adminEconomic Focus Dr Bongani Ngwenya
TO an average literate person in Zimbabwe this may sound like a million dollar question, but to some of us the reasons are very clear and it does not require any rocket scientist to answer this question. The Chinese President, Xi Jinping was last week in Zimbabwe and left the country with a great sigh of relief and hope for a bright economic future, hinging on the fruition of the 10 additional Government to Government investment deals and two private sector deals that were signed on Wednesday (last week), following the nine deals that were signed last year when President Mugabe visited China.
Preamble
China and its African partners, Zimbabwe included, interact in a wide range of political, economic, and military-related arenas in ways that advance mutual interests, but economic pursuits lie at the heart of the Sino-African relations, hence the Forum on China-Africa Co-operation underway in South Africa over this weekend. China seeks to acquire oil, gas, minerals, and other natural resources to fuel its phenomenal economic growth that spans over a very few years, and has seen China rising to be the second largest economy in the World today. Many African countries have plentiful resource reserves whose extraction represents their primary economic output. Beijing also seeks markets for Chinese companies to sell their goods and services; consumers in many less-developed countries on the continent welcome inexpensive Chinese manufactured goods, while African governments purchase inexpensive Chinese military material and hire Chinese construction and engineering companies to develop the much-needed physical infrastructure.
In the political arena, China seeks allies at the United Nations, and so do the African countries, and in other international fora, and African governments are eager to be courted by a global power that treats them as sovereign equals instead of lecturing them about democracy, good governance, and free markets. China provides extensive development assistance to demonstrate its good intentions and creates a conducive environment to commerce and friendly political relations, while African countries generally welcome China’s willingness to provide aid without preconditions, as typically required by the United States and the rest of the International community of donors and investors.
What China wants from Africa
China has four overarching strategic interests in Africa: access to natural resources, particularly oil and gas, markets for Chinese exports, political legitimacy in international fora, particularly in regards to China’s principle of non-interference, “South-South solidarity,’’ and adherence to the “One China” policy and prosperity, security, and stability on the continent, both for Africans’ well-being and to ensure safety of China’s investments and the continuation of its commercial activities.
Despite public relations efforts to portray the relationship as comprehensive and multifaceted, China’s number one interest in Africa remains securing access to oil, minerals, and other raw materials to fuel its ambitious industrialisation efforts. Such keen interest in Africa can be seen as part of the broader “going out” strategy that China initiated in the late 1990s, which encourages state-owned and private companies to invest abroad, particularly in countries rich in natural resources. By 2020, China is predicted to overtake the United States in terms of oil imports worldwide and will become the largest global consumer by 2035. To guarantee future supply, China is heavily investing in the upstream and downstream oil sectors in countries such as Sudan, Angola, and Nigeria.
Africa also presents a huge untapped market for Chinese goods. Africa’s collective Gross Domestic Product (GDP) is estimated to grow to $2,6 trillion by 2020. Investment in Africa can potentially facilitate China’s efforts to restructure its own economy away from labour-intensive industries, especially as labour costs in China increase. These two factors — feeding Chinese energy needs and absorbing Chinese exports — remain the central drivers of China’s engagement with Africa.
What Africa Wants from China
African governments look to China to provide political recognition and legitimacy and to contribute to their economic development through aid, investment, infrastructure development, and trade. To some degree, many African leaders hope that China will interact with them in ways that the United States and other Western countries do not, by engaging economically without condescendingly preaching about good governance, for example, or by investing in high-risk projects or in remote regions that are not appealing to Western governments or companies.
Some African officials aspire to replicate China’s rapid economic development and believe that their nations can benefit from China’s recent experience in lifting itself out of poverty. The vice chairman of Tanzania’s ruling party, for example, said in 2012 that, “China’s development model sets a very good example for African nations, in Tanzania in particular. . . It is a model which shows how a country can develop from a low level of production to very high level of production and it is the correct model for all developing nations, especially for African nations”.
Many African leaders simply believe that as a fellow developing country, China has more altruistic motives than exploitative Western corporations. The Tanzanian party official, for example, asserted, “Companies in the west are business-oriented, they are to make profits in whatever projects they participate in, they look for what they can get out of it, not what African countries would get out of it. China does not have that approach. China is to help the African nations build their own capacity to develop and that’s the difference we must very much appreciate, as Africa.”
However, China has been widely criticised by both political leaders and ordinary citizens in Africa for failing, in reality, to live up to its promises to contribute to African countries’ indigenous economic capacity, a dynamic that has led China to make a more concerted effort to generate economic benefits for its African partners. On Wednesday (last week) one analyst had this to say, “I think that there is this wide misconception in Zimbabwe that since the Chinese President has visited, we will see an economic turnaround spurred by Chinese investment. Nothing can be further from the truth. It is about time that Africans realise that Chinese aid is not intended to impact recipient state’s governance or sovereignty in any positive manner whatsoever. It is primarily intended to benefit China and China alone”. Then on Thursday (last week) when I was listening to a local radio station, a top Government official suggested that the reason why there hasn’t been much of meaningful and value creating investment inflows from China it’s because China had no capacity to do so, as it has been focusing on growing its own economy. The irony of the whole matter is that China has been growing its economy together with other countries’ economies and not Zimbabwe.
My humble submission is that people seem not to understand China very well. The Chinese are very serious investors, like I have always said to my MBA students at Solusi University, there is the other side or face of China. The truth is, like the West, China also want to be sure about the security of their investment, they also want to see an investment friendly environment. Look at the nature of the deals they have signed with us — mainly infrastructural development loans not grants. The security of these investments lies on the future generations of this country as well.
May I conclude by saying that as long as we still do not want to take a very deep introspective look into ourselves, and say where exactly are we getting it wrong, all these deals that China has signed with us will slip off our fingers. One single cancer that we must fight and win is corruption. China has done it, let’s learn from our all-weather friends and we will be economically successful. The Zim Asset will be the first economic blueprint to achieve its intended goal.
Dr Ngwenya is a Bulawayo-based economist and senior lecturer at Solusi University’s Post Graduate School of Business.
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