26 February 2013

Zimbabwe: Zim-China to Bolster Ties

WHILE China has several investments in various sectors of Zimbabwe's economy there has been a general feeling in some quarters that the Asian country has not invested enough to match the level of cordial political relations with Zimbabwe.

But the economic relations are set to scale new heights following the visit to Zimbabwe by Chinese Minister of Commerce Mr Chen Deming last week.

After holding fruitful discussions with Finance Minister Tendai Biti, Mr Chen pledged his country's commitment to invest in the infrastructure sector, the axis for sustainable economic growth and development.

The world's most populous nation has the financial wherewithal to help Zimbabwe address its massive infrastructure problems relating to roads, water systems, power and other deserving areas of private sector.

Addressing journalists in Harare last week, Minister Chen pledged China's commitment to help Zimbabwe address its yawning infrastructure deficit soon after meeting Minister Biti in Harare last Friday.

"We should give support to the economic development of Zimbabwe as far as my job is concerned. We are confident about the future of Zimbabwe," he said.

Minister Chen said discussions with his Zimbabwean finance counterpart had centred largely on infrastructure projects and other ways in which his country could promote trade with Zimbabwe.

There is no country in the world better placed to help the process for Zimbabwe's economic recovery and growth than China due to the level of its influence in the global economics and also opportunities that can be exploited between the two countries for mutual benefit.

China has the world's largest foreign currency reserves at over US$3,2 trillion and what Zimbabwe requires to address its infrastructure challenges, is just but a drop in the ocean compared to the Asian country"s foreign exchange reserves. Zimbabwe would welcome China's investment in infrastructure with both hands given the pressure on its overcommitted National Budget of merely US$3,6 billion, most of which goes to recurrent expenditure. There can never be a better time for China and Zimbabwe to explore mutually beneficial economic relations as strong as their political ties.

Considering China's global economic influence, Zimbabwe needs to move with speed and follow through the pledge China has made, which would see China taking in its step Zimbabwe's economic growth.

In the past decade, the trade volume between China and Africa has increased with an average annual rate of 35 percent, from US$10 billion in 2000 to over US$160 billion in 2011. China has replaced the United States to become the largest trading partner to Africa in 2009.

The more than US$7,3 trillion economy, the world's second largest after the United States, has huge appetite for African resources and will remain so for a long time as more of its people scale the social ladder.

Africa has also grown rapidly to become China's second largest project contracting market and fourth largest overseas investment destination.

One of the reasons China's trade and investment relations with Africa have grown at tremendous pace is Africa's resource rich status and Zimbabwe remains one under-explored country in this regard.

Speaking after meeting Mr Chen, Minister Biti said Government sought investment from China in light of its overstretched National Budget and little fiscal space to be able to fund key infrastructure projects.

"I must say we had very fruitful discussions which hopefully might something materialising in the next few weeks as we all know there are many things that China and Zimbabwe have been discussion for a long time. The projects we are specifically talking about are the Kariba Hydropower Station, Hwange Thermal Power Station and the Zambezi Water Project," he said.

The African Development Bank estimates that Zimbabwe has a yawning infrastructure deficit that requires about US$14 billion to address.

China and Zimbabwe have enjoyed long periods of cordial relations dating back to the days of Zimbabwe's liberation war struggle against Britain.

And China has also made several huge investments in the country and some of its notable capital projects in the country include Sino Cement in Gweru and Anjin Diamonds in the Chiadzwa diamond fields.

State-owned Chinese company Shandong Taishan Sunlight Group plans to invest up to US$2 billion to develop coal mines, coal-bed methane extraction and power projects in a western province of Zimbabwe.

A Sino-Zimbabwe joint venture agreement has been signed and it has secured a coal concession of 100 000 hectares in Matabeleland North Province, with reserves of more than two billion tonnes of coal.

An open-cast mine is expected to be developed with a capacity of 3 billion tonnes of coal a year from the project.

The construction of a 600-megawatt coal-fired thermal power station is scheduled for commissioning in 2015. The project is also expected to have a coking coal plant with production capacity of 300 000 tonnes of coke annually. Former Chinese ambassador to Zimbabwe Mr Xin Shukang last year said trade between China and Zimbabwe had doubled to US$800 million in the two years to 2012 and set to breach US$1 billion by end of last year.

The Chinese Development Bank last year reported that it planned US$10 billion worth of investments in Zimbabwe over the next five years, and Chinese cotton merchant Sinotex is involved in a US$500 million cotton production deal with more than 300 000 rural farmers.

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