Before orchestrating the coup that has finally, and thankfully, removed Robert Mugabe from his dictatorial presidency of Zimbabwe, Army Chief Constantino Chiwenga paid a visit to Beijing. He met with his counterpart, Defense Minister Chang Wanquan, and another general, Li Zuocheng of the Central Military Commission, who told him China and Beijing are "all-weather friends."
Speculation that China approved of a change in power on condition that its strategic interests in Zimbabwe remain untouched started immediately. According to the South African newspaper City Press, China promised not to stop providing "economic and technical assistance" if Mugabe, a man China had long supported, was deposed.
Only with Chinese approval, then, did the toppling of Mugabe take place, many commentators say. God knows, it has taken long enough -- Mugabe has run a thriving and fertile agricultural land into the ground, by destroying it. Empty shelves and a currency that was worth less than the paper it was printed on were the results. At one point, in 2009, inflation was so bad that the central bank printed a Z$1 trillion note.
That the former revolutionary survived so long is down to Mugabe's freedom-fighting past, success in painting all enemies as "neo-colonialists," ruthlessness -- and Chinese aid. Now that Mugabe is gone, he'll likely be replaced by another dictatorial force. Former vice president Emmerson Mnangagwa, a man nicknamed The Crocodile for his cunning viciousness during Zimbabwe's civil war, is next in line.
But it is clear that Chinese capital will always be behind the throne. Mnangagwa trained in China with the military and at the Communist-run Beijing School of Ideology in the 1970s during Zimbabwe's war of independence, just as China backed Mugabe's "struggle" with weapons. Chiwenga, the military chief so recently in the Chinese capital, is a key ally of the new leader and ran the coup.
According to a report in City Press, when China promised not to oppose the coup to depose Mugabe, its officials asked who would take over. When they heard it was Mnangagwa, "they were thrilled as he is an old friend of China. He did his military training there."
Of course, money is an even greater motivating force than the bullet. Chinese businesses have invested $450 million in Zimbabwe this year alone, according to The Zimbabwe Mail, China is the top destination for Zimbabwe's exports, chiefly minerals, cotton and tobacco, and there's $1.1 trillion in two-way trade each year.
Mnangagwa even orchestrated for the Chinese yuan to become legal tender in the inflation-blighted land in 2015. Both yuan and U.S. dollars now change hands freely. Chinese President Xi Jinping also in 2015 visited Zimbabwe, one of the four biggest beneficiaries of Chinese development assistance, with $4.0 billion in deals struck during the visit. Mnangagwa returned the favor with his own 2015 trip to Beijing.
By far the biggest China-driven impact is, however, in infrastructure. Chinese construction companies, which are inevitably state-owned, are already building a new nation. China is financing a new 650-seat parliament in Harare, the capital. China is also backing a $2.0 billion revival of Zimbabwe Iron and Steel Co., according to the Zim government. And it has already helped finance and build the country's first professional military school, the National Defense College.
China was supplying the previous regime with, according to U.S. diplomatic cables, "aircraft, armaments, air defense radars and medical equipment," during Mugabe's reign. "China regularly sends technical military advisers to work with their Zimbabwean counterparts," one cable states.
China is now building an economic empire, rather than a diplomatic one, by negotiating such deals to build roads, dams, schools and hospitals across Africa. And -- fair's fair -- in return they often get sweetheart deals on mineral-extraction rights.
Investors have an increasingly sophisticated array of tools to allow them to play these themes. The creation of several interesting niche indexes is allowing for promising plays on Chinese infrastructure investment, not only at home but also overseas.
The MSCI Global China Infrastructure Exposure Index is the most fascinating of the indicators to watch. Designed to identify the beneficiaries of the One Belt, One Road initiative, the index takes a cross-border approach to mapping China's increasing infrastructure influence. It tracks companies, not necessarily Chinese, with a high percentage of revenues stemming from exposure to Chinese infrastructure development.
The KraneShares MSCI One Belt One Road ETF (OBOR) maps this index. It is tiny right now, with only $6.2 million in assets, having only launched in September. It is trading down 1.2% in the short span since launch. The new ETF is managed by New York-based Krane Funds Advisors, which focuses on interesting China-focused ETFs and is now majority owned by the Chinese investment bank CICC HK:3908.
Its largest constituents are the Singaporean bank OCBC (OVCHY) , the Russian oil company Rosneft (RNFTF) , the Malaysian conglomerate Sime Darby KL;SIME, and PTT Global Chemical (PCHUY) , which is the largest Thai oil company.
Only in fifth spot do you find a mainland company, China State Construction Engineering SH:601668. That, though, as the world's largest construction company is sure to be a major direct beneficiary of Chinese construction contracts and international reach.