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China, Zimbabwe's all weather friend increases economic grip

by Muleya
24 Mar 2011 at 05:06hrs | Views
CHINA is consolidating its economic grip on Zimbabwe as part of its continent-wide strategy to dominate a vast swathe of the African economic landscape, stealing a march on South African companies steadily advancing into the country to reinforce their presence.
Chinese Vice-Prime Minister Wang Qishan was in Harare on Monday seeking more investment opportunities in Zimbabwe. China extended loans of up to $700m to Zimbabwe to revive the country's health, mining and agriculture sectors. Zimbabwe, struggling to emerge from its 10-year economic depression, is a trove of opportunities, especially in the mining sector. It is replete with minerals such as platinum, diamonds, gold, coal, chrome, nickel, iron ore, black granite, asbestos, uranium and coal-bed methane .
Mr Wang met President Robert Mugabe and Prime Minister Morgan Tsvangirai to secure a string of deals. He said while Beijing supported Harare's black economic empowerment and indigenisation policies, Zimbabwe should protect "legitimate Chinese investments".
"China understands the need for indigenisation and empowerment but we hope Zimbabwe will protect the legitimate right of Chinese businesses in the country," Mr Wang said at a briefing with Zimbabwean Vice-President Joice Mujuru.
Mr Wang and Ms Mujuru witnessed the signing of the agreements which included 342m for an agricultural machinery project, 99,5m for medicine and 144m for the renovation of sewers in the capital. The two countries also discuss ed a 102m loan from the Export-Import Bank of China (China Eximbank).
China Eximbank, fully owned by the Chinese government and under the direct leadership of the State Council, bankrolls Chinese companies and projects abroad.
Zimbabwean Economic Development Minister Tapiwa Mashakada said on January 31 China was considering investment worth 10bn, mainly in the mining, agriculture and energy industries. China has also offered Zimbabwe a 3bn loan facility in exchange for platinum reserves in Selous worth up to 40bn on current world market prices. Beijing has also been negotiating a 950m loan with Harare.
Mr Wang pledged support for Zimbabwe's economic recovery and promised to lobby for the lifting of western sanctions. "China will continue to support and grow your economy. China will continue to impress on countries that have imposed sanctions to lift them at an early date."
Ms Mujuru said Chinese investment would help Zimbabwe to recover from the economic doldrums. "We acknowledge the efforts by the China Development Bank to engage government in supporting Zimbabwe's most critical areas of energy, mining, transport, agriculture, manufacturing and tourism," she said. "These areas would assist in the growth of our economy."
Last month, Beijing dispatched Foreign Minister Yang Jiechi to Harare and other parts of Africa to negotiate a raft of investment deals, particularly in mining. Mr Mugabe has opened the floodgates to the Chinese through his "Look East" policy in the wake of western sanctions.
Mr Jiechi was accompanied by a high-powered 11-member delegation which had its eyes firmly fixed on Zimbabwe's vast mineral wealth.
"The visit is aimed at consolidating the friendship between China and Zimbabwe," said Chinese ambassador to Harare Xin Shunkang .
"The minister will sign various business deals during his visit and will hold meetings with various government officials."
Zimbabwe has benefited from a buyers' credit loan from China. In August 2006, China extended a 200m facility for the procurement of fertiliser, agrochemicals, agriculture equipment and tools, irrigation equipment and animal health products.
China has become the main purchaser of Zimbabwe's tobacco, which last year earned the country more than 300m. Last year, Zimbabwe's trade with China was worth 520m.
Chinese companies are heavily involved in the mining, agriculture, property , construction, infrastructure and communication sectors . China's bigger companies operating in Zimbabwe include Sinosteel Corporation, which has bought the country's biggest ferrochrome producer , Zimbabwe Mining and Smelting Company; Sino-Zimbabwe, which recently wanted to buy the country's biggest steel-making firm, Ziscosteel; Anjin, involved in the money-spinning Marange diamond mining; Sino Zimbabwe cement company; Jinchuan Nickel Mining Company, involved in nickel, cobalt and copper; and China Uranium, eyeing the country's uranium reserves.
The Chinese have also invaded the small-scale business sector in Zimbabwe. Their presence is mainly visible in the capital, Harare, where tensions between them and locals are rising due to cut-throat competition .
China understands the need for indigenisation but we hope Zimbabwe will protect the rights of Chinese businesses

Source - Muleya