Evidence of China’s involvement with Africa dates as early as in Free Essay Example

Evidence of China’s involvement with Africa dates as early as in 1980 where it started to strengthen its agricultural co-operation with Africa in trade and other commercial activities. It has also increased its agricultural investment in Africa. With China’s rapid economic rise, the global economic downturn and its uncertain recovery, and the challenge of climate change, China’s agricultural investment in Africa has developed against a backdrop of closer economic ties with the continent. Although agricultural growth has increased in Africa in recent years, food security remains a severe challenge.

International organisations and programmes, such as the UN millennium development goals, have called for greater investment in Africa to reduce poverty and eradicate hunger. Despite international and local concerns, China’s investment in Africa in infrastructure and agricultural technology and training could facilitate agricultural growth in Africa. China itself has demonstrated sustainable growth in agriculture, improvement in the livelihood of small-scale farmers, and success in reducing rural poverty. The paper analyses the driving factors behind China’s agricultural investment in Africa particularly, Zimbabwe, from the perspectives of economic development and market factors, and concerns about food security.

It considers the implications of China’s experiences in terms of institutions, productivity and technology. Finally, the paper addresses the issues of the Green Revolution’ and green technology’ in the context of China’s agricultural investment in Africa and suggests policy recommendations for further studies.Literature ReviewSince the end of the Cold War, China has been strengthening strategic partnerships with developing countries around the globe. It is however, China’s invigorated engagement with African countries that attracted profound interest among scholars, analysts and critics the world over.

Although much scholarly interest is on the geo-political and economic implications resulting from the increased Chinese presence on the continent, China’s involvement in Africa via financial aid, FDI, trade policy and trade flows instigates controversial debate within academic literature. The main question that remains is whether if China’s economic involvement fosters development in Africa or is another form of exploitation of Africa’s natural resources so as to sustain China’s growth. Based on plethora of literature available, for instance, Botha (2006) noted that China’s interests in Africa are driven by three main motives, namely,Africa is seen as a potential market for Chinese manufactured products, China’s rising demand for oil and Africa’s richness in natural resources and raw materials. In the same vein, Van der Wath (2004) asserted that market potential and raw materials are most important consideration of China’s engagement in Africa. Berthelemy’s (2011) findings also contend that the center of Chinese financial involvement in Africa is either in countries that represent strategic interests for the Chinese economy due to their oil and mineral resources, for instance, Zimbabwe, Angola, Zambia, Congo and Sudan or in countries with which it has good political relations, for instance, Tanzania, Egypt, Mali and Ethiopia.MethodologyThe information in this paper was collected from both primary sources and secondary sources. The primary sources of data were government’s official documents and statistics concerning agriculture from both countries, whilst secondary data were internet sources, journals, books and newspapers. This research methodology in both data collection and analysis also involved taking account of routine public statements by various government officials and other stakeholders about the nature of the relationship in terms of agriculture between the two countries. Thus, the research makes a collection of various media reports released by different media outlets including newspaper articles, electronic media reports and government gazettes. From these sources, official statements from both Zimbabwean and Chinese government authorities on the relations between the two countries are extracted. This paper also made use of the extensive existing literature on China-Africa relations, including books, book chapters and journal articles, reports of investigative panels and groups working on China Africa relations.Chinese investments in Zimbabwe Zimbabwe is the 83rd largest export economy in the world. In 2016, Zimbabwe exported $2.83B and imported $5.2B, resulting in a negative trade balance of $2.37B. In 2016 the GDP of Zimbabwe was $16.3B and its GDP per capita was $2.01k.The top exports of Zimbabwe are Raw Tobacco ($887M), Gold($850M), Nickel Ore ($293M), Ferroalloys ($119M) and Diamonds($118M), using the 1992 revision of the HS (Harmonized System) classification. Its top imports are Refined Petroleum ($1.3B), Corn ($296M), Electricity ($166M), Packaged Medicaments($160M) and Soybean Oil ($124M).The top export destinations of Zimbabwe are South Africa($2.25B), Mozambique ($267M), the United Arab Emirates($116M), Zambia ($72.2M) and Belgium ($45.7M). The top import origins are South Africa ($2B), China ($387M), India($116M), Mexico ($59.3M) and Botswana ($50.6M). Due to political instability, corruption and poor governance Zimbabwe has been in deep economic turmoil for a long time now with years and years of hyperinflation and this condition has led the western world to avoid markets in Africa, particularly in Zimbabwe but China has taken lead and invested in this risky market. China has capitalized on that by investing in the nation’s solar, coal and farming industries just to mention but a few. Chinese investments in Zimbabwe have grown significantly ever since the adoption of the Look East policy by Zimbabwe in 2003. However, year breakdowns of the total amount of China’s foreign direct investment in Zimbabwe are difficult to note as some of the investments are made state to state and kept secret. Additionally, it is also difficult to separate aid from investments, as the former can also appear to be an investment. Nevertheless, it should be noted that Chinese investments are spread across various economic sectors with mining accounts for the most of the investments. An analysis of Chinese investments in each and every sector will be discussed below.Mining SectorZimbabwe possesses vast mineral resources such as gold, platinum, copper, coal and diamonds and has a long successful history of mining which can be traced way back to modern mining in 1890. Over the first hundred years of modern mining, gold and asbestos were the two valuable products, but changed with the emergence of nickel and ferrochrome as major exports and the subsequent exploitation of platinum, palladium and rhodium (Hawkins, 2009). In 1965, Zimbabwe became the seventh largest gold producing country in the world, whilst it was still under colonial rule. Given its geological setting and the sophistication of the formal sector, Zimbabwean mining industry became the largest of its type in Southern Africa, in all mining contributed 8% of the GDP in 1995 (Hollaway, 1997). Around 1996, the mineral industry in Zimbabwe was a major contributor to the world supply of chrysotile asbestos, ferrochomium and lithium minerals, gold production was the highest with an output exceeding 24 tonnes (Matsika, 2010). Zimbabwe was poised to become a major force in African mining due to its well-maintained infrastructure, competitive mineral resources, skilled workforce and professionally-managed state regulatory institutions, however, by the turn of 2000 Zimbabwe’s mining sector, just like other economic sectors, was affected by the deepening economic crisis. The mining sector encountered mineral production downturn due to disinvestments by major mining households, skills flight, power outages and lack of foreign currency to buy necessary equipment and raw materials. Due to the deepening economic crisis some mining companies closed or were placed under governments care. The crisis has made Zimbabwe to trail the rest of the world in terms of mineral exploration and development (Matsika, 2010). However, over the past years, the mining industry has contributed extremely to the Zimbabwe’s positive growth over the past years. The mining sector in Zimbabwe generates more than 30% of export earnings, and the government places a lot of emphasis on the possibility of using mineral resources to generate foreign-exchange and increase the growth rate of the economy (Chifamba, 2000). In 2010, the mining sector accounted for 65% of exports, 15 % up from 50% that was registered in 2009. According to African Development Bank (AFDB) Economic Review of January 2012, the mining sector recorded a growth rate of 25.8% with mining exports growing by 38.7% contributing half of the exports in 2011 (AFDB,2012). It is postulated that the mining sector’s recovery is largely due to Chinese investments. Since Zimbabwe’s adoption of the Look East policy, China has become one of the leading investors in Zimbabwe’s mining sector and a main consumer of several Zimbabwean resources. It is reported that the mining sector has received a majority of Chinese investments. In 2004, Zimbabwe and China signed several mining agreements, which gave Chinese experts’ exploration rights and to study Zimbabwe’s mineral resources. Mvutungayi (2012) cites that the joint venture between Zimbabwe and China North Industries Corporation (Norinco) is of particular importance, as Norinco granted a reprieve to Hwange Colliery Company after it had accrued US$ 6.3 million debts. In 2003, Shanghai Baosteel Group, China’s largest producer of steel and steel products, ranked 5th in the world by output in 2006 signaled to invest US$ 300 million in the metals mining industry of Zimbabwe (Edinger and Burke, 2008, p. 12). In September 2007, state-owned Sinosteel Corporation acquired a 50% stake in, Zimasco Consolidated Enterprises Ltd largest chrome producer in Zimbabwe (Edinger and Burke, 2008). The Mineral and Marketing Corporation of Zimbabwe (MMCZ) signed an agreement with Chinese Nickel Company, Jinchuan Nickel Mining Company in 2008, Mvutungayi (2012) notes that the deal required Zimbabwe to sell these minerals to China. This deal, however, depicts an exploitative situation where Zimbabwe has to conform to Chinese mineral prices. Investment trends in 2009 and 2010 highlight Chinese appetite for local mineral resources, in terms of the size of mining investment approved by Zimbabwe Investment Authority China is fourth after British Virgin Islands, Mauritius and South Africa (Shelton and Kabemba, 2012). In the first five months of 2013, China has contributed much to Zimbabwe’s mining investments with a total of US$16 million, while South Africa and Mauritius injected US$ 11 million and US$ 7 million, respectively. Agricultural Sector Zimbabwe was once regarded as a breadbasket for Southern Africa. However with the deepening economic crisis, land reform, poor rains and shortage of farm inputs the sector has recorded low productivity. Mvutungayi (2012) notes that China has shown support of Zimbabwe’s land reform program as it donated US$241 worth of agricultural equipment to Zimbabwe in 2001 and continued providing continuous crisis credit lines to the sector during the deepening crisis. Andersen (2008) notes that in 2004 China won a contract to farm 1,000 square kilometres of land seized from the white commercial farmers. In 2007 China brought farm machinery worth around US$ 25 million to Zimbabwe as a part of its US$58 million it is reported that in return Zimbabwe pledged and delivered tob