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Zim must Look East

As the global economic balance of power shifts from the West to the East, it is becoming increasingly evident that we are living through the end of 500 years of Western ascendancy. Consequently, Zimbabwe must exercise long-term strategic vision, by perfecting the art of benefiting from China.

 

Most analysts agree that China will break away from the US and have the world’s largest and most influential economy by 2025. However, as it stands, America needs China to buy her Treasury bills; and China needs America to buy her exports. They are like two drunken giants leaning on each other. A sobering reckoning of some sorts seems inevitable; and it is difficult to see how both can be winners.

 

The eureka moment of the past decade that indicated that only one giant will remain standing, was the crippling global recession and consequent realisation that China holds vast global reserves, while the US lives increasingly on unsustainable credit. The US reliance on Chinese capital to stabilize its accounts signifies that the decline and fall of America’s undeclared empire might neither be due to despicable terrorists at the gates nor the rogue regimes that sponsor them, but to a fiscal crisis at home.

 

Five hundred years prior to this crisis, what had given the West the edge over the East were five key features: the capitalist enterprise, the scientific method, global imperialism, the consumer society and the ‘Protestant’ ethic of work and capital accumulation as ends in themselves. China has clearly replicated the first and the second and may be in the process of adopting others with some alterations (consumption and the work ethic). Only  the third – imperialism -shows little sign of emerging in the People’s Republic.

 

The new world order will not commence after China’s economy overtakes that of the US in 2025: it has started already. The US was the old order’s main architect, and China is the rising power of the new. Thus, the decision by President Mugabe to ‘Look East’ was strategic and prescient.

 

Zimbabwe must now perfect the art of benefiting from China’s colossal rise. In order to do so, Zimbabwe must recognise and expand mutually beneficial areas of political, economic and social cooperation between the two nations.

 

Geo-strategic Importance of Sino-Zimbabwe Relations

 

From the outset, it is important to note that looking East does not mean completely turning one’s back to the West. A great deal of emphasis has been placed on the need to re-engage the Bretton Woods institutions and détente with the West, and rightly so; however, this rapprochement must occur in simultaneity with a strengthening of economic relations with China, which has fast become of great geo-strategic importance to Zimbabwe on several fronts:

 

Firstly, President Mugabe’s administration has had links with the Chinese government ever since China provided Zimbabwe’s guerillas with training, logistical and material support to wage the Liberation Struggle.

 

Chinese authorities’ associations with the Second Chimurenga, and subsequent cordial political relations, have resulted in the crucial formation of an ideological alliance with a permanent member of the UN Security Council. This alliance has been unwavering throughout the Third Chimurenga, where China’s support was instrumental in derailing attempts by Western nations to use the UN Security Council to put sanctions on the people of Zimbabwe, pursuant to illegal regime change.

 

Illegal economic sanctions have brought Zimbabwe and China closer by resulting in the former’s increased reliance on the latter for imports of telecommunications, road-building, irrigation and farming equipment that can no longer be imported from the west, which in turn has resulted in over 40 Chinese companies operating in Zimbabwe.

 

From China’s perspective, this long-standing alliance serves as a means of not only, improving political ties with its fifth largest trading partner in Africa, but also cultivating good relations with a nation that is strategically nestled between its two biggest African trading partners, namely Angola and South Africa.

 

Crucially for China, Zimbabwe neighbours its flagship infrastructure project on the continent, a transcontinental rail-road linking Tanzania’s port to copper filled Zambia and oil rich Angola.

 

China’s keen interest in Zimbabwe is by no means confined to the location of Zimbabwean soil, but also includes the abundant natural resource endowment that lies beneath it.

 

These strategic minerals include the second largest platinum deposits in the world, estimated at in excess of $500 billion; voluminous yet to be exploited coal-bed methane gas; vast coal reserves and immense hydroelectric power potential; as well as the geological treasure zone in the Great Dyke region, home to abundant deposits of copper, chromium, nickel and gold to mention but a few.

 

Secondly, China’s voracious appetite for these mineral resources has driven it to become the largest investor in Zimbabwe. The People’s Republic has also overtaken Western nations as the investor with the fastest growing foreign direct investment in Zimbabwe. Crucially for Zimbabwe, increased FDI and export opportunities are more likely to come from an economy that is continuing to grow at a booming pace, than from those that are begging for bailouts and assistance from it.

 

Finally, Beijing’s propensity to give Zimbabwe assistance in the form of interest-free loans and grants is of increasing importance as Western capitals, and the multilateral institutions they commandeer, continue to maintain illegal economic sanctions on Harare.

 

Over the past three years, China has provided approximately half a billion dollars to Zimbabwe in direct assistance for investment in infrastructure including schools, clinics and transport routes. These no-strings-attached soft loans for economic development are a far cry from IMF and World Bank ‘reforms’ which require a reduction in spending on the aforementioned infrastructure.

 

Why should Zimbabwe look West and agree to voluntary lower its citizenry’s living standards on the back of exorbitant loans, when it can receive virtually interest free loans aimed at investing in development and improving people’s living standards, by simply looking East?

 

Chinese loans and grants on the continent last year amounted to more than $8 billion to Angola, Nigeria and Mozambique alone, compared to the $2.3 billion granted by the World Bank to the entire Sub-Saharan African region. Therefore, as important as World Bank and IMF might be, the deepest and most generous pockets are found in the east.

 

The economic shift eastward may have taken 500 years but the Zimbabwe Government must waste no time in perfecting the art of benefiting from China, by focusing on strengthening Sino-Zimbabwe relations on all fronts.

 

By Garikai Chengu.

 

Garikai Chengu is a scholar at Harvard University’s Faculty of Arts and Sciences.

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Discussion

3 thoughts on “Zim must Look East

  1. As a research scholar at Harvard University’s Faculty of Arts and Sciences, I have to wonder about the credibility of your research. In an article in the Zimbabwe Guardian discussing something similar to the article posted above (Zim-Brazil relations vital for economic development) you have some key flaws in your argument thus undermining the accuracy of your work. First of all, Zimbabwe’s Look East policy developed after sanctions were imposed by Western nations. So the statement: “Zimbabwe must be commended for presciently adopting a ‘Look East Policy’ over a decade ago,” should more so read – if continuing to include your opinion – Zimbabwe’s expanding relations with the East, albeit forced as a result of Western-imposed sanctions, should be seen as a positive occurrence. Then again, that’s not entirely accurate either since Zimbabwe holds the world record for highest monetary inflation – so it would stand to reason that the “Look East” policy that developed over a decade ago didn’t help stimulate its economy too much. Why is this? One reason could be that instead of stimulating the employment sector, China brings over its own laborers and also has stringent conditions for any loans given for things like power projects. Chinese residents now make up the biggest minority in Zimbabwe, but stimulating its economy has yet to be seen.

    Furthermore, one really unfortunate error in the article posted in the local Zimbabwean news would be: “When George Walker Bush was elected President by five of the nine Supreme Court judges, he inherited a nation swimming in money and basking in its post-Cold War hegemony.” Once again, being a research scholar and nonetheless, a research scholar at an Ivy League school IN the US, I would hope that you would know that the US Supreme Court Justices are nominated and appointed by the President. The Justices have no term limits and serve for a lifetime and/or retirement. The President of the US is elected by the people; however, that’s just popular vote. The Electoral College is responsible for electing the president (based on the majority of popular votes from the electoral congress member’s coverage area).

    Everyone makes mistakes, myself included. I just wanted to point out a couple of issues to create awareness for your future articles. Good luck to you.

    Posted by LeAnne | August 1, 2011, 10:46 am
  2. Thank you for the above comment Leanne. It does point out an issue I have with Garikai’s article as well. The look-east policy, in my humble opinion, was not as fruitful, if at all, as some might think it is for countless reasons.

    Also, George W Bush did not inherit a country swimming in money. Things significantly runed for the worst when Ronal Reagan came into presidency allowing him and baroness Thatcher in the UK to steer the worlds superpowers in the wrong direction that has partly led to the current econimic crisis. After the election of Reagan into office, American banks lobbyed hard for America to increasingly adopt the British secrecy jurisdiction policies leading to Manhattan becoming the worlds number one secrecy jurisdiction, with the City of London coming second. This the escalation of tax avoidance and tax evasion for huge banks, large multinational companies/corporations and larger gaps between the rich and the poor. This system propagated exploitation of smaller economies, especially those of the developing world. It also let capital fly out of America and Bush subsequently gave tax breaks to the rich so that they could bring some of the wealth back home.

    Adopting the secrecy jurisdiction status allowed banks, through their lawyers and accountants/accounting bodies, to participate in offshore trickery and gamble with money and basically lie about their capital/revenues/worth or what have you. Hence when the recession hit some triple A rated banks around the world went bust and the most trusted rating agencies claimed the AAA rating they gave to these banks was just their opinion. America was not swimming in real money when Bush came in. Bush only worsened an existing situation, but because it was not in recessionary times, us lay-people did not notice. Harvard lecturers were paid hundreds of thousands of dollars to write complete BS about banks and securitisation. Look at Iceland for example. AAA rated banks, supported by Harvard academics as a world-class banking systems and when the recession hit, what happened to Iceland? They tanked. Simples. Lies and deceit is what we were lived in. Now we have to bail out the banks.

    Posted by Emilia | August 3, 2011, 12:48 pm
  3. I couldn’t agree more, Emilia. I thought exactly like you, but only wanted to highlight a couple of discrepancies. I also wondered from where the information was gathered that George W. Bush came into office with a top tier economy and over-flowing bank. Furthermore, you are dead-on when you discussed the leniency that the US banks accrued allowing them to alter numbers that best suited Wall Street while hurting Main Street. And now the US faces problems with how much regulation is too much regulation.

    There is another problem with the statement: “Zimbabwe must recognize and expand mutually beneficial areas of political, economic and social cooperation between the two nations.” When has Mugabe, in his over three decades as leader, ever put Zimbabwe first? And now there is a so-called power sharing agreement that has Tsvangarai throwing a temper tantrum whenever Mugabe’s regime ignores his requests and boycotts the system.

    Instead of looking outside, Zimbabwe needs to first fix problems internally. And anyone thinking that China is ready to strike a “mutually beneficial” agreement should look to other African countries to see clear examples of how that is inaccurate.

    One example can be seen in Sudan. The Chinese came in and built one of the best telecommunications systems in Africa, but after the contract was up (and CNOOC, the major Chinese oil company, won certain key contracts in Sudan), the Chinese left. When they took their exit, they had failed to complete the technology transfer and properly train the Sudanese to continue to maintain the system. However, China continues to receive benefits from Sudan’s hydrocarbon sector (although that will undoubtedly be challenged now that South Sudan has seceded).

    Heading over to the Democratic Republic of Congo (DRC), the Central African nation struck a barter deal with China in 2008 that had the Asian country investing $9 billion to develop infrastructure and revive the DRC’s mining sector by creating a joint venture, Sicomines. In return for these low-interest loans made repayable over 25 years, China was given access to 10 million tons of minerals, 6.5 million tons of refined copper, 200,000 tons of cobalt and 372 tons of gold. And here’s the clincher: China will NOT pay the DRC until a sufficient profit has been received from the infrastructure projects.

    The projects will be financed from the mining with a rate of return set at 19%, only assessed by China (see the problem there?). If the rate is unable to be reached, China has the right to demand supplementary concessions.

    One of China’s Congo dealmakers, the China Railway Engineering Corp., was denied entry into the DRC market by a Hong Kong court until its bad debts had been paid regarding a defunct hydropower project in 1980. The National Assembly of DRC is also investigating the disappearance of $23 million in signing bonuses that Chinese companies were said to have paid Congo’s local Sicomines’ partners, Gecamines.

    The author of these articles is entitled to his opinion, but it should be well supported with facts and I’ve failed to see any accurate information posted within Garikai’s postings to do this. And again, it begs to question what kind of research methods are being used at Harvard?

    China allows African leaders to continue doing what they’ve done for so long that hinders the continent’s growth: not being held responsible to show proper allocation of the funds received which allows high-levels of corruption to continue among government leaders. Mugabe is like many other African leaders, the “Look East Policy” is only beneficial for those collecting the money and the African citizens are never on the receiving end.

    Posted by LeAnne | August 4, 2011, 7:37 pm

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