Zimbabwe-China relations are as old as China-Africa relations which dated back to more than 2000 years ago. These relations became more pronounced during the Zimbabwe’s liberation struggle where China assisted the guerilla movement with arms and other supplies. This relationship became more visible after independence with the Government of Zimbabwe clearly declaring China as her partner. When Zimbabwe implemented the Land Reform Program she became an enemy of the West. She then declared openly her Look East policy, which largely meant her predominant relationship with China, even though other countries like Malaysia and Indonesia are included in the matrix. This paper will give a reflection on the implications of this relationship on investments and trade.

Literature Review on Investments and Trade
World trade and investment have grown rapidly in recent decades, driven by the growth of major emerging markets. According to the Department for Business Innovation and Skills, certain aspects of the pattern of world trade and investment have remained relatively constant over the last 30 years. For instance, in 1980, the US, Germany, France, Japan and the UK were the top five exporting and importing countries, accounting for 39 per cent of world exports and 40 per cent of world imports. Trade in goods accounted for nearly 85 per cent of total world trade. In 2008, world goods and services trade had expanded and diversified. But, Germany, the USA, Japan and France were still the top five exporters and importers, although they had been joined by China, pushing the UK into sixth place. The top five in 2008 accounted for 34 per cent of exports and 35 per cent of imports. Trade in goods accounted for 81 per cent of total trade. [①] So while there had been some shifts such as China’s growing importance and a slightly more dispersed pattern of trade, there was little change in the list of leading trading nations, in the concentration of trade or in the balance between manufactures and services. Although there have been shifts in investment flows, developed countries share of the stock of world outward investment has remained very high. While developed countries’ share has slipped slightly in recent years, they still accounted for 84% of the stock of outward investment at the end of 2009 compared with 87% in 1980. [②].
There is a rapid export growth of major emerging markets, such as China, but also the significant growth in many other emerging and developing countries, in Africa, Latin America and Central and Eastern Europe as well as in Asia. Currently, 2 billion people live in the world’s low-income countries. Their average income has a purchasing power less than one-sixteenth of that enjoyed by the 1 billion people who live in the high-income countries. Even more astonishing is the ratio of the average income of the poorest and the richest 1 billion people on the planet: it is – conservatively – in the region of one to 80. [③] Policy makers in Less Developed Countries (LDCs) are concerned that they should be better integrated in world trade, that their share of world trade should be larger, and that they should manage to sustainably reduce the incidence of extreme poverty. Some policy makers have advocated for the implementation of liberalisation policies which unfortunately has resulted in extreme poverty, at least learning from the effects of Economic Structural Adjustments implemented in Africa from the late 80s. This is why Chinese investments are becoming preferred by African countries because they seem to be reasonable negotiation of the investments contracts. Whilst Chinese investors are not so shrewd, African governments should be astute when they are negotiating these contracts so that they can benefit the majority of their populations.
A key implication of the analysis above is that the LDCs need to increase investments related to the development of productive capacities. They also need to significantly step up investments which are related to productive capacities (especially in infrastructure and institutions). Only if LDCs overcome these constraints and successfully develop productive resources, will they benefit from a more favorable process of capital accumulation, technological progress and structural change. The necessary investments to develop productive capacities and to relieve constraints on them are a formidable challenge for any country, but especially the LDCs, which are resource-stripped economies.
Most developing countries still view Foreign Direct Investment with great wariness. The presence of Multinational Corporations (MNCs) is perceived to impinge on national sovereignty and security. Multinational Corporations are sometimes viewed as a threat to host countries, raising concerns about MNCs capacity to influence economic and political affairs. These fears are driven by the colonial experience of many developing countries and by the view that Foreign Direct Investment (FDI) was the modern form of economic colonialism and exploitation. In addition, MNCs were frequently suspected of engaging in unfair business practices, such as rigged transfer pricing and price fixing through their links with their parent companies.[④]
The Trade Related Investment Measures (TRIMs) Agreement recognizes that certain investment measures distort trade and that these distortions are not consistent with General Agreement on Tariffs and Trade (GATT) principles. Export subsidies, import entitlements, minimum export requirements, and local content requirements directly affect the volume of trade, and in some cases the composition of trade. For example, local content requirements mean that imports are treated less favorably than domestic inputs, violating the national treatment principle of the GATT. The trade balancing requirement that limits the quantity of imported products that can be used if an MNC does not meet its export target, also violates national treatment obligations. Incentives geared to attracting FDI, such as tax incentives, may also influence trade flows in that they can persuade firms to favor FDI rather than exports as a method of foreign market penetration. As such, the inclusion of TRIMs on the agenda of the Uruguay Round of multilateral trade negotiations was favoured and considered legitimate by developed countries.[⑤]
 Why is Zimbabwe Looking for China on Investments and Trade?
The issue of colonial legacy should never be taken for granted in international economic relations. Colonial legacy affects present and future relations of states. Zimbabwe was once a colony of Britain. The records and footprints cannot be erased easily. The issues of mistrust and skepticism cannot be ruled out in such relationships. Zimbabwe therefore finds herself more at home when dealing with China, her ally when she fought against colonialism. Courting China as an investment and trading partner is therefore a second level of trust that is from a mere political relationship to an economic level which shows increased confidence with the relationship. Zimbabwe was slapped with sanctions as a result of implementing the Land Reform Policy and related processes which ensued. China is important to Zimbabwe because she is a permanent member of the Security Council whose veto power can save weaker and fragile countries from domination by the United States of America and the European countries. During the Zimbabwe’s worst years after independence, that is, during its political crisis, between 2007 and 2009 China’s veto power saved her from Security Council sanctioned position. For Zimbabwe China is therefore the most appropriate partner because she has come a long way in their friendship.
Chinese economic growth is an important factor which explains why Zimbabwe is turning to China for investments and trade. China is now one of the biggest trading countries in the world. Its Gross Domestic Product ranks second after the US, after overtaking Japan in 2010. China is poised to replace the U.S. between 2015 and 2020 and be the largest economy in the world, and India will overtake the UK and France in 2015 economically. China's GDP surpassed Japan because of the huge difference in each country's growth rates. China is growing at about 10% a year, while Japan's economy is forecast to grow between 2% and 3% this year.
In 2009, China’s total value of import and export was USD2.2073 trillion. The country's trade surplus was US$196.07 billion in 2009. During the period from January to November 2010, China's foreign trade value grew 36.3% year on year to US$2.68 trillion. The country's export value rose 33% year on year to US$1.42 trillion during the period, while its import value surged 40.3% year on year to US$1.25 trillion. China has US2.3992 trillion of foreign exchange reserve which is about 30.7% of the world total. This shows that there is a positive trade balance (exports are higher than imports). The trade value (value of both imports and exports) with some countries is over USD100 billion, for examples, with EU the value of trade is over USD 364.04 billion; with the US it’s about USD298.26 billion; with Japan: USD 228.85 billion; and with ASEAN: 213.01 billion.[⑥] In 2009, the U.S. trade deficit with China was $227 billion. This was down slightly from the record of $268 billion set in 2008, the largest in the world between any two.[⑦]
Currently the domination of China in the international trading system is very clear. Mr Mandelson of EU made comments on China: “China’s time has already come. Wondering beyond world affairs during the last two decades, China today has returned to the center of the world. China is not only the manufacturing factory of the world, but also a big trading country. She stands firmly in the center of the world economy and shoulders responsibilities for effective operation of the world trading system.” [⑧]
Therefore Zimbabwe cannot afford to ignore the second largest economy in the world. In the global financial crisis, China has bailed out US and European countries. China has stepped in to rescue Spain by purchasing that European country’s public debt. Spanish public debt rose to 57.7 percent of GDP at the end of September from 53.2 percent at the end of 2009. [⑨] China has also agreed to bail out Portuguese debt amounting to USD 4 billion. Therefore China has the financial muscle to invest in Africa and Zimbabwe. China’s 2.3 trillion foreign exchange reserves make her an attractive investment partner to Zimbabwe. She has tangible wealth which has survived the wrath of the global financial crisis.
Chinese culture is attractive to Zimbabwe in the sense that it is calm. Most social values are derived from Confucianism and Taoism. Zimbabwe has an experience of nasty investors who siphoned resources without contributing significantly to the country. Zimbabwe is implementing the Indigenization and Economic Empowerment Policy which enables its locals to have a 51 percent shareholding. This is not a new phenomenon to China where 50-50 deals are acceptable. The Chinese call these type of contracts ‘win-win’, because they are based on fairness, negotiation and agreed positions.
Zimbabwe’s products, just like any products from developing countries face steep Technical Barriers to Trade (TBT) which includes Sanitary and Phytosanitary measures. Legislation in some countries requires that a country wishing to export fresh fruits and vegetables to them must obtain prior approval from the appropriate authorities before it can commence exports. Such approval is granted if the authorities are satisfied that fruits are free from diseases and pests not existing in the importing country. Jamaica for instance has not been able to get approval for its exports of mangoes as the United States considers that West Indian and Caribbean fruit flies are present in the fruit. The United States may allow imports if mangoes are subject to hot water treatment. No such facility presently exists in Jamaica. Other countries such as Australia, Japan and the Republic of Korea also exercise strict control over imports of fresh fruits, vegetables and flowers to prevent entry of exotic plant pests and diseases. Imports of such products are prohibited unless prior approval is obtained or a specific treatment given to the produce before export. Australia for example, requires glyphosate devitalisation of flower shipments before entry into the country. [⑩] Zimbabwe exports fresh cut flowers and flower buds, citrus fruit, fresh or dried and vegetables, fresh or chilled. Currently, Zimbabwe is ranked second largest in Africa behind Kenya on cut flowers export of the total value of horticulture exports.
Zimbabwe like her Southern African counterparts is affected by pesticide and Maximum Residue Levels (MRL), hygiene conditions, food and feed controls and general food measures. These measures are implemented by the Food and Veterinary Office through on-site inspections and monitoring activities to ensure exports are in compliance with the EU regulations. For Zimbabwe, this means that local laboratories have to analyse the residues, to ensure that tolerance levels are met. Medicine Masiiwa notes that the MRLs applied in the EU are generally stricter than internationally agreed standards (for example Codex Alimentarius MRL). [11] This is allowed under the World Trade Organisation (WTO) if the EU is able to produce its own risk assessment report and justify deviations from international standards when it notifies the WTO. The EU’s applied Hazard Analysis Critical Control Point (HACCP) system prescribes a logical series of steps to identify throughout the production chain points where control is critical for food safety. Companies are obliged to keep records of safety checks carried out under HACCP for surveillance cases. Zimbabwean exporters mostly fail to meet these requirements because of supply side constraints such as poor infrastructure for example roads, ports, railways and storage facilities. There are also long delays at borders and ports. Road tolls and levies are considered very high by exporters. Air cargo is not a viable option because there are inadequate air links. Freight monopolies and cartels exacerbate the situation by charging very high prices. Most farmers in Zimbabwe do not have access to information on markets. They are not connected to the internet, not only because of lack of national connectivity but also the problem of realizing the importance of information technology. Information gets to these agricultural producers and exporters in an unstructured but ad hoc manner.[12]
China is going through rapid industrialization period, featuring fast technological advancement and industrial upgrading. While its competitiveness in such traditionally strong areas as textiles, light industry and home appliances is improving, its competitive edge in some high-tech sectors as information and telecommunications is sharpening. The constant expansion of the production capacity has laid a solid foundation for the sustained fast growth of export. Zimbabwe is going through transformation which requires technology which is up to speed with international standards and development. China becomes therefore an ideal partner in its technological advancements.
Zimbabwe’s Investments and Trade Requirements
Zimbabwe requires Chinese investment and trade for several reasons. These include colonial legacy, social equity, structural adjustments and land reform issues. Zimbabwe was a British colony since the 19th century with the occupation by the British South African Company. Colonialism left legacies of dependency to the former colonizer; a rigid economy based on exports of raw materials and poor infrastructural development. The black majority rule which came into existence in 1980 hoped to address these flaws but the International Monetary Fund’s structural adjustment reforms meant that the Government of Zimbabwe had to roll back its frontiers as the economy became market driven. This did not improve social equity but the system promoted inequalities which worsened the gap between the rich and the poor. Some companies which had helped to employ locals were forced to close shop and some downsized leading to forced retrenchments. Now the unemployment rate in Zimbabwe is above 80 percent. The implementation of the Fast Track Land Reform since year 2000 became the final nail on erosion of economic development in Zimbabwe because of the reactionary policies which ensued both internally and externally. Zimbabwe pulled out of the Commonwealth and she was placed on targeted sanctions by USA and European states. The net effect of all this was to make Zimbabwe a less attractive destination for investors because of the political instability which was created. However, raises of hope were created by investors since the implementation of the Government of National Unity in February 2009. National policies since then have been focusing on creating a conducive climate to attract investors and hence several investor conferences have been held in Zimbabwe since 2009. During these conferences some investors saw the Unity Government as a positive development since it showed unity of purpose. Some investors still think that a lot more is to be done to democratize the country on issues such as media reform, issues around legislative reform, and many others.
Zimbabwe’s economic development is setback by dilapidated infrastructure. Domestic power generation, which currently stands at around 1200 MW, against a national demand of 2200 MW and installed capacity of 1960 MW, remains a major constraint to the operations of all sectors of the economy.[13] In 2000, China supplied equipment for the utilization of solar energy. Under the new agreement of co-operation in the energy sector, in November 2004, Zimbabwe Electricity Supply Authority (ZESA) received equipment mostly transformers worth 110million US dollars. Zimbabwe is dependent on imports for almost 35% of its domestic consumption of electricity at a monthly cost of at least US$40 million. During an official visit in November 2004, ZESA Holdings Limited signed a co-operation agreement with the Chinese company -National Aero-Technology Import and Export Corporation (CATIC) for more equipment worth a total of US$2.4billion. Under this agreement contracts were concluded for the development of power plants and the installation of generators worth US$368 million. The agreement also provides for the expansion of the power plant in Hwange with two new production units of 300 MW each. This agreement does also contain provisions on financial supports for developing the domestic capacity to manufacture transmission and distribution equipment worth respectively 40 million and 143 million US dollars. Finally, co-operation on a rural electrification project has been agreed in principle. [14] Zimbabwe is too dependent on electricity imports from Mozambique and South Africa, and therefore improving local production will enhance predictability of energy supply and this should help boost the industrial production capacity. This can also improve revenue generation by ZESA that can be reinvested in rehabilitation and maintenance of infrastructure.
80 percent of the 88,100 road network in Zimbabwe is in need of rehabilitation. Most of Zimbabwe’s roads in both the urban and rural areas are in poor state as a result of inadequate resources and dysfunctional road maintenance equipment. The rail infrastructure has declined in service levels from a design capacity of 18 million tons per year to around 5.3 million in 2011. There is lack of working capital for refurbishment of wagons and locomotive equipment. In 2001, Air Zimbabwe reached an agreement with the Chinese company (CATIC) for the acquisition of a long haul plane MA60. This plane was to be used on the new route. Air Zimbabwe is flying to China and Singapore. This is meant to enhance trade and tourism between the two countries. What is however important is to ensure that Zimbabwe purchases planes which are durable and in sync with latest technologies which attracts passengers, given international competition in this sector.
In construction, a number of Chinese are investing in Zimbabwe. Chinese investors have opened tile and brick factories in this country. Sino Cement is also operating a cement plant in Gweru. Zimbabwe is importing construction equipment such as graders, bulldozers, tipping trucks and machinery for road tarring from China. These imports were normally pre-dominated by American and European companies. What is important for Zimbabwe is to ensure that the equipment has reliable back up services and is suitable to its terrain and harsh climatic conditions.
Certainly investment in mining is required in order for this sector to contribute meaningfully to economic development in Zimbabwe. In 2009, Banc ABC reported that out of 100 registered mines, only three were working at full capacity and these are Zimplats, Mimosa and Murowa Diamonds. 60% of all mineral rights in Zimbabwe are held by indigenous people. What is required is for the Chinese investors to partner with the state and indigenous people to enable exploration and development of minerals. Zimbabwe still requires mineral beneficiation and this requires special skills and infrastructure. Chinese investments in the mineral beneficiation will be required given their vast years of experience in this field. Chinese investors have shown interest in Zimbabwe’s iron, steel, chrome, diamonds and platinum. China and Zimbabwe have signed several cooperation and trade agreements concerning this sector. Zimbabwe signed a joint venture with China North Industries Corporation (Norinco). Anjin, a Chinese company is investing in diamond mining in Marange. These investments will indeed benefit China which requires these raw materials to support its own growth. Besides, China and India are the two single largest jewellery markets for gold and platinum. What is important is that investors in mining should take up social responsibility projects. Anjin has constructed houses for families relocated from the diamond field. These families were allocated agricultural plots to enable them to have sustainable livelihoods. Anjin has also employed over 800 people in its initial mining investment stage. Zimbabwe’s challenge is that these investment contracts should ensure that meaningful royalties and taxes are paid to the Government of Zimbabwe in order to realize sustainable development.
Agriculture contributes about 15% of the country’s Gross Domestic Product. In 2010, 33.9% growth in agriculture was driven by maize, 34%; tobacco, 110%; sugar 35% and cotton, 23%. [15] Zimbabwe is exporting tobacco, citrus, cotton to China. It is exporting 2.77 million kilograms of citrus valued at US$970 418 to China. In the 2009/10 season, about 65 000 hectares were put under tobacco. 123.5 million kilograms were sold at an average price of US$2.88. A total of US$98.6 million were obtained from the sale of cotton lint; US$2 million from raw cotton and US$6 million from cotton seeds. Zimbabwe has a lot of potential to produce more agricultural products. Its production capacity was affected by the implementation of the Fast Track Land Reform Policy which resulted in sanctions which led to de-investment by some companies in the agricultural sector. Investment is required in the agricultural sector in cropping and infrastructural development. In 2001, it was reported that the Ambassador of China, Hou Qingru donated to Zimbabwe on behalf of his government agricultural equipment worth US$241,000 in order to show support for the land reform program. Subsequently, the Chinese government made available several credit lines in further support of the land reform program. The donations were dedicated to the purchase of Chinese agricultural equipment or food imports from China, such as 4,500 tons of maize. A Chinese state company, the China International Water and Electric Corporation, concluded an agreement with the Zimbabwean government to cultivate 100,000 hectares of land under irrigation. Investments in Zimbabwe’s irrigation system are much needed since the bulk of cropping relies on rain fed agriculture. With the drying and frosting effects of climate change being experienced in Zimbabwe, it is important that China invests in the country’s irrigation.
 Conclusion
It can be concluded that Zimbabwe-China investment and trade relations should be strengthened given that China is the second largest economy in the world and it is geared to overtake USA at least by 2020. China has forex reserves which can bail out Zimbabwe’s investment and trade requirements. China is a favorable destination for Zimbabwe’s products since it has a culture of negotiation which is deeply rooted in its Confucius and Taoism doctrines. China is bailing out Europe, USA and the International Monetary Fund from the financial crisis and cannot afford to be ignored. Fortunately for Zimbabwe, she has always had good relations with China, more prominently since the liberation struggle. Zimbabwe’s Look East Policy should therefore benefit Zimbabwe’s investment and trade requirements.

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