on the continent that had suffered for a long time under exploitative trade agreements with Europe and the United States.
Beijing also seeks to diversify imports from the continent and buy more products in addition to primary commodities, particularly natural resources, which account for the bulk of China-Africa trade.
The Asian tiger has become Harare’s biggest trade partner with trade statistics between the two countries peaking to nearly US$1,2 billion between January and November last year compared to US$1,1 billion for the whole of 2013.
In the first five months of 2015, statistics from the Zimbabwe Investment Authority (ZIA) showed that Beijing remained Harare’s largest investor accounting for 74 percent of the US$134 million of the foreign direct investments that came into the country.
Between January and September 2015 this year, ZIA approved FDI (including joint ventures) coming from China worth US$153,561,602.
The approved FDI in agriculture was US$1,5 million while construction recorded US$42,3 million, with US$64,9 million going to the manufacturing sector, US$41 million to mining, US$3,3 million for services and US$400 000 benefiting the transport sector.
Last week, ZIA board chairman, Dr Nigel Chanakira also told The Sunday Mail Business that the coming of President Xi underscores the point that Zimbabwe remains an attractive investment destination.
“The visit by President Xi has been contemplated for quite a long time and quite a number of people have cast aspersions on whether he was going to come or not given the situation. So for me it is further confirmation that as an investment destination, Zimbabwe remains attractive,” said Dr Chanakira.
He added that China has “a very State-oriented approach in terms of investment planning”.
“That is how the Chinese work, they normally work State-to-State. In this particular case, there has been a number of visits (to China) on the part of our Presidency.
“For example in terms of Special Economic Zones (SEZs), there has been a lot of specific work done and the former Ambassadors, you recall, made assistance in terms of study tours to China so that we will model and mimic what the Chinese have done because that is the way they operate and they like a similar operating environment.
“A lot of people have then seen quite a significant amount of project sign-ups and they have been asking if these projects will come to fruition.
“China has been in our top three sources of investments since we dollarised. If you note the work of the resident Ambassador here and our embassy in China, these are what we would call the busiest embassies in terms of definitely liaising with ZIA with regards to specific projects and coordinating investment approvals. The numbers don’t lie.”
A number of Chinese companies have already invested in Zimbabwe while others have opted for partnerships with local companies.
Sino Hydro Corporation, for instance, has partnered the Zimbabwe Power Company (ZPC) in the expansion of Kariba South Hydro Power Station in a US$533 million project, which upon completion in 2017, will increase power generation at Kariba by another 300 megawatts (MW).
Sino Hydro is also expanding Hwange Thermal Power Station in a US$1,3 billion project that will add 600MW to the national grid.
Countries visited by the Chinese top political leadership have tended to get more investments and it is expected that Zimbabwe will equally benefit.
Statistics also show that China has been consistently doubling its financing commitment to Africa in the last three Focac meetings from US$5 billion in 2006 to US$10 billion in 2009 and US$20 billion in 2012.
In April this year, Equatorial Guinea signed several agreements with Chinese companies to increase generation of electricity and develop its industrial sector, a key goal of the government’s plan to diversify its economy and reduce dependence on oil production.
The largest was a US$2 billion agreement with the Industrial and Commercial Bank of China (ICBC), China’s biggest lender by assets, to provide financial support to the Malabo government and Chinese businesses operating in the country.
The agreement was signed on April 30 following a meeting held in Beijing between Equatorial Guinea President Theodore Obiang Nguema Mbasogo and his Chinese counterpart, President Xi.
Apart from former Premier Zhou Enlai’s ideology-tinged visits to Africa in the 1960s, past Chinese presidents rarely travelled to Africa until recently when investment on the continent became high on the country’s agenda.
Former president Hu Jintao visited Africa six times between 1999 and 2009.
In January and February 1999 when he was Vice President, Mr Hu first visited Madagascar, Ghana, Cote d’Ivoire and South Africa and after two years, he visited Uganda.
In 2004 when he became president, he visited Egypt, Gabon and Algeria.
Records show that it is rare for both the Chinese President and Prime Minister to visit the same region in the same year but former President Hu and Premier Wen Jiabao separately visited Africa in April and June, covering 10 countries.
Prime Minister Wen visited Ghana, Egypt, the Republic of Congo, Angola, South Africa, Tanzania and Uganda.
In his first overseas visit in 2007, former President Hu visited eight countries in Africa – Cameroon, Sudan, Mozambique, Namibia, Seychelles, Liberia, Zambia and South Africa.
In all the countries he visited, Mr Hu announced new aid and investment programs.
There have been allegations that China is only interested in resource-rich African countries but in February 2009, Mr Hu visited Mali, Senegal, Tanzania and Mauritius that are neither rich in resources nor oil production.
Instead, China helped build schools, hospitals and other infrastructure projects in the countries visited.
Mr Hu’s predecessor Mr Jiang Zemin also visited three African countries in 2002 – Nigeria, Libya and Tunisia while in 2004, Vice President Zeng Qinghong travelled to Tunisia, Togo, Benin and South Africa.
In 2004 around the time when Zimbabwe vigorously started pursuing the ‘Look East Policy’, National People’s Congress chairman Mr Wu Bangguo visited Kenya, Zimbabwe, Zambia and Nigeria.
It has also become almost a New Year ritual for the Chinese Foreign Minister to begin his annual overseas visits in Africa since the early 1990s.
While former colonisers treated Africa in a condescending way, China considers itself part of the developing world and former President Hu said the partnership was based on “political equality and mutual trust”.
When he visited South Africa in 2007, Mr Hu said “China did not, does not, and will not impose its will or inequality on other countries, as well as do anything that would harm the African people”.
Since 2000, the United States trade relations with Africa have been dictated by the Africa Growth and Opportunity Act (AGOA).
As a unilateral preference scheme of the United States to promote trade and investment in Africa, AGOA was meant to boost America’s trade with Africa and develop the continent.
But by last year, United States trade in goods with Africa has demonstrated a shocking downward trend since 2011, dwindling from US$125 billion in 2011 to US$99 billion in 2012 and US$85 billion in 2013.
Last year, trade in goods between the United States and Africa was US$50 billion.
In comparison, Beijing has been quite low-key in disseminating its Africa trade promotion efforts, although its trade with Africa has been growing exponentially.
China surpassed the United States as Africa’s largest trading partner in 2009. China-Africa trade reached US$166 billion in 2011, an 83 percent rise from 2009.
The bilateral trade further increased another 19,3 percent to US$198 billion in 2012, and passed the US$200 billion threshold to US$210 billion in 2013.
In terms of trade volume, Chinese trade with Africa not only dwarfs United States’ trade with Africa, but the gap is as large as 2,5 times the magnitude of 2013.
Between January and November last year, China-Africa trade totalled US$201.1 billion, going up 5,4 percent year on year, with its annual trade hitting US$200 billion once again.
Among others, China’s export to Africa saw a robust growth, up 13.2 percent year on year, 8.3 percent higher than China’s export growth over the same period.
In recent years, Africa has become an emerging destination of China’s outbound investment.
In January-November 2014, Chinese enterprises made a non-financial direct investment of US$3,5 billion in Africa, up 19 percent year on year.
More than 2 500 Chinese enterprises did business in Africa, and it covered various areas including finance, telecommunications, energy, manufacturing and agriculture, creating more than 100,000 jobs directly for local people.
However, Chinese investments to Africa had fallen by 40 percent in the first half of this year, with analysts saying the sharp decline was a sign of the broader impact of the country’s slowing economy while others posit that the decline is more related to Beijing’s changing approach to investments overseas.
President Xi is expected to clear up whether Beijing’s overseas investment strategy is changing when he speaks at the Focac in Johannesburg this week.
