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Cablegate: Chinese Engagement in Zimbabwe

VZCZCXRO2329
RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHSB #0118 0431150
ZNR UUUUU ZZH
R 121149Z FEB 10
FM AMEMBASSY HARARE
TO RUEHC/SECSTATE WASHDC 0052
INFO SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RUEHBJ/AMEMBASSY BEIJING 0001

UNCLAS HARARE 000118

SENSITIVE
SIPDIS
AF/S FOR B. WALCH

E.O. 12958: N/A
TAGS: ECON PREL EAID CN ZI
SUBJECT: CHINESE ENGAGEMENT IN ZIMBABWE

REF: 10 STATE 10152

1. (U) Although statistics are not readily available, anecdotal
evidence shows increasing Chinese involvement in Zimbabwe's
economy. The trend became pronounced with the Government of
Zimbabwe's (GOZ) "Look East Policy" in 2003, through which it
sought to emphasize new ties with China in place of traditional
links to Europe and North America. Chinese enterprises are
noticeably active in the retail and construction sectors. One
local press report suggests that 80 percent of Chinese-owned
enterprises are in the retail sector. But Chinese construction
projects receive far more public attention - often negative. For
example, an eight-year-old plan involving Chinese contractors to
widen the highway between Harare and Bulawayo collapsed after only
20 kilometers of construction amid allegations of poor workmanship
and corruption.

2. (U) There has been significant Chinese investment in industrial
enterprises. In 2007 Sinosteel Corporation bought Zimasco
Consolidated Enterprises Limited, Zimbabwe's largest ferrochrome
producer. Zimasco suspended production in 2009. In 2004 the China
Building Material Industrial Corporation entered into a joint
venture with the Industrial Development Corporation of Zimbabwe to
establish the Sino-Zimbabwe Cement plant in Midlands Province.
Chinese firms also provided agricultural equipment worth millions
of dollars under the Reserve Bank of Zimbabwe's farm mechanization
program in order to show support for the GOZ's land reform program.
In 2009, Zimbabwean officials announced a multi-billion dollar
Chinese investment in platinum mining, but there is no evidence of
actual investment on this scale.

3. (U) The GOZ's severe fiscal constraints have put limits on
Chinese engagement. The GOZ is in arrears on its US$400 million in
official debt to China, and this has blocked access to lines of
credit reportedly worth as much as US$950 million. According to
GOZ figures, as of March 2009 Zimbabwe owed US$37.2 million to
China in unpaid principal and interest.

4. (SBU) There are no concrete examples of U.S.-China collaboration
in Zimbabwe. Ambassador Ray met with the Chinese ambassador who
indicated his desire to maintain a dialogue with the U.S. and other
Western countries. The principal aims of U.S. policy in Zimbabwe
are a return to democratic governance, restoration of the rule of
law, and protection of human rights. While China has remained
silent on these subjects, it has moved from sole support of ZANU-PF
to a more balanced approach and now has relationships with both
ZANU-PF and MDC-T. The Chinese embassy recently sponsored a golf
tournament in honor of Prime Minister Tsvangirai. While China
may share an interest with the U.S. in restoring Zimbabwe's
investment climate, progress in this area ultimately depends on
governance reforms.
RAY

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