China Seen Gaining Even More in Zimbabwe If Mugabe Leaves Office

HARARE (Capital Markets in Africa) – China has seen its influence rise in Zimbabwe during Robert Mugabe’s nearly four decades in power, becoming the African nation’s third-largest trading partner and biggest foreign investor. Beijing might gain even more if he goes.

Former vice president Emmerson Mnangagwa, whose removal sparked last week’s military intervention, is seen as more open to investment from China and other nations than Mugabe, according to researchers who advise President Xi Jinping’s government on Africa policy. Mnangagwa is poised to take Mugabe’s job after replacing him as leader of the ruling ZANU-PF party on Sunday.

Mnangagwa, who received military training in China during a war for independence decades ago, proposed in 2015 to have the Chinese yuan as legal tender in inflation-prone Zimbabwe. That paved the way for its adoption along with other currencies — though none are as popular as the U.S. dollar.

He also signaled opposition to Mugabe’s nationalization moves, telling China’s CCTV he sought “an environment where investors are happy to put their money because they will have a return.”

“Mnangagwa has a more open and moderate approach in economic policies and is also a friend of China,” said Shen Xiaolei, a research fellow on Africa in the Chinese Academy of Social Sciences, China’s state think tank. “Mugabe’s receding power is just a matter of time, and sooner is better than later because it can help stabilize the domestic situation.”

Military Visit
China has sought to shower ruling elites in Africa with financial aid and infrastructure investment in exchange for access to natural resources including gold, diamonds and minerals. Zimbabwe was among the four biggest recipients of China’s official development assistance between 2000 and 2014, only behind Cuba, Ivory Coast and Ethiopia, according to research lab AidData.

Xi’s 2015 trip to Zimbabwe — the first visit by a Chinese president in nearly 20 years — produced at least 12 deals with an estimated value of $4 billion in sectors such as power generation, infrastructure and pharmaceuticals, though it’s unclear how much of that materialized. He called ties between the nations “one of the best relationships between developing countries.”

Zimbabwean army chief Constantino Chiwenga visited Beijing less than two weeks before the coup and met Chinese Defense Minister Chang Wanquan. China’s foreign ministry called the Nov. 5 meeting a “normal military exchange as agreed by the two countries.”

China hasn’t officially declared a preference for either Mugabe or Mnangagwa. Foreign Ministry spokesman Geng Shuang said on Nov. 16 that bilateral ties wouldn’t change, and China hoped “the situation in Zimbabwe will become stble and the issues will be resolved peacefully and appropriately.”

Indigenization Law
Despite the “all-weather” friendship between the countries, Mugabe’s indigenization law became a source of tension between Beijing and Harare. The legislation, which required foreign companies in the country to have majority black Zimbabwean ownership, spooked Chinese investors.

“This policy was too radical and Chinese companies there stood to suffer,” said Wang Hongyi, a research fellow on China-Africa ties at CASS. “Mnangagwa is seen as a steady hand, and he will limit or even revoke the indigenization law.”

Zimbabwean lawmakers are set to begin impeachment proceedings against Mugabe and vote him out of power within two days after he missed a ruling-party deadline to end his 37-year rule. He had been widely expected to announce his retirement so that Mnangagwa could take over in a televised address on Sunday.

Even if Mugabe somehow manages to survive, Beijing is poised for continued strong relations with Zimbabwe. Grace Mugabe, the president’s wife who was also mentioned as a possible successor, studied at Renmin University in Beijing between 2007 and 2011 and received a degree in Chinese language.

“China is in ‘a no-lose situation’,” said Ding Yifan, a senior research fellow specializing in China’s overseas investment strategy at Development Research Centre, the State Council’s policy research arm. “We have good ties with every party in the turmoil. Everyone needs Chinese investment.”

Source: Bloomberg Business News