The pluses and minuses of Zimbabwe's special relationship with China

Nov 19, 2011

Zimbabwe is just one of many African countries whose economic ties to China are booming. But Zimbabwe is different in being one of the few with particularly poor relations with the West. One benefit of this for China is that it does not have to worry about the threat of serious competition from the West for Zimbabwean resources and opportunities. A drawback for Zimbabwe is that it may lose some leverage to negotiate the best deals, even with the Chinese, by being seen to have no other options.

President Mugabe has just been on a trip to China, where he was warmly received as ‘an old friend.’ He would have been further heartened at China’s call for increased economic cooperation, to add to that already taking place. His delegation is said to have fielded ‘overwhelming’ interest from prospective mining investors, and were said to have been in discussions with a major airline to invest in bankrupt Air Zimbabwe.

There is no question that Chinese support has been important to Zimbabwe weathering the economic storms of the past few years. The problems that caused them may have been home-grown, but the Western world had its own reasons for squeezing the Mugabe government even tighter.

The Mugabe government withstood all the many pressures against it, including by squeaking through a controversial election which was widely expected to topple it in favor of its more Western-friendly opponents in 2008. Mugabe and Company emerged from the economic, political and diplomatic pressures severely battered, but they are still standing. It is quite likely that without Chinese support, clandestine and open, this would not have been possible.

Chinese support against international censure was one type of support; military sales and cooperation another. But perhaps the most significant Chinese support of the Mugabe government was to provide credit and investment when the West had shut Zimbabwe off. Chinese companies now play prominent roles in mining, agriculture and other sectors that previously were dominated by Western or South African players.

The Chinese obviously did this for self-interest rather than ideological or philanthropic reasons. But there is no doubting the lifeline this offered for the Mugabe government, and arguably for the country as well, during the economy’s most difficult times since independence.          

Zimbabwe has begun to stabilize economically, helped significantly by new diamond finds and some agricultural recovery. The local political and Western diplomatic pressures on Mugabe’s government still exist, but are not nearly as acute as three or four years ago.

If China’s support was a life or death matter for the Mugabe government and the economy then, it is now not so much critical life support than it is now an avenue for further economic normalization and growth.     
With Western disapproval and sanctions against the Mugabe government continuing, that government is obviously not as amenable to Western investment as it might have been. The contradictory Western signals of wanting a warming of economic relations while maintaining the ‘targeted sanctions’ could not work, and they haven’t.

Besides, there realistically would not be any flood of Western investment as long as Mugabe is in power. Confusing statements and belligerence about plans for locals to have majority stakes in businesses will further particularly keep Western investors at bay.  

Another significant factor is that the Mugabe government has clearly, deliberately made a decision to reduce Western economic influence, and to favor investment from what are considered politically friendly countries. This is a direct consequence of and reaction to the experience of Western sanctions. With Mugabe’s government generally pressing ahead with the controversial policies and actions that the West invoked in putting into place those sanctions, the diversification of foreign economic players is intended to reduce the country’s sanctions vulnerability.

For now, in many cases of large investment/tendering in important sectors or companies, an Asian investor/bidder would have an almost automatic advantage over a Western one, at least at the start of the process.

For all these reasons and more, the Chinese are in a large investment sense the only game in town, with the also favored Indians being in a different league and far behind. How does this affect Zimbabwe’s ability to negotiate the best deals and terms for itself in general, and with the Chinese in particular?

Few details of the major known deals with Chinese companies are publicly known, which itself may be an indication of the currently specially favored status of the Chinese. But there has been concern over unconventional credit and resource swaps some Zimbabweans fear are heavily, unfairly in favor of the Chinese. Just one example cited is a new Chinese-built installation for the Zimbabwe army to be paid for with Marange diamonds extracted by a Chinese company. There are many unanswered questions about the valuation and implementation of such deals.

For a cash-strapped but resource-rich country, perhaps this is just innovative trading. But because Zimbabwe has relatively few other options to get the benefits for which it is making these concessions, its bargaining position in this kind of deal-making is arguably not very strong.

The Chinese have requested to be exempted from the country’s new requirement for locals to have majority shareholding in enterprises. Although the law has been criticized as being over-ambitious and unrealistic as a blanket requirement, it compromises and mocks the country to be seen to be willy nilly flouting its own laws because of the pressure of a powerful ‘friend.’ The Mugabe government may have no problem making this exemption for the Chinese because the unspoken, at least partial, immediate intent of the law is to reduce Western as well as local white ‘control’ of the economy, which are considered ‘threats’ in various ways, both from a historical viewpoint as well as with present international and domestic power relations in mind.

Yet Chinese over-weaning economic influence such as is arguably taking place is as much of a potential political threat as was/is considered Western economic ‘hegemony.’
Zimbabwe’s unusually good present relations with China/Asia, and its unusually bad present relations with the West mean it has no prospect of playing one off against the other to get the best deal. Zimbabwe for now and the foreseeable future (short of a change of government) is quite clearly in China’s ‘bag.’

On a government to government level, relations between China are excellent. On a person-on-the-street level, Zimbabweans, like Africans elsewhere, are of mixed minds about their powerful new friend. China’s help on many fronts is acknowledged, but feelings towards the Chinese encountered locally is generally lukewarm.

Part of this is no doubt simply due to the ‘otherness’ of the Chinese to Zimbabweans/Africans, who have deeply, exclusively, slavishly been under Western influence for more than a century. It will just take time for Chinese and African peoples to get relatively comfortable with each other.

But deeply resented is the perception that the Chinese are considered by officialdom to be a special class of foreigner, and that this gives the Chinese unpleasant airs and makes them prone to abusing Zimbabweans with whom they interact, especially their employees.       

From the Mugabe government’s perspective, all these issues are probably secondary to the considerable relief of just having a powerful ally and ‘friend’ like China in the face of Western pressure it would otherwise not have been able to stand against. The Mugabe government has addressed what it considered a dangerously lopsided reliance on Western trade and investment. The downsides and dangers of a lopsided reliance on economic ties with China will have to be dealt with by a future generation of leaders.


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