We are not debt-trapping Zimbabwe — China

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ZIMBABWE and China have had a strong bond dating back to the time of the liberation struggle and Beijing continues to support Harare despite allegations that it is debt-trapping the southern African country and plundering its resources. This week, the Chinese Embassy in Harare responded to media questions about its relations with Zimbabwe. Below are excerpts.

Q: What level of support has China given to Zimbabwe since its independence in 1980 and in what areas?

A: China and Zimbabwe have remained by each other’s side on issues close to our heart. Together, we spoke out against unilateral, illegal sanctions, called on bigger nations to stop hectoring smaller ones, and stood up for each other’s sovereignty and territorial integrity.

Together with Zimbabwe, we carried out a number of projects financed by Chinese grants — the National Sports Stadium, Chinhoyi Provincial Hospital, Mahusekwa Hospital, New Parliament Building, new pharmaceutical warehouse, 1 000-borehole-drilling, China-Africa Friendship Primary School, and Hatcliffe China-Zimbabwe Friendship High School.

Other joint projects include the Kariba South Hydropower Station, Hwange Thermal Power Station expansion, Robert Gabriel Mugabe International Airport expansion, new Victoria Falls Airport, and the NetOne mobile broadband upgrade.

In the face of Covid-19, Chinese firms renovated the Wilkins Infectious Diseases Hospital and established a state-of-the-art Covid-19 treatment centre.

China this year will donate another 10 million doses of Covid-19 vaccines, on top of the 16.2 million doses of vaccines Zimbabwe purchased from China at a preferential price and the two million doses already donated by China.

We are deeply involved in supporting the vulnerable in Zimbabwe under the South-South Cooperation Assistance Fund together with the WFP, UNICEP, UNDP and UNFPA. We donated rice, pulse, and vegetable oil and repaired housing units, schools, clinics in Chimanimani and Chipinge that suffered from Cyclone Idai. We provided medical and health services for the population affected by the cyclone which would benefit up to 270 000 people.

The local Chinese community, together with the embassy, regularly bring food hampers and medical supplies to local orphanages, schools and children living with disabilities.

With funding from China’s Anhui Province, over 2 000 students in Chimanimani now enjoy solar-powered facilities. Every year, the Chinese government extends scholarships to Zimbabwean students so that they pursue studies in various disciplines.

We stand ready to continue our wide-ranging cooperation with Zimbabwe to contribute to Vision 2030.

Q: What future plans does China have for Zimbabwe?

A: At the FOCAC Ministerial Conference in November 2021, President Xi Jinping identified nine programmes that China intends to implement with African countries in the next three years. This is the framework for China-Zimbabwe bilateral cooperation in 2022 and beyond. A number of initiatives are being worked on and considered at the moment.

For example, under the medical and health programme, China will donate another 10 million doses of Covid-19 vaccines within this year. China will continue to strengthen the partnership between the Parirenyatwa Group of Hospitals and their counterpart in China and support the Chinese medical team in Zimbabwe, Zimbabwe-China TCM Acupuncture Centre and Chinese-funded Health Point Upper East Medical Centre in playing a bigger role in consultations and treatment for more Zimbabweans.

Under the poverty reduction and agricultural development programme, we are going to welcome another team of Chinese Senior Agricultural Experts to Zimbabwe and continue to build demonstration villages so as to raise living standards and disseminate advanced agriculture technologies to local farmers.

The trade promotion programme has already got off to a good start. We have finalised the procedures for Zimbabwe to export its citrus to China. The “green lanes” in the trade promotion programme open up good prospects for bringing other fine agricultural products from Zimbabwe to China.

In other areas, such as investment, digital innovation, green development, capacity building, cultural and people-to-people exchange, and peace and security, we expect to see more opportunities.

China is serious about its commitments of assistance and cooperation. Real actions will be taken to implement the nine programmes to the benefit of the people.

Q: What is China-Zimbabwe loan status? Can you comment on allegations that you are using advancement of loans to Zimbabwe to own assets and have access to mineral resources (debt trap)?

A: Zimbabwe has been historically burdened by its debt to other top creditors, such as the Paris Club and multilateral financial institutions. Its debt to China is smaller, only 18 percent of the total external debt. If there really is a debt trap for Zimbabwe, it is certainly not set by China.

All of China’s concessional loans to Zimbabwe are provided at the request of the Zimbabwean government; every penny of them is earmarked to improve Zimbabwe’s infrastructure and productivity; all the projects they fund are based on scientific research and feasibility studies.

These projects are set to generate a strong economic impact and make a real difference in people’s lives. They are good enablers for Zimbabwe’s development, and as such are highly sustainable.

A defining feature of China’s financial support is that it can generate sustained returns for the recipient that far outweigh the input. In Zimbabwe, this is manifested in building airports, power plants, and telecommunication networks. In these areas, Zimbabwe is protected from the attempt by some foreign powers to strangle its neck. China never uses its loans as a lever to force itself into Zimbabwe’s internal affairs, demand unrealistic reform, or press for natural resources to be used as collateral.

What is a “debt trap”?  It is to use debt as a tool to meddle in a country’s internal affairs so that the debtor buckles to the creditor’s will. This is never a possibility in China’s policy for Africa. In fact, China’s financial support gives African countries an option to stay away from the debt trap laid by some countries and groups. Another reason why some falsely allege a Chinese “debt trap” is that they hate to see Africa develop; because their interest lies in a backward Africa.

Think about it. Whose loans and the attached conditions for those unrealistic reforms sank Zimbabwe into economic chaos? Whose loans are not as easily accounted for as the Chinese loans which are all used on visible projects? Has China ever demanded of Zimbabwe any concessions of sovereignty or natural resources as collateral in releasing its loans? If there is any “trap” in Africa, it is a “poverty trap”, an “underdevelopment trap”. That is what really deserves our closest attention.

Q: Of late, we have seen several Chinese companies investing in Zimbabwe, especially in mining and the manufacturing sectors. Why the interest in Zimbabwe?

A: In response to the policy of “Zimbabwe is open for business” and on the back of our excellent bilateral relations, Chinese companies have been investing in and growing with Zimbabwe for years. They are not newcomers. They effectively complement our inter-government cooperation and keep Zimbabwe connected to the global economy against the choking illegal sanctions. They have created many local jobs, increased tax revenues and foreign currency earnings for Zimbabwe, upskilled local workers, generated business opportunities for local companies, and given much back to their host communities.

Chinese companies are investing around the world, in developing and developed countries alike. Zimbabwe is not unique. Chinese investment comes here because Zimbabwe, like many other countries, is part of the globalised economy where investment and trade flow across borders. If there really is something different about Chinese investment in Zimbabwe, it is that the long-standing friendship between the two nations fortifies Chinese investors’ confidence in braving the illegal sanctions on the country that have kept other foreign investors away.

Q: How big is the level of Chinese investment in the country in the past five years?

A: The embassy does not have very accurate figures on this; but it is safe to put it at billions of US$. The Zimbabwean authorities are in a better position to provide more precise information.

We believe figures are less important as their impact on the ground. The positive presence of Chinese investment can be seen and felt in various sectors, not only mining, but also manufacturing, agriculture, health care, retail, hospitality, and art and culture.

These investments help Zimbabwe build domestic capacity for development. Chinese business people strike normal business deals that benefit both sides and we will continue to encourage healthy development, supporting investments from China to help Zimbabweans build a better life.

Q: Any examples of Chinese huge investments?

A: A high-profile Chinese investment project is the plan by Chinese Group Tsingshan Holdings to set up in Zimbabwe one of the biggest steel plants in Africa.

Then there is the recent acquisition of the Arcadia lithium project by Huayou from Prospect Resources Zimbabwe and minority shareholders, which is reported to draw in US$300 million of investment and be able to create 1 000 jobs.

They have rich experience working in different markets. They have a proven record of respecting laws and regulations and protecting the environment.

They are among the best companies that deserve strong public confidence. When their projects are launched on the ground, they are also prepared to contribute more to the local community, such as building a clinic, school and water supply facilities. A large number of job opportunities can be expected from their investment.

Q: While your companies are investing in the country, there have been several reports in some private press that some of your firms are engaged in unfair labour practices. What is your comment on that?

A: On labour rights issues, one needs to first recognise that differences in workplace cultures should not be misconstrued as infringement of labour rights. I would like to recommend a documentary “American Factory” to our Zimbabwean friends. It is about a Chinese entrepreneur investing in the US and how he overcame all the cultural differences.

In 2015, Mr Cao Dewang, the Chinese entrepreneur featured in the documentary, set up a glass factory in the city of Dayton, Ohio, which was hard hit by the 2008 financial crisis with many jobless people.

In the beginning, the local community was very positive about the investment. But as production unfolded, local employees began to complain about the style of management and workplace culture. The Chinese shareholders and managers were also getting frustrated with the inefficiency of local workers which caused the company to lose profit. But after sincere communication and patient dialogue, the two sides were finally able to bridge their differences and resume production. When the factory finally turned a profit, local employees also enjoyed better incomes.

Nine-to-five is never how the Chinese work. Without such dedication, China could not have grown to where it is now and Chinese people could not have enjoyed a comfortable life as they do today. We firmly believe every effort will be rewarded.

It is our clear position that all investors, including the Chinese, should protect the legitimate rights and interests of their Zimbabwean employees in accordance with the law. Investors should follow the statutory requirements on standards and currencies of wages, working hours and workplace safety and improve wages and benefits for workers as their business profits increase. Investors should seriously engage with labor unions, properly settle labor disputes through legal channels, listen attentively and respond to the workers’ reasonable requests.

We would like to note that In many cases, the concerns are only a result of misleading or even completely false media coverage. Some media agencies and self-claimed journalists have no regard for journalism ethics and standards, trying to pass off their own fabrications as facts because they do not wish to see Zimbabwe grow stronger with China’s support. Quite a number of them make a living from doing this.

We welcome fair and fact-based criticism, support the relevant authorities of Zimbabwe in conducting swift and thorough investigations into the allegations made by some private media agencies and releasing authoritative information to the public. We support the authorities of Zimbabwe in holding wrongdoers accountable in accordance with the laws and regulations of the country; but smearing, blackmailing, and hectoring of Chinese businesses and nationality-based discrimination will be met with a strong response.

Q: Why are there attacks on Chinese investments in the country and who is behind this?

A: Chinese investments have been under malicious attacks on social media and a few private publications for quite some time. Clearly this is organised propaganda.

Evidence has also surfaced that some foreign interests and elements are behind the scheme. They hate to see Africa getting what is good for itself, such as investments from China. They are trying to stifle and smear China all over the world. There are also those who are more than willing to sell their motherland for a few US$.

If the spiteful media attacks are allowed to continue, I’m afraid confidence will be hurt, and not just the confidence of Chinese investors, other international investors are watching too. What is really at stake is Zimbabwe’s own reputation, its own economic growth, and the livelihood of Zimbabwean people.

A few days ago it was revealed in the media that a foreign embassy in Harare is sponsoring some locals in protesting against Chinese companies. Do the Zimbabwean media and ordinary Zimbabweans find it acceptable to have your own land used by a foreign embassy in this way? Is this part of their diplomatic functions set out in international conventions? Are they sabotaging a newly-established Chinese investment project to protect the locals or advance their own hidden political agenda? Zimbabweans are a smart people and cherish deeply your independence and liberation. We are confident you will see through the deception. This kind of behavior that undermines your national security, investment environment and fundamental interests should be condemned by all Zimbabweans.

Q: Are all Chinese companies clean?

A: Chinese businesses have been investing in Zimbabwe in accordance with the country’s laws and policies since Zimbabwe’s independence. We do not deny that there may have been a few Chinese companies wanting to comply with local laws and regulations, corporate management, and community relationships. We sincerely welcome objective and fair criticism from the public and efforts by the government of Zimbabwe to handle issues in a lawful, fair and open manner. This is good for the competitiveness and sustainability of Chinese businesses.

In the meantime, when isolated incidents happen, they should not be used to write off China’s general goodwill towards Zimbabwe, indict the entire Chinese community in Zimbabwe, or even stir up racist, xenophobic sentiment.

Q: What is your reaction to allegations that your companies are in Zimbabwe to plunder its resources?

A: Are there any contracts signed under guns and canons? No, all are normal commercial agreements between the relevant parties and authorised and permitted by the Zimbabwean government.

The attacks on Chinese mining companies are either extremely unprofessional or shockingly ignorant. Some are only making things up to appear critical.

For example, some of them welcome western companies as legitimate investors, but accuse the Chinese as looters when they are following the same market rules. Some attach a huge price tag to the natural resources Zimbabwe brings to a business deal, but dismiss the value of the hundreds of millions of US dollars contributed by Chinese investors. When investors make legitimate profits, they cry looting. Some pick fault with Chinese investment for “not adding value to Zimbabwe’s resources” in the naive and mistaken belief that lithium ore can become lithium batteries overnight without complicated manufacturing processes. Chinese investment gives value to Zimbabwe’s mineral resources which have been lying undeveloped for decades by the failure of the Western companies. Zimbabwe is set to reap immense benefits from the Chinese investment.

Let us make it clear: China is not interested in taking Zimbabwe’s resources. This is never our intention, and we have never done anything close to it. If you check the cooperation agreements signed between the two governments, you will see none of them is about mining or uses Zimbabwe’s resources as collateral or in exchange for China’s assistance. Not a single Chinese state owned enterprise is exploring minerals in Zimbabwe.

Coming to private investment, mining cooperation with foreign partners makes up a critical part of Zimbabwe’s foreign trade. Either investing in Zimbabwe’s mining sector or acquiring shares in local companies, Chinese companies have consistently followed Zimbabwe’s laws and standard international business practices. Their deals are done on a willing-buyer, willing-seller basis and follow market prices. They pay their taxes in accordance with the law, sell the required portion of their export earnings to the central bank, and bear the huge risk of uncertain returns. Take the lithium projects for example, more than 50% of the total returns will go to the government of Zimbabwe.

Have you ever seen such a law-abiding “looter”? It is a media misconduct to conceal the fact about investors pouring in huge amounts of funds for a project while framing the normal and legal investment and trade as “looting”. This is unfair, irresponsible and narrow-minded. And it hurts Zimbabwe’s capacity to promote development by attracting foreign capital.

Q: What is China’s reading of the Zimbabwe political and economic situation and what do China propose as a solution to the challenges?

Under the strong leadership of President ED Mnangagwa, Zimbabwe has made very good progress in recent years. It not only stood firm against waves of the global pandemic, but also realized positive growth in 2021. This is remarkable even in comparison with the richer countries.

As for solutions, we do not believe what works for China will also work for other countries. Different countries have different conditions, which must shape their approach to development.

Speaking from our own experience, China has benefited from having a strong political leadership, an independent mind, commitment to openness and willingness to work hard. China makes her own strategies and policies. We do not dance to the tune of others in political or economic reforms. We have an efficient governance system that can make good decisions and execute them. For decades, very importantly, China has maintained a friendly investment climate for foreign investors. I hope our experience can offer some food for thought for Zimbabwe.

Finally, we also call on the big powers to stop inflaming the political differences in Zimbabwe. Zimbabweans deserve the right to solve their problems with their own intelligence and wisdom.

***this article first appeared in the Daily News