Zimbabwe to make Chinese yuan legal currency after Beijing cancels debts

[Red Wolf]

Zimbabwe to make Chinese yuan legal currency after Beijing cancels debts
Yuan becomes the latest currency to be approved for public transactions in Zimbabwe, as the southern African nation seeks to increase trade with Beijing

The yuan will become legal tender after Chinese president Xi Jinping visited Zimbabwe in early December for talks with president Robert Mugabe. Photograph: Huang Jingwen/Xinhua Press/Corbis

Zimbabwe has announced that it will make the Chinese yuan legal tender after Beijing confirmed it would cancel $40m in debts.

“They [China] said they are cancelling our debts that are maturing this year and we are in the process of finalising the debt instruments and calculating the debts,” minister Patrick Chinamasa said in a statement.

Chinamasa also announced that Zimbabwe will officially make the Chinese yuan legal tender as it seeks to increase trade with Beijing.

The yuan hasn’t been approved yet for public transactions in the Zimbabwean market which is currently dominated by the US dollar.

Use of the yuan “will be a function of trade between China and Zimbabwe and acceptability with customers in Zimbabwe,” said Chinamasa.

According to the finance minister, Chinese tourists could start paying for services in yuan and Zimbabwe could use the currency to pay its loans to China.

The minister added that the central banks of the two countries are already negotiating on a yuan clearance system.

Zimbabwe abandoned its own dollar in 2009 after hyperinflation, which had peaked at around 500bn%, rendered it unusable.

It then started using a slew of foreign currencies, including the US dollar and the South African rand.

The yuan was later added to the basket of the foreign currencies, but its use had not been approved yet for public transactions in the market dominated by the greenback.

Use of the yuan “will be a function of trade between China and Zimbabwe and acceptability with customers in Zimbabwe,” the minister said.

Zimbabwe’s central bank chief John Mangudya was in negotiations with the People’s Bank of China “to see whether we can enhance its usage here,” said Chinamasa.

China is Zimbabwe’s biggest trading partner following Zimbabwe’s isolation by its former western trading partners over Harare’s human rights record.

In reaction veteran president Robert Mugabe adopted a “look East policy”, forging new alliances with eastern Asian countries and buttressing existing ones.

In early December, Chinese president Xi Jinping stopped over in Zimbabwe in a rare trip by a world leader to the country, and presided over the signing of various agreements, mainly to upgrade and rebuild Zimbabwe’s infrastructure such as power stations.

Source: The Guardian / RussiaToday

 

[Rajaraja Chola]

A dynamic failure of a monstrous proportion of a country incapable of anything. Thank God South Africa got someone like Madiba who united the Blacks and the Whites.

Economic colonisation "competition" has started. US was a leader and China has joined it.
Well done for getting a new colony China (appreciations intended)

 

[C130]

they need more than the Yuan as basket currency. they need to import Chinese to fix their country after they kicked out the whites

 

[Chinese-Dragon]

A dynamic failure of a monstrous proportion of a country incapable of anything. Thank God South Africa got someone like Madiba who united the Blacks and the Whites.

Economic colonisation "competition" has started. US was a leader and China has joined it.
Well done for getting a new colony China (appreciations intended)

It's more of a gamble than anything else I think.

In investment, it's important to always appreciate that higher risk usually correlates with higher rewards.

You just need to be prepared to lose everything you've put in (worst case scenario).

 

[Hamartia Antidote]

$40M? I think this must be a typo.

 

[Indika]

A dynamic failure of a monstrous proportion of a country incapable of anything. Thank God South Africa got someone like Madiba who united the Blacks and the Whites.

Economic colonisation "competition" has started. US was a leader and China has joined it.
Well done for getting a new colony China (appreciations intended)

Agreed, but only difference is now there is a choice rt? This might give breathing space for countries by playing one against another. Even though china is no frnd of india but I do support a multipolar world.

 

[Rajaraja Chola]

It's more of a gamble than anything else I think.

In investment, it's important to always appreciate that higher risk usually correlates with higher rewards.

You just need to be prepared to lose everything you've put in (worst case scenario).

Not much to lose even if China loses. particularly China isnt losing dollars. Its going to use its own currencies.
In return Chinese companies can have a free run at state contracts and mineral extractions.

Agreed, but only difference is now there is a choice rt? This might give breathing space for countries by playing one against another. Even though china is no frnd of india but I do support a multipolar world.

Not really. I saw a documentary. US AID assistance are all directed to US companies who provide equipments to the said nation at generally higher cost. If a Pepsi is 3$ in US, they send the same Pepsi at 4$ as AID to that foreign nation resulting in less money. And no technical training is given to the people of the country. US activities in Haiti was well documented.

China on the other hand, brings it own people to work on projects, has a free run with the minerals.

not a win win for those countries.

 

[Blue Marlin]

$40M? I think this must be a typo.

$40 billion is too high for a small country with very little trade

 

[Indika]

Not much to lose even if China loses. particularly China isnt losing dollars. Its going to use its own currencies.
In return Chinese companies can have a free run at state contracts and mineral extractions.



Not really. I saw a documentary. US AID assistance are all directed to US companies who provide equipments to the said nation at generally higher cost. If a Pepsi is 3$ in US, they send the same Pepsi at 4$ as AID to that foreign nation resulting in less money. And no technical training is given to the people of the country. US activities in Haiti was well documented.

China on the other hand, brings it own people to work on projects, has a free run with the minerals.

not a win win for those countries.

Of course neither of them are saints but atleast choice of devils is present rt.
They all want a piece of the world, but let them pay a higher price and some one benefit from it. US was doing it bcos of no competition. US does the same in Afghanistan by paying its own contractors more money and tom-toms the amount of money spent.

 

[Chinese-Dragon]

Not really. I saw a documentary. US AID assistance are all directed to US companies who provide equipments to the said nation at generally higher cost. If a Pepsi is 3$ in US, they send the same Pepsi at 4$ as AID to that foreign nation resulting in less money. And no technical training is given to the people of the country. US activities in Haiti was well documented.

China on the other hand, brings it own people to work on projects, has a free run with the minerals.

not a win win for those countries.

Yep. Geopolitics is all about national interests.

China is betting big here. And even if we lose, at least we are not losing that much.

Zimbabwe can also see this as an opportunity to further their own national interests, by using the inflow of money to boost their own infrastructure base.

Also, there is some consideration that Zimbabwe might not have been able to pay off those debts in the first place, so forgiving the debts can be useful. And it can help Zimbabwe generate more revenue for further projects in the future. So instead of getting nothing, we could have a chance of getting something in the future.

 

[Indika]

Also, there is some consideration that Zimbabwe might not have been able to pay off those debts in the first place, so forgiving the debts can be useful. And it can help Zimbabwe generate more revenue for further projects in the future.

Agreed, I would see a better world if china and US compete against each other. Cold war inspite of the wars fought actually was better place than now. Multipolar world would produce a world with better economy than the one which is totally tied to one currency.

 

[Hamartia Antidote]

$40 billion is too high for a small country with very little trade

yeah but $40M is a drop in the bucket. I thought it should be $400M. But the number is correct.

Zimbabwe to adopt China's currency the yuan - Al Jazeera English
"In the last five years, Zimbabwe has received more than $1bn in low-interest loans from China, which is Harare's second largest trading partner after South Africa"

 

[That Guy]

Zimbabwe is run by a fool of a man.

 

[egodoc222]

It's more of a gamble than anything else I think.

In investment, it's important to always appreciate that higher risk usually correlates with higher rewards.

You just need to be prepared to lose everything you've put in (worst case scenario).

But doing this for 40million $ debt waiver is absurd!!

Yep. Geopolitics is all about national interests.

China is betting big here. And even if we lose, at least we are not losing that much.

Zimbabwe can also see this as an opportunity to further their own national interests, by using the inflow of money to boost their own infrastructure base.

Also, there is some consideration that Zimbabwe might not have been able to pay off those debts in the first place, so forgiving the debts can be useful. And it can help Zimbabwe generate more revenue for further projects in the future. So instead of getting nothing, we could have a chance of getting something in the future.

Money put in by China is peanuts for it!!
Even it loses...it's literally nothin for china!

 

[Chinese-Dragon]

Money put in by China is peanuts for it!!
Even it loses...it's literally nothin for china!

Sure, but if we call in our debt and bankrupt a customer like Zimbabwe, then that's bad for us in the end. Since we lose the customer.

Gotta keep the customer afloat. The long-term value of a healthy economic partnership can be very good, and it's always better than losing a customer completely.