China, Russia relations on a rise

Prime Minister Dmitry Medvedev’s visit to Beijing in the framework of Russia-China intergovernmental meetings was striking evidence of a major improvement in bilateral relations. The challenge of matching the high level of mutual political trust with the real state of Russian-Chinese trade and economic ties is being met and at a fairly rapid pace.

This is clear enough from the practical results of this visit. Following the talks with Premier of the Chinese State Council Li Keqiang, the sides signed over 10 agreements, including a plan for developing agriculture in Russia’s Far East and the Baikal Region and China’s North-West and a memorandum of understanding between Russia’s Ministry of Economic Development and China’s Ministry of Commerce on trade in services.  The Federal Customs Service and the General Administration of Customs of China agreed to upgrade customs clearance procedures and oversight of international e-commerce. The two countries are completing their final agreements on the cooperative project to build the AHL heavy helicopter and will sign a relevant general contract in the near future.

It is gratifying that the marked decline in trade in the past few years has been replaced by solid growth. It may exceed $110 billion before this year expires and the sides are likely to bring their trade to $200 billion in the foreseeable future. It was clear that Dmitry Medvedev was intent on resolving outstanding issues during his visit rather than leaving them for later. Russian companies are keenly interested in gaining access to the Chinese agricultural market, for example, but a number of restrictions prevented them from doing so. This time, however, the governments of both countries managed to agree on lifting several remaining restrictions and now domestic producers will be able to supply China with poultry and dairy products. Officials of the Russian Ministry of Agriculture said Russia may supply their first consignments before the end of this year.

Another sore spot, China’s investment in the Russian economy, is also being resolved but not without effort. For the most part, the Chinese are interested in the oil and gas sector. According to Premier Li Keqiang, Chinese companies are weighing their participation in projects for the production, deep processing and transportation of fuel. They are also interested in developing innovation cooperation with Russian companies, in particular, creating a research and innovation fund to support science and technology cooperation and joint projects.

Importantly, Russia-China cooperation is making such headway despite the external pressure and attempts to destroy the international trade system. Dmitry Medvedev and his Chinese counterpart announced their intention to promote global trade and exchange of investment. They noted that protectionism and unilateral approaches undermine the multilateral trade system based on the WTO, hurting the interests of specific states, including Russia and China – countries that are always ready to facilitate trade and investment and support regional economic integration.

Under the circumstances, Moscow and Beijing have to look for such cooperation mechanisms that will offset this negative influence on their economies.

The word “sanctions” was not used when the United States unleashed a trade war against China earlier this year. However, its actions amount to the same. This is why China is beginning to understand much better Russia’s logic in countering US sanctions and the need to meaningfully bolster Russia-China efforts to resist sanctions pressure and illegal trade restrictions on our countries, which are becoming increasingly systematic and long-term.

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[Opinion] Differences and similarities between South Africa and Zimbabwe

 

The land debate has created a new fear of economic collapse and ruin and all we hear about these days is how South Africa is on its way to becoming the ‘next Zimbabwe’; an inflationary crisis-prone country, with food and fuel shortages, power outages and not to mentions western sanctions.

While there are similarities, like the struggle for freedom from minority rule, a highly unequal society and the on-going land debate, it’s the differences that prevent South Africa from becoming a Zimbabwe-like country.

The difference of having the late Tata Nelson Mandela as the first democratically-elected President, who in his single term in office put reconciliation and peace for all South Africans at the forefront. While former Zimbabwean President Robert Mugabe, who had good intentions but was corrupted by power, couldn’t truly deliver democracy for his people.

However, Patrick Bond, a Professor of Political Economy who combines political economy and political ecology at the Wits School of Governance believes that in February 2000, Mugabe’s regime was seen as “hopelessly corrupt and repressive” after 20 years in power.

Says Bond: “His constitutional amendment proposal was rejected by the people, after a strong lobby from civil society – the National Constitutional Assembly – and the newly formed opposition party, the Movement for Democratic Change. That meant Mugabe amplified the talk-left, walk-right politics of populism, and authorised land invasions, because he worried he’d lose power to the MDC in the June 2000 parliamentary elections.”

South Africa today is a totally different position than Zimbabwe was when it initiated its land policy. SA makes out part of international bodies that we have to comply with, like the International Criminal Court (ICC), a non-permanent member of the UN Security Council, as well as the United Nations Human Rights Council.

South Africa internally still has many checks and balances that the government and ruling party must adhere to. The Constitution remains an important part of the debate; no political party in South Africa has yet spoken about land reform without mentioning the constitution, which means it still at the centre of the South African democracy.

South Africa also has a large assortment of institutions, being civil, financial or academic, who has a strong interest in land expropriation without compensation, like Agri-Forum and the Land bank.

There is the belief that the South African government is very centered in its approach to land reform, with President Cyril Ramaphosa affirming that he won’t allow land expropriation without compensation effect food security and economic stability.

President Ramaphosa, in his parliamentary question and answer session on Wednesday told members of parliament that his goal is to find a balance between those without land and those who own the land.

Perhaps South Africa has the added benefit of viewing how Zimbabwe handled its land policy, its shortcomings and the major problems it created by doing things the wrong way.

But according to Bond, South Africa is yet to reach the stage of “ruling party delegimitisation and civil society counter-power”. He adds: “So Ramaphosa is not really desperate to deal with a genuine leftwing challenge the way Mugabe had to, with his populist ‘jambanja’ (chaotic) land reform. But he is dealing with left-populist challenges to his rule within the ANC and also from the EFF. The crucial ingredients that allow him the space to talk-left, walk-right on land reform in South Africa are a weak, divided and atomised civil society, and the lack of a strong opposition party capable of winning power. Maybe those ingredients will change, however.”

Not only is South Africa approaching the land reform matter the right way, it is being handled responsibly too, through open dialogue, and with the consideration of the economic impact it may have – whether negative or positive for South African citizens.

On the other hand, Bond believes that South Africa is yet to reach the stage of “ruling party delegimitisation and civil society counter-power”. He adds: “Ramaphosa is not really desperate to deal with a genuine leftwing challenge the way Mugabe had to, with his populist ‘jambanja’ (chaotic) land reform. But he is dealing with left-populist challenges to his rule within the ANC and also from the EFF. The crucial ingredients that allow him the space to talk-left, walk-right on land reform in South Africa are a weak, divided and atomised civil society, and the lack of a strong opposition party capable of winning power. Maybe those ingredients will change, however.”

 

By Mokgethi Mtezuka’

[OPINION] BRICS could become the premier platform for South-South cooperation

Image: iStock

During the 2018 BRICS Summit, one thing that was made clear was the BRICS bloc’s commitment to multilateralism. From the BRICS Business Forum, to the Heads of State meeting ending with the Africa outreach and the BRICS Plus meeting.

Multilateralism and the enabling of a multipolar world, were two of the key words throughout the Summit. BRICS on its journey to achieving this, has many challenges it will have to face up to, from balancing individual and collective interests, to the realising of its own capacity and strengths.

The USA’s steel tariff policy can be seen as one of the many reasons why there is a strong need for BRICS in the first place, founded on the pragmatic approach on how to deal with each other and the world. The US clinging onto protectionism and the unipolar world of the past, can be quite damaging to global trade and can result in unforeseen circumstances of allies conflicting.  

Each BRICS state has its own reason for continuing with this project for 10 years now, but if the benefits didn’t outweigh the drawbacks, I don’t think any member state would have lasted this long. In fact, the BRICS bloc is moving forward and intertwining even further, going beyond just economics and trade but with the merging of civil societies, health, agriculture, technology, education sports, culture and media.

As the tables turn, the global south and BRICS now looks like the new leaders spearheading the inclusive agenda and promoting free trade, as the tradition powers slowly lose relevance and credibility. The BRICS Africa outreach further demonstrates the seriousness to which the BRICS bloc is taking multilateralism, as a thriving Africa can only help in growing global trade and give new voices to a multipolar world.

 

By Mokgethi Mtezuka

 

[OPINION]: China’s building BRICS in South Africa

Engulfed in the euphoria of securing additional investment from South Africa’s biggest trading partner, a buoyant South Africa President, Cyril Ramaphosa opened the 10th BRICS Summit alongside Chinese President Xi Jinping. Jinping subsequently announced China’s commitment to $14.7-billion in investments in South Africa, with a key emphasis on sectors such as oceans and green economy, energy, science and technology, agriculture, environment and finance.

Since the announcement, emphasis has shifted from the broader BRICS Summit, to analysis and concern about China’s role in Africa, and whether we are witnessing a renewed scramble for Africa, with the recent announcement being termed a “neo-colonial project”.

This criticism frames China within a historical context, based on Africa’s turbulent history with the West, and removes the idea that African states have to chart their own way forward.

This narrative also negates the evolution of Chinese foreign policy over the last decade, especially under the leadership of President Xi Jinping, and overlooks the evidence that China is engaging with the world in a more systematic way than it did before. This is partly because of the Belt and Road Initiative, and the rebuilding of connections in countries across Asia and Africa.

China’s Evolving Foreign Policy

In 2011, for the first time in its history, China released a White Paper on its foreign aid policy. The paper outlines the aid modalities that China uses to deliver developmental assistance to countries in Africa, Asia and Latin America. It further highlights that its policy is based on the principles of peaceful coexistence, the respect for the recipient countries’ right to independently select their own model of development and the belief that every country should explore a development path suitable to its actual conditions.

The 2014 White Paper reiterated these same principles, emphasizing that they the cornerstone of its foreign aid policy. The second paper further emphasises that “mutual respect, equality, keeping promises, mutual benefits and win-win” is what officially drives their aid policy.

Faced with the global challenges of reform and innovation, the aid policy acknowledges that “China adapts its foreign aid to the development of both domestic and international situations” and continuously adjusts and reforms its aid allocation and delivery mechanisms to improve efficacy.

The paper further asserts that unlike other international donors, China does not have elaborate “country plans” for its partner countries. Instead, after consulting with their  respective counterparts, Chinese embassies convey to Beijing the actual needs of its partner countries and how best China can provide support in particular sectors . Thus, it can be inferred from the policy document that China’s foreign aid is demand-driven.

This is in line with President Ramaphosa’s investment drive, where he articulated that his government would engage in an aggressive investment drive in both the West and the East. Prior to the announcement, diplomats from both countries engaged extensively to iron out the modalities of the $14.7-billion in investments, which includes a considerable portion being earmarked for state-owned enterprises.

It is important to emphasize that China views development financing differently than traditional aid-providers. For them, aid, trade, and investment are seen as interconnected within a mutually-beneficial framework. It is therefore poignant to not only focus on aid exclusively and separately from other modes of development financing. It is essentially an “aid-business-trade model” that combines all three into one.

As such, it would be incorrect to measure, monitor and evaluate China’s aid objectives using the same set of definitions, standards and parameters established by traditional aid donors. It would be more prudent to evaluate whether China adheres to its avowed principles of international development cooperation, comprising of features such as mutual respect, non-conditionality, equality, building local capacity and addressing the actual needs of partner countries.

No scramble. Just mutually beneficial partnerships

Africans are not passive participants in a “neo-colonial project” in relation to China. Instead, they are active economic agents who play strategic roles in the geo-political landscape. This was elucidated in the statements made by South Africa’s Minister of Trade and Industry Dr. Rob Davies, who addressed the opening of the 10th BRICS Summit in the presence of Chinese President Xi Jinping. He stated emphatically that South Africa’s trade imbalance with China was unsustainable, specifically referring to South Africa exporting raw natural resources to China.

Those who continue to frame China’s investment and trade within Africa as one of exploitation, would see Rob Davies’ statements as both audacious and confrontational. However, China understands that its engagement with South Africa and the rest of the developing world, as stated in its foreign-aid policy white paper, has to be mutually-beneficial, and for the benefit of the partner country, in this case South Africa.

This does not mean that there are not isolated instances where Chinese aid/investment/trade has not reached the desired outcome, for both China and the partner country. However, this also does not mean its aid/ investment/ trade has a sinister agenda.  As stated in their own foreign aid policy white paper, they do not have elaborate “country plans” for its recipient countries, and instead its often demand-driven.

Some have argued that these white papers are in direct contrast to the Belt and Road Initiative, which has guided China’s foreign policy in recent years. In some instances it is true, however, within the context of South Africa, and the recent announcement by President Xi Jinping of $14.7-billion in investments, it is not.

Greater analysis needs to be given to China’s “aid-business-trade model”, which operates in a different paradigm than the traditional developmental aid organisations. This would negate measuring, monitoring and evaluating China’s aid objectives using the same set of definitions, standards and parameters established by traditional developmental aid donors.

Senior Researcher, Fazlin Fransman
Moja Research Institute

[VIEWPOINT] Mugabe and His Country: A Chinese Perspective

By Liu Yunyun (Assistant Executive Editor of Beijing Review)

It came as a big surprise to China that the long-time leader of Zimbabwe and an old friend of China’s had been confined and forced to resign in a “military coup,” despite the fact that many had long questioned whether the nation’s revolutionary leader could effectively lead the poverty-stricken nation to industrialisation and modernisation.

Though his resignation is deemed celebratory by many – some of his people and the so-called media elites from the West – his achievements and failures are part of the nation’s history and legacy which will remain true and significant in understanding this Southern African nation.

Mugabe visited China several times in the hope of finding support for his government and also the Chinese “secret” to success. But unfortunately, as our great reformer Deng Xiaoping had said to his entourage, after his meetings with Mugabe, “He won’t listen.”

China was once in the same international and domestic position as Zimbabwe: poor, backward, and with foreign sanctions. But eventually, after many twists and turns, it found out its own path for economic and social development, which is: making policy changes in accordance with its own national condition without blindly copying others’ way of governance.

READ MORE: Zimbabwe: Domestic Rivalries, US-China Competition Underlie Political Crisis

When it became evident that the former Soviet Union socialist approach could not help Zimbabwe, Mugabe did not draw lessons from the failure of the “big brother,” but instead, continued down the road of proactive policies in various fields, including the land ownership.

Looking back on history, there are some lessons to be learnt from the rise and fall of Mugabe: reform the system when it is necessary; put aside ideological debate while focusing on development; set up a legal base for transition of power and tenure system. Nonetheless, it’s always easier said than done. It is widely expected that his successor can move the nation forward, however difficult it now seems.

Resigned or not, Mugabe has been, is now, and will always be China’s good friend, and so also his country, Zimbabwe. As China’s Foreign Ministry spokesperson said, China has always adhered to the principle of not interfering in internal affairs of other countries and respects Zimbabwean people’s choice and the choice of Mugabe too. China is committed to cooperation with Zimbabwe to improve the well-being of its people regardless of who its leader will be.

Zimbabwe: Domestic Rivalries, US-China Competition Underlie Political Crisis

By Eric Draitser

On November 14, 2017 military forces in Zimbabwe took control of the streets, sequestered President Robert Mugabe in his residence, and publicly announced that the kinda sorta but not really coup was merely a clean-up operation intended to “target criminals.” While the claim does have some merit – Zimbabwe’s government, like those of nearly all nations in Africa and the Global South, grapples with endemic corruption – it remains difficult to ignore the long and sordid history of military coups in Africa, and then avoid the tendency to view the developments in Zimbabwe through the same lens.

Indeed, most media outlets quickly branded the operation a military coup d’etat.  However, a more critical analysis reveals that this episode is decidedly different from the countless coups that have taken place in the post-colonial history of Africa. In fact, a number of Zimbabwean commentators have made precisely that claim (see here andhere).

George Shire, a London-based political analyst, and veteran of Zimbabwe’s liberation struggle, incisively noted to Al-Jazeera, “The dominance of ZANU-PF [Zimbabwe’s ruling party since liberation] on the political landscape in Zimbabwe is not in question…What you see is really a leadership contest taking place – Zimbabwean style.” This point is critical in that, typically, a coup would overthrow not only the President, but an entire ruling party in favor of a military that either assumes control itself or installs some new power structure or party. In this case, however, the military has intervened to block one faction of the ruling party from assuming power in favor of another faction.

On November 14, 2017 military forces in Zimbabwe took control of the streets, sequestered President Robert Mugabe in his residence, and publicly announced that the kinda sorta but not really coup was merely a clean-up operation intended to “target criminals.” While the claim does have some merit – Zimbabwe’s government, like those of nearly all nations in Africa and the Global South, grapples with endemic corruption – it remains difficult to ignore the long and sordid history of military coups in Africa, and then avoid the tendency to view the developments in Zimbabwe through the same lens.

Indeed, most media outlets quickly branded the operation a military coup d’etat.  However, a more critical analysis reveals that this episode is decidedly different from the countless coups that have taken place in the post-colonial history of Africa. In fact, a number of Zimbabwean commentators have made precisely that claim (see here and here).

George Shire, a London-based political analyst, and veteran of Zimbabwe’s liberation struggle, incisively noted to Al-Jazeera, “The dominance ofC [Zimbabwe’s ruling party since liberation] on the political landscape in Zimbabwe is not in question…What you see is really a leadership contest taking place – Zimbabwean style.” This point is critical in that, typically, a coup would overthrow not only the President, but an entire ruling party in favor of a military that either assumes control itself or installs some new power structure or party. In this case, however, the military has intervened to block one faction of the ruling party from assuming power in favor of another faction.

The political turmoil in Zimbabwe is a product of both domestic factional rivalries and broader international political intrigue. Don’t let the corporate media impose its usual superficial narrative on the events in Zimbabwe; as with all things Africa, there’s so much more than meets the eye.

On November 14, 2017 military forces in Zimbabwe took control of the streets, sequestered President Robert Mugabe in his residence, and publicly announced that the kinda sorta but not really coup was merely a clean-up operation intended to “target criminals.” While the claim does have some merit – Zimbabwe’s government, like those of nearly all nations in Africa and the Global South, grapples with endemic corruption – it remains difficult to ignore the long and sordid history of military coups in Africa, and then avoid the tendency to view the developments in Zimbabwe through the same lens.

Indeed, most media outlets quickly branded the operation a military coup d’etat. However, a more critical analysis reveals that this episode is decidedly different from the countless coups that have taken place in the post-colonial history of Africa. In fact, a number of Zimbabwean commentators have made precisely that claim (see here and here).

George Shire, a London-based political analyst, and veteran of Zimbabwe’s liberation struggle, incisively noted to Al-Jazeera, “The dominance of ZANU-PF [Zimbabwe’s ruling party since liberation] on the political landscape in Zimbabwe is not in question…What you see is really a leadership contest taking place – Zimbabwean style.” This point is critical in that, typically, a coup would overthrow not only the President, but an entire ruling party in favor of a military that either assumes control itself or installs some new power structure or party. In this case, however, the military has intervened to block one faction of the ruling party from assuming power in favor of another faction.

Read more

What if the New Development Bank funded SMMEs?

By Mpendulo Dlamini

Mpendulo Dlamini, Founder and Managing Director of Umbuso Advisory, a corporate finance advisory firm for Small and Medium Enterprises, analyses the difficulty of access to funding for SMMEs and the role of the BRICS bank.

[SMMEs] are playing an increasingly important role in developing market economies. That they have great difficulty accessing funding is a travesty…

As more and more details emerge about the BRICS New Development Bank (NDB), it is clear that it will function as a typical development finance institution (DFI), albeit multilateral. It will also function as a critical policy instrument providing an alternative to the current Western-dominated multilateral funding institutions, whose development goals remain increasingly alienating.

I say typical not in the cynical sense, which implies bloated and staffed with incompetence, but rather typical in that its aim has historically been focused on development banking – large-scale commercial developments and, more importantly, infrastructure projects.

While there is nothing wrong with this aim, these larger development projects are becoming easier to fund with market-related instruments. These instruments make the diligence process more stringent and, as a result, can remove historical problems that multilateral development bank (MDB) and development bank (DB) financed infrastructure projects face. These problems include cost overruns; disruptions caused by labour delays and disputes; environmental issues; construction delays; engineering problems; designs disagreements; and supplier collusion, among other things.

The Association of Development Financing Institutions in Asia and the Pacific (ADFIAP) has taken an interesting view on the role of MDBs, and it’s worth considering. In loose developmental speak, it outlines the role of MDBs as funding institutions that:

  • Take a leading role in creating new financial packages with the involvement of commercial banks and other financial institutions, such as loan syndication of large projects, guarantee schemes for start-up industry sectors;
  • Operate as advocates of development, promoting the “business of development” such as job-generation, domestic resource mobilisation, countryside development and urban renewal, among many other development aid projects; and
  • Operate as a bank of last resort, providing finance to projects which no other financial institution will fund.

 

It can be seen from the above that development banks can become funders of projects that no other financial institution will fund. However, there are few areas where this description is more apt than in the area of SMMEs.

SMMEs account for that vast majority of private sector employment in the Americas, Europe and Asia. One can arguably say the same with African private sector employment if one considers the “informal” sector.

Whether or not we consider this African context, we cannot doubt that SMMEs contribute considerably to employment and domestic GDPs across the world. They are playing an increasingly important role in developing market economies. That they have great difficulty accessing funding is a travesty, but it is also the great opportunity in financing, especially DB financing.

The standard reasons for commercial banks’ current decline in providing funding to SMMEs is that they are too risky. This means understanding, and therefore mitigating, their risk is too expensive for the banks to make it worthwhile.

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