Absence of Chinese Banks Affects 'Look East Policy'

President Robert Mugabe of Zimbabwe with People's Republic of China Senior Military Commission Cheif Air Marshal Xu during a visit to Harare. The two countries have close ties going back decades., a photo by Pan-African News Wire File Photos on Flickr.

Absence of Chinese banks affects ‘Look East policy’

Saturday, 07 July 2012 18:53
Africa Moyo

The absence of Chinese banks to financially support local people willing to trade with the Asian giant has compromised the amount of business that could have been generated from the “Look East policy”, Ambassador Christopher Mutsvangwa has said.

Addressing the Zimbabwe-China Trade Fair (ZCTF) in Harare last week, Ambassador Mutsvangwa said Zimbabwe was probably the first African country to establish trade relations with the economic superpower, but not much has been realised due to the absence of Chinese banks to fund entrepreneurs.

He also said the business sector has not partnered Government in ensuring the idea to trade with China was successful.

“We started the Look East policy, but we have not generated as much business as we thought we could because we don’t have Chinese banks to support local entrepreneurs willing to trade between Zimbabwe and China.

“The other problem is that we have a business class that is not supportive of the move taken by Government. South Africa started trading with China way after us, but they have creamed off more benefits than us because that country’s business class has embraced the initiative.

“It is unlike in Zimbabwe where the business sector appears to be more British than the British themselves,” he said.

Ambassador Mutsvangwa added that the Reserve Bank of Zimbabwe is also partly to blame as it has failed to allow Chinese banks to open branches here.

He said if those banks had established branches in Zimbabwe, Chinese investors would have stampeded for opportunities in the country because funds would have been readily available to support them, boosting trade between the two countries in the process.

“I have a lot of misgivings over how the local central bank handled meetings that could have brought Chinese banks here. It appears to me as if they didn’t see value in having Chinese banks in Zimbabwe, and it is very sad.

“China has about $3 trillion reserves, and we could have been tapping on some of those funds to boost our industries and trade with China. Finance oils trade; that is why there has been no economic growth in Zimbabwe since 2009 (because of cash shortages),” explained Ambassador Mutsvangwa.

He called on the country to immediately consider a currency swap with China, and/or include the yuan in the basket of multiple currencies being used in Zimbabwe.

“My argument is that since there are not many Zimbabweans buying in Europe or the United States, why don’t we get into a currency swap with the Chinese or include the yuan in our basket of currencies?

“Around 2006, the Chinese wanted a currency swap with us where the two trading countries would agree to use their different currencies, but there were no takers. China has already done a currency swap with Japan and South Korea, and trade among those countries is growing.

“It is disappointing to note that the yuan is not part of our cross-currency. The yuan needs to be included in the multiple currency basket because it will become the world currency in the next two years,” he noted.

He said the Reserve Bank of Zimbabwe did not consider a currency swap with China, or including the yuan in the multiple currencies basket, because it is “used to gimmickry and not reality”.

“When you are more into gimmickry than reality, you end up having your currency disappearing”.

He slammed some local businesspeople who foolishly think that profit is not profit if it is not in pound sterling, the euro or the US dollar.