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Is China Ready for a Post-Mugabe Zimbabwe?

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Is China Ready for a Post-Mugabe Zimbabwe?

The strong relationship has soured in recent months thanks to controversial policies from Zimbabwe’s leader.

Is China Ready for a Post-Mugabe Zimbabwe?
Credit: Russian Presidential Press and Information Office

On August 3, 2016, China pledged $46 million toward the construction of a new Zimbabwean parliament. According to Zimbabwean state media outlets, China’s parliament construction pledge was a “gift” to Zimbabwe, as Chinese officials believed that Zimbabwe’s current parliament was too small for its lawmakers to work in effectively.

China’s decision to fund Zimbabwe’s parliament construction follows a string of large business contracts signed between Beijing and Harare. In recent weeks, China has opened its markets to Zimbabwean farm products, expanded its investments in Zimbabwe’s housing and agriculture sectors, and lent Zimbabwe money to upgrade its medical equipment in inner-city hospitals.

Despite these investment pledges, China has surprised many analysts by not helping President Robert Mugabe repress Zimbabwe’s largest protests in modern times and by not providing Zimbabwe with the loans it needs to avoid insolvency. China’s unwillingness to help Mugabe retain power is symptomatic of deeper strains in the China-Zimbabwe relationship. Mugabe’s crackdowns on foreign ownership of Zimbabwean companies have alarmed Chinese investors. Beijing also wants to ameliorate anti-Chinese sentiments in Zimbabwe to ensure that its alliance with Harare will remain intact even if Mugabe’s ZANU-PF party falls from power.

China’s Discontent With Zimbabwe’s Indigenization Policies

In 2008, Mugabe passed an indigenization law requiring Zimbabwean nationals to have a majority ownership stake in all Zimbabwean companies possessing over $500,000 in assets. However, the ZANU-PF government has frequently exempted Chinese companies from its indigenization policy. These exemptions have given China unparalleled access to Zimbabwe’s mineral resources and have entrenched Zimbabwe further into China’s economic sphere.

Zimbabwe’s new indigenization legislation, which took effect on April 1, could cause Chinese companies to be stripped of many of their past exemptions. Zimbabwe’s new business regulations require all foreign companies to submit tangible indigenization plans to the ZANU-PF government for evaluation. Should foreign companies be non-compliant, the Zimbabwean government has the right to close down their businesses by force. According to Yun Sun, a non-resident fellow at the Brookings Institution, the ZANU-PF’s indigenization policy could jeopardize China’s investments in the Zimbabwean mining sector and bankrupt small businesses owned by Chinese expatriates in Harare.

Mugabe’s decision to nationalize Zimbabwe’s diamond industry has caused particular alarm in Beijing. Under Zimbabwe’s new rules, Chinese mining companies are forced to operate under the umbrella of the Zimbabwe Consolidated Diamond Company (ZCDC). In 2015, Anjin, a leading Chinese diamond mining company appealed to the Zimbabwean Supreme Court to challenge the legality of the ZCDC’s monopoly.

Even though Chinese investment is vital for Zimbabwe’s economy and Chinese diplomats have pressured Zimbabwean policymakers to moderate their indigenization laws, Harare has refused to kowtow to Beijing’s demands. Mugabe has insisted that indigenization legislation is necessary to redress economic inequalities created during Zimbabwe’s colonial past.

Mugabe’s position has broad support within the ZANU-PF. Senior Zimbabwean officials believe that the Zimbabwean government does not earn enough tax revenues from profits made by foreign companies in Zimbabwe. Patrick Zhuwao, Zimbabwe’s Minister of Youth, Indigenization, and Economic Empowerment views the integration of foreign companies under Zimbabwean government control as the ideal way to rectify this revenue shortfall.

Zimbabwe’s unwillingness to comply with the demands of Chinese investors has strained the Beijing-Harare relationship. Nevertheless, it is possible that the China-Zimbabwe rift on indigenization could be overcome. Mugabe’s recent public statements suggest that he might be open to making a compromise with China. On April 13, Mugabe admitted that his indigenization proposals are creating “confusion” that is discouraging foreign investment to Zimbabwe. Mugabe has also criticized ZANU-PF government ministers calling for rapid, sweeping indigenization, claiming that this approach would alarm international investors.

In the short-term, Mugabe needs to uphold Zimbabwe’s indigenization policy to ensure that hardline nationalists in the ZANU-PF remain loyal to his government. However, Mugabe could eventually reconsider his position and convince extreme nationalists in the ZANU-PF of the dire economic consequences of applying Zimbabwe’s indigenization laws to Chinese companies. Should Mugabe pursue this course, the China-Zimbabwe alliance could return to its former strength.

China Looks Ahead to Zimbabwe’s Post-Mugabe Future

Even though China’s relationship with Zimbabwe has been defined by personal camaraderie between senior Communist Party of China (CPC) officials and Mugabe, China hopes to maintain Zimbabwe as an ally even if the ZANU-PF is eventually toppled. According to Chinese official statistics, Zimbabwe consistently ranks as one of the top three destinations for Chinese investment in Africa. An estimated 10,000 Chinese nationals work in Zimbabwe.

As Zimbabwean opposition figures have expressed virulent opposition to China’s economic hegemony over Zimbabwe, Chinese business interests in Zimbabwe could be jeopardized if the ZANU-PF falls from power. Many of Mugabe’s opponents believe that China is propping up the ZANU-PF to make Zimbabwe a de facto colony of Beijing.

Representatives of the Zimbabwe Congress of Trade Unions (ZCTU) vehemently oppose China’s crackdowns on collective bargaining rights in Zimbabwe. The ZCTU also opposes China’s policy of dumping cheaper goods into Zimbabwe’s markets, as this policy makes Zimbabwean goods uncompetitive. In addition, the ZCTU has drawn attention to China’s alleged human rights abuses against Zimbabwean workers and flagrant violations of Zimbabwean pollution laws by Chinese steel companies.

According to Zimbabwean journalist John Karumbidza, ethnic tensions between Chinese expatriates and black Zimbabweans have risen markedly in recent years. To crack down on crimes perpetrated against Chinese nationals, Mugabe established a Chinese-language desk at Harare’s central police station and appointed a Minister of Chinese Affairs to his Cabinet.

These efforts have not ameliorated ethnic tensions in Zimbabwe. Some Zimbabwean police officers have reacted with derision at the prospect of learning Mandarin. Opposition activists have also scapegoated affluent Chinese-Zimbabweans for Zimbabwe’s economic plight. Many Zimbabwean nationalist groups contend that Mugabe has encouraged Chinese immigration to Zimbabwe to further his own political interests, as Chinese expats are an economically influential support base for the ZANU-PF Party.

To counter popular perceptions that Beijing is firmly committed to the ZANU-PF’s retention of power at any cost, China has refused to provide unconditional support for Mugabe. Beijing’s reluctance to publicly support Mugabe during Zimbabwe’s recent protests demonstrates that China has learnt lessons from its conduct during the 2011 Libyan civil war. Allegations that China had offered Muammar al-Gaddafi military support against Libyan rebel groups in September 2011 strained Beijing-Tripoli relations after Gaddafi’s demise. This is an outcome that China is keen to avoid if Mugabe succumbs to mass popular unrest.

China’s investments in Zimbabwe and diplomatic overtures with Mugabe regime officials suggest that the Beijing-Harare alliance remains largely intact. But tensions over Zimbabwe’s indigenization laws and China’s unwillingness to unconditionally support Mugabe against his domestic opponents reveal latent strains in the China-Zimbabwe relationship. It remains to be seen if reduced Chinese support for Mugabe weakens the ZANU-PF’s stranglehold on power and if China can increase its soft power in Zimbabwe enough to maintain its current leverage over Harare in the post-Mugabe era.

Samuel Ramani is a DPhil candidate in International Relations at St. Antony’s College, University of Oxford. He is also a journalist who contributes regularly to the Washington Post and Huffington Post. He can be followed on Twitter at samramani2 and on Facebook at Samuel Ramani.