Let’s make economic growth perennial

the prerequisites of economic growth. The pursuit of building a US$100 Billion Economy by 2040 would therefore transcend all political difference for purposes of facilitating such perennial growth.
This series of articles have been compiled by Joseph Mverecha of ZB Bank on the building US$100 Billion Economy for Zimbabwe by 2040.
Focus on the long term/Farsightedness

It is a recurring challenge for many small open economies in Sub-Saharan Africa, including Zimbabwe that economic policy formulation is blighted by an abiding nearsightedness, the proverbial preoccupation with “shortemism”.
It is a reflection of the political economy evolving where quick gains are primed and propagated, at the expense of the long-term.
The Chinese have no such impediments. Like the Japanese, the Chinese focus on the long-term competitiveness of their economy. They are preoccupied with what gives their country the long-term

competitive advantage. We may not like to accept our present realities but we are a consuming nation – they are a producing nation and they produce for the global stage. Just compare these statistics: Consumption as a proportion of GDP in Zimbabwe exceeds 80 percent, while in China this ratio is about 40 percent – the lowest in the world. Savings as a proportion of GDP are less than 10 percent (to be fair, this largely reflects the cumulative effects of the policies of the past decade). China savings rates exceed 35 percent of GDP.
A nation that is focused on the long term has high savings rates and invests in labour (education and health), research and development (5 percent of Chinese GDP dedicated to R & D), capital accumulation and technology, thus enlarging the future productive potential of the economy. A consuming nation focuses on what is necessary to consume and has a higher per capita corporate and household debt to reflect its consumption.

China focuses on the long term. Yes, they are aware of near term exigencies – that is why they poured US$585 billion in domestic stimulus packages after the recent global financial crisis, but they keep fundamentals of the long term in balance. They are not predisposed to undermine the long-term stability of the economy for short-term expediency.
The international community will reprove, cajole, implore and threaten China regarding her significantly undervalued currency. Big powers led by the USA, and Japan and their trans-Atlantic friends will hold seminars, symposiums and a flurry of diplomatic missions to try to change China’s currency policy, but if the Chinese judge that this is for the long-term good of their economy, nothing else is of significance. They are preoccupied with the long term.

When the reforms commenced in 1979, Deng particularly focused on agriculture and industrial reforms, studiously nurturing private enterprise. Steadily and progressively, Deng encouraged more private enterprise in all sectors of the Chinese economy. In 1952, the state sector in China was less than 41 percent, but by 1978, this had grown to a staggering 77 percent.
Deng began to roll back the role of these state entities, first championing agriculture reforms for food security, and subsequently state enterprise and industrial reforms. A pragmatic and farsighted reformer, Deng had no time for populism – “I do not care if the cat is white or black, so long as it catches the mice” was a wistful Deng refrain.

Mastery of international engagement
The Chinese are masters of diplomacy and the art of international engagement. They recognise that their burgeoning economy requires resources and they will do whatever is necessary to get those resources, from Africa, the Middle East, Europe, Asia and all over the globe. Since the opening up of the economy they have judiciously cultivated relations with all their big neighbours, particularly those for which relations were somewhat tepid.

They have soothed Sino-Soviet relations for decades. They have pursued the Japanese for FDI and they have reached out to India, where relations have continued to thaw since the two big powers fought a bruising border war in 1962. They have reached out to Europe and the Americas and have high regard for an unwritten Sino-USA special relationship, since the days of Nixon.
It goes without saying that the Chinese regard Africa as a partner from which energy and other resources can be tapped, at low cost. As such a Sino-Africa Summit is held every year where China massages African sensitivities and her task is made much the easier because of the real and perceived Western brazen over-bearance which many African leaders loathe. Instead China pursues some form of “don’t ask, don’t tell policy” when it comes to African governance and human rights issues. All she wants is an endless supply of raw materials for her industries.

Lately, the Chinese have been on the diplomacy offensive – with foreign trips to India, Spain, Germany and the UK. They seem to have a soothing message for everyone. In India, the two giants exchanged well-deserved congratulatory messages and agree on how to share the spoils of globalisation which “falleth” in increasing measure to the two global giants.

In Spain, China pointed out that they will support the Spanish bond issue, should Spain issue such a bond. In Germany, China stated that they want to strengthen already deep trade relations. In the UK, China supported the Spartan austerity measures recently implemented by the new coalition government. It is clinical and purpose driven diplomacy, designed to support the burgeoning domestic economy.

The process to US$100 Billion Economy for Zimbabwe will have to adopt some of this mastery of global dynamics. The Chinese have always emphasised a simple rule. They will learn from everyone and then adapt such knowledge to Chinese conditions.
For Zimbabwe, there is still so much to learn and the sovereign right to adapt such knowledge to Zimbabwean conditions.