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(NEWZIMBABWE) China extends US$700m loan to Zimbabwe

China extends US$700m loan to Zimbabwe
by Reuters
21/03/2011 00:00:00

CHINA signed nearly US$700 million in loan deals with Zimbabwe on Monday, its biggest loan package to date, and urged the government to protect Chinese firms from nationalisation plans.

Shunned by the west, President Robert Mugabe has increasingly sought help elsewhere. China, meanwhile, covets the mineral resources of the southern African country as Zimbabwe struggles back from economic collapse.

Zimbabwean Vice President Joice Mujuru gave details of the loan agreements during a visit by Chinese Vice Premier Wang Qishan, the second high-level Chinese visitor to Harare in little over a month.

Mujuru said loans from China's Export-Import Bank would be used for priority areas such as agriculture, machinery and equipment -- nearly half the money would go for that -- as well as health and water systems.

Wang said US$100 million of the money would be a concessionary loan for the government itself.

Zimbabwe needs the money badly.

There are food shortages in six of ten provinces because of drought. Western countries, which don't trust Mugabe, have not stepped up funding despite the unity government he formed with the opposition two years ago.

Mugabe has ruled for over three decades and the west has imposed sanctions on his Zanu PF party, accusing him of human rights abuses and election fraud. Donors seek more political and economic reforms before releasing more money.

China has invested heavily in a drive for resources in Africa to feed its booming economy. Zimbabwe's mineral deposits include the world's second biggest reserves of platinum, used in the car industry.

China's investments have been growing steadily in Zimbabwe and include diamond and chrome mining, platinum concessions, road construction, cotton and tobacco companies as well as a cement manufacturing plant.

But foreign investors in Zimbabwe are concerned at plans supported by Mugabe and his Zanu PF to give black Zimbabweans a majority stake in all firms, including mining companies.

Wang said China supported the company ownership moves but urged the government not to tamper with Chinese investments.

"We hope Zimbabwe will protect the legitimate right of Chinese businesses in the country," he said.

In February, Zimbabwe announced that a Chinese-owned alluvial diamond mine in the country's eastern region, Marange, would be except from nationalisation.

"It would seem the Chinese won't have to obey the same rules that apply to others," said Harare-based political analyst John Robertson.

A government minister told Reuters in January the state-run China Development Bank could fund up to US$10 billion in Chinese investment in Zimbabwe's mining and agriculture sector -- more than annual gross domestic product.

Labels: CHINA, SANCTIONS, ZDERA

posted by MrK @ 7:13 PM