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June 7, 2015

China-Africa in the news: Zimbabwe-China trade, railways in Tanzania, Transnet trains, South Africa’s clothes manufacturers

TAZARA Railway crossing a bridge near the Zambian-Zimbabwean border. The Chinese-built TAZARA railway connects Zambia to Tanzania's ports. Photo: Wikimedia Commons

TAZARA Railway crossing a bridge near the Zambian-Zimbabwean border. The Chinese-built TAZARA railway connects Zambia to Tanzania's ports. Photo: Wikimedia Commons

The relationship between Zimbabwe and China is often held up as a model of the wider China-Africa relations, according to a paper written by Zhang Chun and published by the South African Institute for International Affairs. This is because of its economic and resources elements, as well as China’s willingness to shore up a pariah regime. As Zimbabwe's diplomatic and trade ties with the West became more and more strained, it adopted a 'Look East' policy in 2003, and "prioritised its relationships with countries such as, China, Singapore, Iran, Indonesia, India and Malaysia, broadening the scope of its foreign policy."

China is now Zimbabwe's third largest trading partner after South Africa and the European Union. Zimbabwe actually exports more to China than it imports. Its main imports are cash crops - tobacco especially - and minerals. In 2013, Zimbabwe was also the largest recipient of Chinese foreign direct investment in Africa. In addition, it also receives a modest amount of development assistance from China.

Latest trade figures show that trade between Zimbabwe and China dropped in the first quarter of this year compared to the corresponding period last year. Bilateral trade was $360 million, 43% less than the figures registered last year. It is still tilted towards Zimbabwe, however: exports to China were worth $274 million - registering a decline of 51.4% - while imports from China increased by 36.7% to $85 million. No explanation is given for the fall in exports, but a recent report blamed Zimbabwe's growing trade deficit this year on a fall in mineral exports.

Chinese companies to construct Tanzania's new railway lines. The East African country awarded contracts worth about $9 billion to a Chinese consortium and another Chinese company to work on two railway lines. The region is currently upgrading or building new infrastructure to facilitate the exploitation of recently discovered natural resources (oil and gas), and to keep up with the demands of economic growth. Chinese companies are also building a port and natural gas pipeline in Tanzania.

World Bank and Chinese company to build houses. The World Bank's International Finance Corporation is financing the construction of 30,000 cheap but "high quality" homes in Kenya, Rwanda and Nigeria over the next five years.  China's CITIC Construction Co. Ltd will construct the houses. The project will cost $300 million.

HNA group gets a slice of Comair for half the price of a jet. China's HNA Group bought a 6.2% stake in South Africa's Comair for $13 million, which is "less than half the cost of a narrowbody jet," according to CAPA - Centre for Aviation. It is an unusual acquisition, since the two airlines do not fly to any common destination. HNA had unsuccessfully considered buying a stake in South Africa's national carrier, South African Airways. CAPA says "Africa is a new theme for Chinese aviation, with growing air routes, airport infrastructure projects and placement of Chinese aircraft to African airlines and governments".

South Africa to buy trains with Chinese loan. Transnet, South Africa's state-owned logistics and freight firm, borrowed $2 billion from the China Development Bank to buy new trains.

"Made in South Africa" pushes back. CNN Marketplace Africa profiles South African clothes and shoe manufacturers regaining market share from cheap Chinese imports. Only 25% of the apparel sold in major South African stores is made in South Africa, but government backing and support from large apparel retailers is changing that.

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