China’s Look East To Africa Goes South…

Via Africa-Asia Confidential, an interesting report on how the economic meltdown and spread of cholera across Zimbabwe and into South Africa has emboldened China, India, and Japan – which have been promoting the virtues of Asia’s non-intervention in African politics – to make increasingly direct criticisms of the Zimbabwe African National Union-Patriotic Front (ZANU-PF) regime.  As the article notes:

“…Instead, China, India and Japan now treat Zimbabwe as a humanitarian disaster zone and restrict financial transfers to relief aid, while almost all of Asia’s grand projects in Zimbabwe have been suspended indefinitely. There are no more clarion calls for south-south cooperation between Harare and the Asian giants. The political blank cheque that Beijing gave Mugabe after the stolen presidential elections in 2002 will not be repeated.

a China specialist at the Brussels-based Marshall Fund think-tank, says China decided not to commit new capital to Zimbabwe because the political situation has unravelled over the past decade. It could not offer the economic rewards of oil-producing Sudan, so energetic engagement with Harare was not worth the risk. ‘They [Beijing] have reappraised [the relationship]. They will be ready for whatever political situation comes next. They’ll keep enough people in government sweet whilst waiting for the right moment to jump back in. Until there’s political change, it’s a lost cause.’

Where does this leave Mugabe’s much-trumpeted ‘Look East’ policy? Dating back to Beijing’s support for Mugabe’s Zimbabwe African National Union against the rival claims of Joshua Nkomo’s Zimbabwe African People’s Union (backed by the Soviet Union in the 1960s-70s), the Zimbabwe President has nurtured ties with China to flatter the Asian giant into investing in his country. He had the prescience to see the political significance for Africa of Asia’s economic rise, years before it took place. So his policy-makers crafted their Look East strategy, which aimed to promote trade and investment partnerships between Zimbabwe and countries across Asia.

Mugabe’s style as an authoritarian, nationalist leader helped foster relations over the years with leaders such as Malaysia’s Mahathir bin Mohamad. Mugabe was eager to replicate the rapid growth of states like Malaysia, Korea and Vietnam in Zimbabwe. In return for technology transfer and investment, Zimbabwe offered the Asian states mineral concessions and a range of agricultural products. But neither Asia nor Zimbabwe delivered. ‘Look East’ has brought nothing of substance; it really serves ideological ends instead of economic ones,’ said Eric Bloch, a Bulawayo economist who advises the Reserve Bank of Zimbabwe (RBZ).

Malaysia’s interest in plans for palm oil plantations on the Lowveld came to nothing – but Mugabe’s oriental mansion in Harare’s Borrowdale suburb was built with Malaysian material. Recently, India’s Mittal Steel was negotiating a proposed US$600 million rehabilitation of the ZISCO Steel Works. The deal collapsed when Harare insisted on management control of the project.

Look East goes south
Zimbabwe’s hyper-inflation and falling world commodity prices make the Look East policy still more problematic. Its main target was China. In late 2004, a four-day state visit by Chinese officials to Harare was followed by a flurry of interest. Leading the delegation was the Chairman of the Standing Committee of the Chinese National People’s Congress Wu Bangguo. His visit followed the granting of Approved Destination Status to Zimbabwe at the China-Africa Summit in Ethiopia in 2003.

The visitors were taken to resorts such as the Victoria Falls to view the potential for Chinese tourism. They also visited Kutsaga, the tobacco research station near Harare, where scientists develop disease-resistant and high-yield varieties of tobacco for general local use. The government hoped that seed for these varieties would be sold to China. The two sides reached agreement on eight separate projects and signed memoranda of understanding (MoUs) on 2 November 2004.

For China, Look East was attractive because it fulfilled its industries’ growing needs for minerals. Zimbabwe’s loss of  friends in the West offered an opportunity and Harare’s own economic difficulties allowed China to impose sole-supplier contracts, pay lower-than-market prices and negotiate tough supply commitments. Despite the MoUs, there has been little progress. Most of the plans centred on electricity generation. ‘When the power stations were agreed, China was looking at Zimbabwe as a customer not just a client. But all the projects in irrigation, roads and power have been stopped,’ said Harare-based economist John Robertson.

The rural electrification plans – with the operating company ZESA Holdings receiving US$110 million of equipment for Phase One – were ambitious. Progress has been hampered by shortages of materials and skills, as well as competition for the limited funds available. Phase Two, to deliver services to rural clinics, schools, police stations, business centres and residences, has reached only a small proportion of the properties targeted. Most of the equipment supplied was taken over by ZESA to sustain services to existing customers.

In 2004, Harare announced that ZESA had sealed a $600 mn. deal with Chinese investors to expand two power-generation plants. In a snub to South Africa’s Eskom, Harare chose China’s National Aero-Technology Import and Export Corporation (Catic) and China Electric Technology Import and Export Corporation (Cetic). Catic was to develop 2 300 megawatt units at Hwange and Cetic would build 2 150 MW units at Kariba South. ZESA claimed the Chinese were chosen beause they supplied equipment and manpower, and that the investment would be a loan that would be repaid.

ZESA said that equity investment would be welcome for the longer-term $1.2 billion Batoka Gorge hydroelectric station and the coal-fired plant at Gokwe North projects, as most of that power would be for export. It required $2.5 bn. to complete the projects, to increase output by 2,250 MW to 3,450 MW or even higher. Zimbabwe’s current peak demand is about 2,100 MW, but its generation capacity is only 1,200 MW. Catic was said to have been contracted to supply and install equipment for the extension of the Hwange Power Station by a further 600 MW and for the extension of Kariba South Power Station by an additional 300 MW. The total cost of the two extensions was around $800 mn.

The RBZ had predicted completion by 2008 and has since revised this to 2010, but there is no sign that any work has begun. China had also wanted to tap into Hwange’s coal and newly-identified methane gas deposits, to help meet the energy needs of its mining companies in Congo-Kinshasa and Zambia. Yet no progress has been made on the new Chinese-operated colliery or on the extensions planned for Hwange. Coal production is at its lowest in over 60 years and the power station is delivering less than half its intended capacity.

Several of China’s road-building contracts have stopped and the promised assistance for National Railways of Zimbabwe has not materialised. Telecoms projects have come to nothing and reciprocal landing rights with China have yet to translate into tourist numbers, never mind make up for Western losses.

Among the few projects that have come to fruition is the delivery of trainers for Zimbabwe’s Air Force and 3 MA60 42-seat airliners for Air Zimbabwe. But passenger traffic between Zimbabwe and China is light and some Chinese are taking advantage of the lower-cost service to transfer to other destinations in Africa. The outward freight cargoes of Zimbabwean exports to China are not sufficient to make the service profitable.

Inflows of Chinese goods appear to have changed little, the bulk still carried through South African ports. Some Zimbabweans are using the subsidised fares to make shopping trips to China to buy higher-value items that they can sell in Zimbabwe at scarcity-driven prices.”

This entry was posted on Friday, December 26th, 2008 at 6:03 am and is filed under China, Zimbabwe.  You can follow any responses to this entry through the RSS 2.0 feed.  You can leave a response, or trackback from your own site. 

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