Zimbabwe’s Finance and Economic Development Minister Mthuli Ncube revealed last week that, in 2006, mineral-rich Zimbabwe put up platinum deposits valued at $28 billion as collateral for a $200 million loan from China to buy Chinese farm equipment. Such imbalanced terms are raising questions about corruption and whether China is engaged in predatory lending.

A local watchdog group called the Zimbabwe Coalition on Debt and Development, or “Zimcodd,” has demanded that detailed information about all government loans be made public.

According to research by the Johns Hopkins University School of Advanced International Studies, China rarely claims the assets put up as collateral in such loans. Yet the lack of transparency is again raising suspicions about Chinese practices.

“At this point, a full audit should be required, one in which the final destination of the funds loaned by the Chinese to Zimbabwe are revealed,” Johns Hopkins professor of applied economics Steve H. Hanke told OZY by email. “My guess is that most of the $200 million has found its way into the pockets of people or enterprises closely associated with ZANU-PF,” said Hanke, referencing the ruling political party Zimbabwe African National Union-Patriotic Front.

Zimcodd has also called for an independent audit, noting that loans such as this one, which mortgaged the nation’s valuable platinum deposits, result in citizens being “trapped in a vicious circle of poverty.” Debt repayment effectively limits the government’s ability to fund social programs, even as an estimated 40% of Zimbabweans live in poverty, according to the World Bank.

“It's looting from the future, it's looting from tomorrow, it's looting from our children,” said human rights activist Dzikamai Bere during a Zimcodd Twitter Space held on Aug. 26 to discuss Ncube’s report. “So, it's very important that we create a community to push for accountability.”

Chinese Ambassador to Zimbabwe Guo Shaochun promptly denied allegations that China was intentionally entrapping developing nations, calling it a Western fabrication intended to deflect responsibility and blame.

Zimbabwe's government currently owes China $172 million on the 2006 farm equipment loan, and about $2.6 billion in total, according to parliamentary records.

Japanese conglomerate car manufacturer Honda Motor Co. Ltd and the South Korean battery manufacturer LG Energy Solution have announced plans to build a $4.4 billion lithium-ion battery manufacturing plant in Ohio for Honda and Acura electric vehicles (EVs). This news came two weeks after President Joe Biden signed into law the Inflation Reduction Act which, among other things, provides incentives to EV manufacturers and buyers. The deal is part of Honda’s “longstanding commitment to build products close to the customer,” said Honda’s president and CEO Toshihiro Mibe. (Source: The Wall Street Journal)

In a note titled, “Buy commodities now, worry about the recession later,” investment banking firm Goldman Sachs advised investors to increase their positions in commodities. This advice followed a decline in stock markets on Friday after Federal Reserve Chairman Jerome Powell said there would be continued interest rate hikes until inflation is tamed. Advice published by Goldman Sachs noted that commodities are an attractive asset class, as demand remains above supply. Indeed, many regions around the world are suffering from a limited supply of critical commodities, including food and fuel. Increased purchases of commodity assets by wealthy investors, such as those advised by Goldman Sachs, has the potential to raise global prices. (Sources: Bloomberg, The Wall Street Journal)