An Analysis of the Impact of Chinese Import Penetration on Zimbabwe’s Manufacturing Sector

Abstract The study analysed the impact of Chinese import competition on Zimbabwe’s manufacturing sector for two time periods (2009–2013 and 2014–2017). The study uses the Chenery type decomposition to evaluate the direct effects of increased Chinese import penetration on Zimbabwe’s manufacturing sector. The model separates Zimbabwean imports into those coming from China and those from the rest of the world. Results show that during the first period, manufacturing output increased by approximately US$1.417 billion owing to increases in domestic demand and exports. During the second period, the manufacturing sector output decreased by US$913 million. The decrease in output followed decrease in domestic demand and exports as well as rising Chinese import penetration. In terms of loss in domestic sales, in the first period, the domestic producers gained market share from China worth around US$9.34 million while in the second period, sales by domestic producers decreased by US$67 million. During the first period, losses in market share were in structural metal products, and gains were in glass products, wood and textiles. The study recommends that for Zimbabwean producers to be able to withstand competitive pressure from Chinese imports on the domestic manufactures, there is a need to address supply-side constraints that affect competitiveness of domestic industries. Investment in key enablers for production such as infrastructure is key in alleviating the problem and can be done between government and private partners. There is also a need for improved value-addition to help grow the downstream and upstream firms through value chains.