China Accuses Zimbabwe of Understating Investment
Zimbabwe continues to face its most severe economic crisis since the hyperinflation crisis in 2008. (Wikimedia Commons)
Zimbabwe faced accusations by China on November 19 that it had supposedly understated the extent of China’s financial support. This accusation comes amid another burgeoning economic crisis in Zimbabwe, accompanied by controversy surrounding the reality of foreign investment in the country.
China made the accusation after Zimbabwe released budgetary figures ranking its foreign donors, with China coming lower than predicted in terms of the total amount of contributions made and relative to other donors. Zimbabwean Finance Minister Mthuli Ncube said that the country received $194 million from bilateral donor countries from January to September of this year and that the majority of the money came from Western countries, particularly the U.K., while China only reportedly provided $3.6 million.
In sharp contrast, the Chinese embassy in Harare, the capital of Zimbabwe, responded promptly that China’s actual bilateral financial support to Zimbabwe was $136.8 million, stating that Ncube’s number “is very different from the situation on the ground.”
According to various news outlets, China is Zimbabwe’s largest source of investment and its fourth-largest trading partner. Zimbabwe is among various African nations that are recipients of Chinese investment under its Belt and Road Initiative (BRI). The BRI is a global effort undertaken by China launched in 2013 to increase its economic ties through investment in trans-continental infrastructure and trade.
China has long acted as a major financier of projects in Zimbabwe, particularly in the absence of funding from international organizations such as the International Monetary Fund (IMF) and World Bank. China also provides the largest market for Zimbabwe’s exports. The two countries have had close diplomatic and economic relations since Zimbabwe gained independence in 1980, and then-President Robert Mugabe established close ties with Beijing, first militarily, then economically.
For many years, Zimbabwe advocated its “Look East” strategy, emphasizing its relations with China and against the West, particularly after various Western countries imposed sanctions on it. Yet, disappointed by its eastward-looking strategy, Mugabe openly asked for re-engagement with the West in 2015, yielding greater investment. Unfortunately for Zimbabwe, analysts think China’s interests are now “increasingly aligned” with the West’s as both look for the best investment opportunities more than merely the potential for political influence. Thus, while China continues to publicly support Zimbabwe, it is wary of further investing in Zimbabwe while the country’s fragile economy and politics remain unstable, opting instead to invest more in other African countries.
China’s worries appear justified given that Zimbabwe is currently experiencing its most severe financial crisis in a decade, with inflation now reportedly more than 500 percent. With this tremendous cash crunch, citizens have to line up for basic necessities like bread, fuel, and medicine and often only get about six hours of electricity a day. The present economic conditions are particularly disappointing for many Zimbabweans who hoped for significant changes in the country’s economic policies after Mugabe was ousted in 2017.
Evan Mawarire, a Baptist pastor who led some of the largest protests against Mugabe while he was in power, said of the current economic crisis, “I think that’s what depresses Zimbabweans, that’s what we all look at and think, ‘This is unbelievable that the worst nightmare got worse at the end of the nightmare.’”
Emmerson Mnangagwa took office as president in 2017 and has continued many of the same political and economic policies of his mentor, Mugabe. Mnangagwa has signed many promising foreign investment deals, but little economic growth has materialized. Citizens are now calling for deeper, structural reforms to tackle cyclical inflation and minimize risk for foreign investors. Further, Mnangagwa has also been increasingly repressive toward protesters. Last year, he called for a military crackdown on peaceful protests after narrowly winning a disputed election.
In response to China’s accusation, Zimbabwe’s government said that it would take the matter seriously, tweeting that “Necessary consultations are underway to establish a common accounting position. We thank the Chinese Govt for their support.”