Opportunities of trade and economic cooperation between zimbabwe and china pdf

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opportunities of trade and economic cooperation between zimbabwe and china pdf

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This paper analyses the impact of China—Africa trade relations both at the aggregate African and at the national level of a selected sample of countries. The paper confirms that there are both trade-related gains and losses arising from China—Africa trade relations. Beyond this is the concern that the existing pattern of Africa-China trade — which continues to be strengthened by China's rising profile — does not correspond to the region's longer term objectives, that is, to diversify its economic and trade structure and ensure that trade contributes to the industrial development of African countries.

China in Africa

Over the past decade, China has actively sought to strengthen its economic and diplomatic relationships throughout the African continent and, in the process, has drawn much praise and incited equal criticism. Major, strategic diplomatic efforts on the part of Chinese high-ranking officials have accompanied and facilitated this increased trade and investment in Africa. China now operates embassies in nearly every African country—except the six countries that recognize Taiwan.

China has also demonstrated its political commitment to fostering China-Africa relations through more than one hundred high-level meetings between Chinese and African diplomats and envoys over the past two years.

China has also established a number of Chinese-African alliances to further economic integration; development assistance remains a major factor in the negotiations that take place within these alliances. At the conference, aid and debt cancellation were discussed in addition to the brokering of economic agreements between China and individual African countries. Notable Chinese aid projects included the Tanzania-Zambia railway in addition to several presidential palaces and Olympic-style football stadiums.

However, China witnessed double-digit growth throughout most of the s and was forced to look abroad to secure natural resources and additional markets in order to sustain its monumental growth. Africa offers China a ready supply of natural resources and energy resources in particular and nascent markets, while China provides a source of revenue to African countries.

China includes many African states as allies in its peaceful rise to global superpower. The benefits of trade and investment have come with trade imbalances and regressive policies towards accountability, human rights and governance. As China continues to increase its presence, it presents significant opportunities and challenges for China, Africa and the international community that deserve to be explored and addressed. In the future, African leaders and the international community should seek to draw China into meaningful dialogue and cooperatively manage this presence.

Only by proactively engaging China will African countries be able to take advantage of the current opportunities to address asymmetries in the current relationship, manage potential risks and detrimental impacts, and bring Africa closer to its long-term development goals.

This quest for natural resources brings clear opportunities and benefits for those African countries endowed with crude oil, minerals and other natural resources valuable to China. In addition to being the largest consumer of copper, China is ranked as the second largest global consumer of oil, and imports the third largest amount of oil.

China intentionally presents itself as an alternative partner to the West and the Western conditionality-driven model of trade and development. The rapidly increasing Sino-African trade volume stands as evidence of this appeal. China has demonstrated its commitment to furthering these trade relationships and increasing economic cooperation by establishing a number of preferential trade agreements across the continent.

Moreover, China pledged to create three to five trade and economic cooperation zones in Africa over a three-year period. African countries with minimally developed economies and small numbers of companies engaged in international trade are able to develop their export industries through trade with China, and bring revenue into the country.

With expanded and more sophisticated export industries and the surge in foreign exchange from commodity exports, countries have a steadier economic base from which to diversify their economies. Revenues from international trade can be directed towards industries outside the extractive sector, broadening commodity exports.

For countries which receive very little FDI, such investments bring the opportunity to extend and develop their extractive industries. In Angola, for example, Sinopec a Chinese state-owned enterprise and the Angolan company Sonangol formed a joint-venture called Sonangol-Sinopec International. In addition to undertaking projects to develop extractive industries, China has also made major investments throughout Africa in transportation and communication infrastructure.

China has filled this void and invested in both large and small-scale infrastructure projects in its strategic efforts to strengthen economic and political relationships in Africa. And while the lack of regulation capacity on the part of national governments raises valid concerns in the development community which will be discussed in a later section , Chinese investment begins to fill a particularly large gap in funding for infrastructure that is not currently matched by foreign assistance and is rarely addressed by the private sector in large scale projects in Sub-Saharan Africa.

China has access to large amounts of capital, possesses the capacity to working quickly and efficiently, and has the political will to undertake large infrastructure projects. Thus, Chinese investment presents the possibility of a future partner to the international community in achieving development goals in Africa, stepping into an area from which other funders has increasingly shied away.

This Chinese model of development differs from the Western model in two important ways: it uses a state-centered approach and does not entail political or economic management conditions. For African countries that have been shunned by the international community for their record of authoritarian rule, human rights abuses or simply those countries whose governing capacity is relatively weak, the Chinese model and aid is a realistic alternative to the West.

A concern echoed throughout the continent from average citizens to national leaders is the current asymmetries in the Africa-China trade relationship. A growing number of countries in Africa have significant trade deficits with China, and this trend is likely to continue over time.

The composition of trade between China and Africa is a major factor in causing this trade deficit. The majority of African countries primarily export unprocessed natural resources and agricultural products to China.

Outside of the major oil producing countries involved in Chinese trade Angola, Sudan and Democratic Republic of Congo , this dynamic has resulted in serious imbalances. Though Ghana is well endowed with natural resources, it also had an 82 percent trade deficit with China in And even South Africa, a middle-income country that has abundant natural resources and leads the continent in industrial production, had a significant trade deficit with China of 17 percent last year.

The textile and apparel industries are central to the beginning stages of economic development in many developing countries, given their labor-intensive nature, and this remains true in Africa. Nascent textile and apparel companies in Africa, however, are unable to compete with the overwhelming influx of cheap Chinese goods both legal, illegal and unauthorized and have been forced to close.

The resulting de-industrialization and loss of employment has resounded with African leaders and textile workers. In Lesotho, which accounted for the largest textile and apparel industry growth under the African Growth and Opportunity Act AGOA , 25 textile factories closed down from , leaving a total of 23, workers unemployed.

Nigeria has felt a similar impact of cheap Chinese textile imports; over a two-year period, more than 35, textile workers are estimated to have lost their jobs, seriously threatening the survival of domestic textile production.

If African leaders do not address the current imbalances in their trade relationship with China, they will continue to primarily export raw materials while importing manufactured Chinese products. Under current trade agreements, countries remain vulnerable to export dumping for cheap Chinese products, threatening their nascent industries, or are trapped in resource extractive relationships with China.

The main goal of Chinese investment is to supply the necessary infrastructure to support the existing resource extractive industries. However, these Chinese infrastructure projects often have little connection to other infrastructure systems in the country and are rarely designed in coordination with national infrastructure plans.

Moreover, the actual construction of Chinese infrastructure projects often fails to bring benefits to the local economy.

Many Chinese companies prefer to employ Chinese labor and even import building materials from China for investment projects—failing to generate new employment or stimulate the local economy, limiting technology transfer, and creating tension between local Chinese and African communities.

A third risk involved in Chinese investment centers on the question of financial sustainability. Some of the investment is secured through new lending from China to national governments, and many question whether the debt can be managed and how it will affect the long-term health of the economy.

The loan has been heavily reinvested in infrastructure, with 70 percent of contracts going to Chinese companies and the remaining thirty percent going to Angolan private subcontractors. A study on Chinese involvement in the construction process found that Chinese firms employed in Angola often import Chinese labor to work on a contractual basis and import all necessary materials and equipment directly from sources in China.

This trend has certainly been seen across the continent, as the benefits of Chinese investment and trade are enjoyed by an elite few and fail to reach the rest of the population. Two characteristics distinguish Chinese involvement in Africa and threaten to reverse positive trends in development in Africa.

This has shown especially true in the operations of Chinese companies within Africa. Unlike Western companies, which are subject not only to intense public pressure but also to international or national regulations from their own countries, Chinese firms do not face a similar degree of accountability.

These firms do not follow international labor or environmental standards, yet often continue business because of Chinese government assistance. A similar lack of accountability exists with regard to Chinese foreign aid. Currently, China does not have a bureau of foreign aid. Instead, China operates aid projects through its Ministry of Commerce, since the goal of many Chinese aid projects is to secure political favor and continued access to resources.

This purely political motivation and implementation may jeopardize the success of the project by removing the pressure to follow accepted best practices in the development field. If a problem arises with Chinese engagement in Africa, to whom can the affected persons turn for an authoritative stance and a remedy?

The Chinese policy of non-interference in Africa directly contrasts with the Western conditionality-driven approach that maintains certain non-economic factors have both intrinsic value and instrumental value to achieving development goals. Over the past 15 years, the international community has come to a consensus and recognized the importance of good governance, sound economic management, the guarantee of basic human rights, established local accountability, and the need to wage war against corruption in order to achieve sustainable development in Africa.

Progress has been made in establishing these factors as central to any engagement in Africa and international pressure has been used as an instrument to protect these norms. China, however, operates openly without regard to the record of African states on any of these norms and has repeatedly engaged countries that have been shunned by the international community for their corruption, human rights abuses and other poor performance indicators.

The Darfur genocide in Sudan provides one of the clearest examples of the dangerous role China can play in undermining international standards on human rights.

No fewer than , people died during the conflict, and more than two million people were displaced and remain in refugee camps four years after the start of conflict.

However, China used its position on the UN Security Council to block the sanctions in order to protect its extensive trade and investment interests in Sudan. Chinese engagement continued and increased even after other foreign investors and companies exited the country, and China deployed some 4, PLA troops to Southern Sudan to guard an oil pipeline.

Moreover, China has sold weapons to the Sudanese government, despite arms embargos from other nations. In an interview in , he said, "Business is business. We try to separate politics from business. Secondly, I think the internal situation in the Sudan is an internal affair, and we are not in a position to impose upon them.

Chinese engagement has supplied the government with a continual source of revenue, arms and military equipment, and protection against sanctions and pressure from international bodies. And to the dismay of the international community now active in trying to pressure President Umar Bashir into fully addressing the situation in Darfur, President Hu Jintao has provided disincentives to do so. China also poses a threat to the democratization movement across Africa by supporting corrupt leaders and practices.

An alliance of Chinese state institutions active in Africa and the local elites is sufficiently powerful to reverse political reform that is currently in progress on the continent—effectively putting a brake on the opening of the political space and the democratization of development.

In addition to bolstering the Sudanese government, China is also one of the main actors enabling President Robert Mugabe to continue Zimbabwe down a rapidly deteriorating path, both economically and politically.

China has since become a critical ally for Zimbabwe in the international arena and has shielded Zimbabwe from pressure and direct action from the international community. It has been reported that many trade and investment deals are hidden in a welter of barter arrangements and front companies, reflecting Zimbabwe's inability to pay China with hard currency.

For example, China is widely reported to have taken a share of Zimbabwe's tobacco harvest in exchange for industrial equipment. In its relationship with Zimbabwe, China has not separated business from politics, instead playing the two factors off of each other.

Moreover, by targeting a country that has largely been isolated from the international community, China is able to maximize the benefits it draws from the relationship with little regard for the long-term impact on the political and economic stability of the country. Through means of economic agreements, political support and foreign development assistance, China has located and exploited these areas of shared interest between African governments and Chinese national interests.

In many countries, Chinese engagement comes at the cost of trade deficits and economic inequalities, disregard for international standards on labor and environment, and erosion of recent political reforms.

As it stands, the African strategy towards China has two critical weaknesses that prevent it from drawing the full benefits of the China-Africa engagement. The first weakness is that African countries are negotiating aid, trade and investment agreements with China as 53 individual countries. By focusing on gaining favorable agreements by country instead of through a collective voice, African leaders have greatly diminished their bargaining power with China.

As China continues to expand its presence on the African continent, African leaders must devise a coordinated strategy for engaging China that addresses these two weaknesses.

Africans should strive towards developing a broad-based framework for all international actors operating in aid, trade and investment in Africa, setting clear standards across the continent to which China would be subject. Only by strengthening the power of the African voice and engaging China on multiple levels will African countries be able to prevent further asymmetries in Africa-China relations and ensure that Africa derives as many sustained benefits from the engagement as China currently enjoys.

African leaders should then collectively engage China in order to ensure that their investment and aid contributes to development goals and follows the established guidelines and norms.

Existing regional organizations should play an increasingly important role in these collective engagements. Rather, the international community should seek to cooperatively interact with China and exploit the expanding intersection of interests between China and the traditional aid community.

To hasten this process, the U. For example, the kind of multilateral conversations that frequently take place between the U.

China and Africa: Opportunities, Challenges and Forging a Way Forward

Deception, Development or Interdependence? This relationship slowly declined as China recovered from the Cultural Revolution and rebuilt its economy. In , China began to re-emerge in Africa as its power and influence grew rapidly along with her hunger for diverse allocations of natural resources. China offers Africa a new approach to development that is similar to its own economic model of growth. China and Africa share similar stories of subjection and colonization from various European nations. China has achieved remarkable success in lifting hundreds of millions of people out of poverty. Nevertheless, China is facing a number of challenges, many of them similar to those facing African countries.

Over the past decade, China has actively sought to strengthen its economic and diplomatic relationships throughout the African continent and, in the process, has drawn much praise and incited equal criticism. Major, strategic diplomatic efforts on the part of Chinese high-ranking officials have accompanied and facilitated this increased trade and investment in Africa. China now operates embassies in nearly every African country—except the six countries that recognize Taiwan. China has also demonstrated its political commitment to fostering China-Africa relations through more than one hundred high-level meetings between Chinese and African diplomats and envoys over the past two years. China has also established a number of Chinese-African alliances to further economic integration; development assistance remains a major factor in the negotiations that take place within these alliances. At the conference, aid and debt cancellation were discussed in addition to the brokering of economic agreements between China and individual African countries. Notable Chinese aid projects included the Tanzania-Zambia railway in addition to several presidential palaces and Olympic-style football stadiums.

U.S. Relations With India

China and Zimbabwe have had a close, but chequered, relationship since the latter's independence. The Soviet Union supported Joshua Nkomo 's Zimbabwe African People's Union , and supplied them with arms; Robert Mugabe 's attempts to gain Soviet support for his Zimbabwe African National Union were rebuffed, leading him to enter into relations with Soviet rival Beijing, culminating in a January meeting in Mozambique in which both sides affirmed their intent to cooperate more closely. Mugabe placed great importance on Zimbabwe's relations with China, especially after the standoff with the European Union resulted in capital flight and economic depression. Chinese president Hu Jintao did not visit Zimbabwe on his February tour of southern Africa, though his schedule took him to a number of countries near Zimbabwe, including Mozambique , Namibia , South Africa , and Zambia. A delegation of Chinese businessmen did visit Zimbabwe around that time; however, the Zimbabwe Tourism Authority put up signs with messages in Korean to welcome them.

Metrics details. The study employs the autoregressive distributed lag ARDL approach to examine the relationship between foreign direct investment FDI in the mining sector on the Zimbabwe economy, while controlling for both non-mining FDI and domestic investment. Mining FDI is revealed to have relatively higher effects as compared to FDI in non-mining sector and domestic investment. The short-run analysis observed that mining FDI as well as non-mining and domestic investment still has positive and significant impacts on growth but at a relatively lower extent. This implies that it takes some time for such investments to have their full effect on the economy.

The economic powerhouse has focused on securing the long-term energy supplies needed to sustain its industrialization, searching for secure access to oil supplies and other raw materials around the globe. As part of this effort, China has turned to Africa. Through significant investment in a continent known for political and security risks, China has boosted African oil and mining sectors in exchange for advantageous trade deals.

Introduction

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