President Jacob Zuma and former finance minister Nhlanhla Nene — PICTURE: SIYABULELA_DUDA
This column has to be done and dusted by 4pm on a Thursday afternoon. I have no idea what President Jacob Zuma had to say in his state of the nation speech last night, or if he was able to make one at all. If he did, and even if what he said was sensible and constructive, I fear the sacking of Nhlanhla Nene and his treacherous retreat in the Constitutional Court this week on paying back money for construction at Nkandla have finished him as a political force.
The best we can hope for is that his speech did no actual damage.
One of the keenest followers of the Zuma U-turn on Nkandla and the speech last night will have been a former Chinese ambassador to SA, Zhong Jianhua, now the Special Representative on African Affairs of the Chinese Government. The Chinese create a special representative for stuff that really matters to them as they grow their power in the world. There’s a special representative for the Middle East, one for climate change, one for Myanmar.
They are super-ambassadors, perhaps none more so than Zhong. Though he nominally reports to Foreign Minister Wang Yi, he is close to President Xi Jinping. The two were at school together and their fathers were both generals under Chairman Mao. Xi has singled out Africa as a special project for his two terms as leader. Zhong is his pointman.
He is superbly prepared for the job, with a masters degree from the Fletcher School of Law and Diplomacy at Tufts, three tours in the Chinese embassy in London, First Secretary of the Sino-UK joint liaison group for the takeover of Hong Kong, director-general of the Chinese foreign ministry, and ambassador in SA from 2007 to 2012. He is a Very Big Deal.
He would probably have been the first official in Beijing alerted when Zuma fired Nene last December 9 and he would have immediately alerted his minister and the head of the China Investment Corporation (CIC), China’s sovereign wealth fund and ultimate owner of a 20% stake in Standard Bank.
As I have tried, inadequately, to report here, the alarm in China resulted in a call to Zuma’s office on the Friday evening. They were not happy.
The Chinese (Xi and Zhong included) had just a few days earlier been in SA for a China-Africa summit. For Zuma, it had been a pleasure to host people he trusts completely. The atmosphere was convivial and cheerful.
But the news that Zhong woke to in the early hours (Beijing time) of Thursday, December 10, would have shaken him. Why?
China is in trouble as its economy slows down, its stock markets tumble and the yuan devalues due to locals and foreigners taking their money offshore. This deterioration is a direct threat to Xi. He has made economic reform (giving the markets greater control) a priority as he at the same time represses internal dissent and corruption. But his control of the latter depends on his reforms working, and any threat to Chinese economic interests is taken seriously.
Although Standard Bank is 20% owned by the Industrial and Commercial Bank of China (ICBC), it in turn is owned by a state investment company wholly owned by the CIC. Its first CEO, in 2007, Lou Jiwei, is now Xi’s finance minister. The Chinese are Prussian about money and the CIC mission statements read like an investment Boot Camp — "(we will) maximise returns for our shareholder ... fundamental to our responsibilities is to effectively manage assets and make every investment a success".
Nene’s sacking had a sufficiently startling effect on the Chinese for the call to the Presidency in Pretoria, when it finally came, to be made from the highest levels of the Chinese government.
Zhong would have had little trouble making that call happen. China has about $35-billion invested in SA and at a stroke Zuma had taken a huge bite out of it.
The fate of Standard Bank in the immediate aftermath of the Nene decision is instructive. By the Friday, not long before the Chinese made their call, China’s most prestigious equity investment in Africa had lost 22% of its market capitalisation as the JSE wilted. At the intraday low on Friday, Standard Bank’s market capitalisation was down by R44.62-billion.
It was too much. The CIC had had a rough year, its mission statement notwithstanding. It lost a ton of money in resources, especially in Canada, and closed its Toronto office in December. But it had also spent good money strengthening Standard’s balance sheet by buying out its subsidiaries in Russia, the UK and Argentina. And now this?
Like everyone else, Beijing saw what it saw — Zuma acting alone. That is not what it wants from its premier African ally.
Discovering, as they have, that Zuma has feet of clay has wider implications for the Chinese. While their investment in SA may be large, it is dwarfed by the money Beijing has ploughed into the oil business in Sudan. Their return on that investment (estimates run north of $80-billion) is almost zero.
The oil has ended up in South Sudan and the refinery is in the North and Zhong, uncharacteristically for the Chinese government, has actually had to "interfere" in the politics of the region to try to persuade its many warring parties to at least get the oil moving.
Zuma is supposed to assist in this effort, which is why he helped Sudanese President Omar al-Bashir escape arrest in SA last year. But the South African help, which also involves Cyril Ramaphosa in South Sudan, has been to little real effect. Now, December 11, the Friday evening, with its prime investment in SA tanking for no good reason, a phone call was made.
Whether or not it was decisive I’ve no idea. I still suspect the message to Zuma from his own party leadership, particularly ANC treasurer and fellow KwaZulu-Natal leader Zweli Mkhize, was decisive.
So, as Zuma begins one last effort to save himself from ignominy, starting with his admission that he breached the Constitution by opposing the public protector’s injunction to pay for part of Nkandla, and with his speech last night, be assured that the Chinese are watching real close. They thought they were buying into strength and prudence here.
They want an alliance with a steady ship, not a circus.
- Writing a weekly column in a daily newspaper means you have to wait a week to correct your errors while critics make merry. I know the De Hoop dam isn’t the only one built since 1994, as I stupidly wrote here last week. It’s the biggest. I apologise.
This article first appeared in Business Day