Due to complaints from foreign investors and the Zimbabwean need to attract foreign investments, the law was never seriously enforced. But in March 2016, the Ministry of Youth, Indigenization, and Economic Empowerment announced that the government had decided to implement the law and required foreign companies to submit their stake transfer plans by April 1 or face the risk of closure.
A month ago, the Zimbabwean government already closed diamond mining companies owned by Chinese (Anjin and Jinan), Russians, South Africans, and Emiratis, as an effort to enforce the indigenization law.
Some argue that the economic downturn, the result of decreasing commodity prices in the last few years, led Zimbabwe to strengthen the indigenization law. As the eighth largest diamond-producing country, Zimbabwe enjoyed a tax income from diamond exports as high as $84 million in 2014.
However, that number nosedived to $23 million in 2015, which may have triggered the government to take over foreign mining businesses. Others have suggested that the mounting factional war within ZANU-PF may be the culprit of the sudden indigenization move.
Patrick Zhuwao, the indigenization minister and nephew of Mugabe, is part of Grace Mugabe’s Generation 40 or G40 faction, which may be interested in channeling the localized businesses and profits to buttress the faction and Mugabe himself.
In contrast, the Finance Minister, Patrick Chinamasa, who is associated with Vice President Mnangagwa’s faction, tried to assure the foreign-owned financial institutions in Zimbabwe that they were compliant and would not face censure.
In any case, China expressed its unhappiness to Zimbabwe, both rhetorically and through action – or, more precisely, a lack of action.
When Harare saw a large wave of street protests in April 2016 over Mugabe’s unwillingness to step down, and as Mugabe watched his country’s economy slip down the slope, his “all-weather friend” kept silent, at least for a while.
Some thought that Beijing might be teaching a lesson to Harare, while others argued that China was actually preparing for a post-Mugabe or even post-ZANU-PF scenario by not annoying the oppositions too much.
China’s risk in Zimbabwe is also reflected in how the Zimbabweans view China. A welcoming public may help protect China’s interests and signal China’s soft power status, while a dissenting public may be a source of political risk, endangering the Chinese economic and political interests.
As in most African countries, China enjoys an overall positive public image in Zimbabwe. In fact, when asked which external power exerted the most influence in their country, 55 percent of Zimbabweans named China, according to newly released Afrobarometer data.
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