Online Reporter
CHINA has been taking its international responsibilities seriously and also seeing that boosting international trade and developing less developed areas, such as much of Africa, makes everyone better off as markets and trade expand.
A core programme in this development drive is the US$50 billion facility to back African modernisation and industrialisation that China unveiled at the Forum on China-Africa Co-operation, FOCAC, last year. Zimbabwe has identified 12 bids to be considered for this concessionary funding under the imaginative programme.
To a degree, the Chinese programme is of immediate as well as future mutual benefit since as we have seen already, in many of these sort of programmes, Chinese companies win the contracts on the basis of efficiency and price.
When most of the risks no longer have to be calculated into the pricing, they should be even more competitive.
So using the China-Africa facility changes very little in who does the work and how the work is done, but makes a huge difference in speeding up that work and making sure that the pricing is ever tighter and more competitive.
We would also hope that as the facility starts operating across Africa that support is given practically to African industrialisation by finding suitable local partners, or seeing how much of the supply work can be done in Africa.
One example is the bid for some very heavy work to be done on the National Railways of Zimbabwe, which is a long way from its heyday as the prime mover of most cargo in Zimbabwe and into the region. Even restoring it to what it once was can only be a first step, as we are seeing that heavy industrial and mining output is expanding fast in Zimbabwe, so ever more cargo that should be shipped by rail is becoming available.
This will require a supply of heavy duty rails to replace some of the oldest material, and far more importantly a large number of new wagons of a range of designs. In the past all these had to be imported, but Zimbabwe now has a modern steelworks at Manhize, owned by a Chinese investor who has their core works in China and so would be well known to the railways supplier.
It should thus be possible that the upgrade of the railways could include a ready market for building up Zimbabwean industry. Most wagons require reasonable quantities of a suitable grade of steel and the Manhize works could almost certainly supply that grade with little problem.
In addition, because they are part of an international group that must already be supplying similar products elsewhere, they have the appropriate reputation and quality control as a reliable supplier.
So we could have a rolling stock manufacturing industry, and considering all our neighbours need to expand and upgrade their own rolling stock, there would be that market for a supplier inside the African Continental Free Trade Area using steel made inside AfCFTA from ores mined inside the area, so meeting any conceivable rules of origin. This sort of effort would multiply the benefits of a successful bid for China-Africa funds.
There are other examples in the 12 bids made by Zimbabwe that could provide not just solutions for Zimbabwean requirements but also build up the Zimbabwean economy.
This is not contradictory for China. That country accelerated from a fairly basic self-sufficiency to becoming the second largest economy in the world in very few decades largely on the basis of a massive industrialisation drive built around becoming a top trading nation.
An example of this is the fact that China is the third largest trading partner of the United States, after Canada and Mexico, which might explain why the three are the first targets of a new avowedly protectionist administration.
The two countries are hardly allies, but business is business and one would expect the two largest economies in the world to have a lot of business with each other, as they do despite everything.
China appreciates, more than most countries, the benefits of open trade since this is what was so critical in its own dramatic development, and that development also made China a far more important and larger market for others.
Zimbabwe is already a major winner of that Chinese development, as we see ever more investment and even more critically, we sell more stuff to Chinese customers. But as we sell more, we have the money to buy more. This is why trade develops economies and creates what are called positive feedbacks.
So China can plainly see that the larger and more wealth trading partners have, the more trade there will be for everyone’s benefit. The rich do the most business with each other. So helping Africa modernise and industrialise does not cut into the Chinese economy, rather it accelerates the creation of a far bigger and more important trading partner. Everyone then wins and wins big.
This understanding by China is important when it comes to its dealings with Africa and Zimbabwe. It is not looking at exploitative relationships, but rather on seeing a far bigger and more important trading partner able to do far more big business with everyone then winning.
China has been an all-weather friend to Africa in general and Zimbabwe has benefited from that as have many other countries. But we have also seen that China expects a degree of seriousness from its investment and trading partners, and Chinese investors and customers are especially keen on seeing high levels of efficiency and honesty.
That is why we can sell so much to China, because we have become a trusted supplier, and why major Chinese industrialists and miners are reasonably keen on investing in Zimbabwe despite our obvious need for more infrastructure, because we provide a secure investment environment that minimises risk.
