Online Reporter
CHINA has stepped up its economic and technical support for Zimbabwean development to Renminbi 400 million (equivalent to around US$55 million) showing not just a desire to be supportive, but also a recognition that Zimbabwe has been using previously agreed assistance correctly and wisely.
The previous such support agreement, signed in 2020 with the fairly new Second Republic, was worth US$41,4 million, so the Chinese are prepared to increase their support by around a third, having seen how Zimbabwe has used that assistance, generally to boost the physical and social infrastructure that underpins economic growth.
A lot of the Chinese contribution to Zimbabwean growth has come from the Asian giant’s businesspeople, but boosting private investment and trade also requires boosting infrastructure that all use and while the Zimbabwean taxpayers, who include those Chinese business investors, have been making a significant contribution, access to more finance means that a lot of critical work is done more quickly and is ready sooner.
Finance, Economic Development and Investment Promotion Minister, Prof Mthuli Ncube noted as he signed for Zimbabwe in the latest programme, that Chinese assistance had, among many other measures, helped boost energy with the Kariba South Extension and Hwange 7 and 8 units, accelerated the work on expanding and upgrading airports, the crucial new warehousing for NatPharm and had seen the new Parliament Building that allows the legislature to do its job properly.
Since the advent of the Second Republic, Zimbabwe-China ties, always strong politically, have boomed in the economic spheres with total investment by the Chinese private sector rising to US$4 billion, making Chinese businesses easily the number one investors, and with US$500 million of that in the last year alone.
Trade has also boomed, with the two-way trade rising to US$3,8 billion last year, a rise of 24 percent, interestingly in a drought year and this is likely to expand even faster with China having set tariffs for most African goods to zero, including its imports from Zimbabwe.
That sort of growth needs to be backed by ever faster growth in the infrastructure and technical side, hence the upgrade in support there.
The support comes in a mixture of concessionary loans and grants, as well as humanitarian and technical assistance.
This is made even more important considering the Western sanctions against Zimbabwe, while now very largely scaled right back, still make access impossible to a range of global concessionary finance.
While political ties should not be underestimated, economic ties are normally stronger since they are based on mutual benefit and involved far more people.
The political ties can open the doors for business people, but when they are also part of the process and everyone is winning, relations automatically ascend into new heights.
This year has been a rough year for global multilateral relations and for global trade, with the world’s largest economy seemingly withdrawing from the rest of the world and turning inward.
China has stepped up to the plate, and has been providing some of the required leadership and in ways that make sense.
The zero tariffs on African imports into the world’s second largest economy is a clear case in point and a very effective counter-argument for those who see raising tariffs as a solution and a way to exert influence.
The Chinese model of a more integrated global economy offers an effective example that others should be following.
Of course, as African businesses make more money selling to Chinese customers they will have more to spend on capital goods and equipment and Chinese companies are among the modern leaders in these areas, so everyone wins.
Trade always builds up when those at each end of a trade axis have more money to spend. This is why freeing up trade pushes growth rates and putting in place trade barriers stifles growth.
Chinese consumers are willing to look at imports these days, but they like what they buy to be safe and healthy. But some Zimbabwean farmers have found that by meeting Chinese standards and these are very realistic and clear, with the Chinese willing to help meeting them, they have opened new export markets for products such as citrus.
The surge of Chinese private investment into Zimbabwe is also a testament to the policy decisions by President Mnangagwa that the Second Republic will have a pro-business and pro-investment climate and that corruption will simply not be tolerated.
Chinese and other investors have noted that a corruption-free environment made their investments worthwhile and even possible.
China has also been pushing its humanitarian assistance, which helps to fill gaps that have appeared, with a second arrangement seeing US$6,9 million for food assistance, up from the US$4,1 million of last year.
Again the Chinese have been practical and having seen how these sort of funds have been administered are willing to back success.
Zimbabwean-Chinese relations are a complex weave of State and business ties, which makes them ever stronger and each set of successes breeds successes in other spheres.
This is how it should be in the modern world and Zimbabwe is fortunate to have these growing ties with an all-weather friend who likes to reinforce success.
