A street view in Harare, capital of Zimbabwe Photo: IC

Chinese companies and experts expressed concerns on Sunday over renewed efforts in Zimbabwe to enforce a controversial law that requires foreign firms to sell stakes of at least 51 percent to locals in Zimbabwe.

The Zimbabwean government has asked all foreign companies in the country to comply with the law or face closure, the Xinhua News Agency reported on Wednesday.

Youth, Indigenization and Economic Empowerment Minister Patrick Zhuwao announced on Wednesday that the deadline for compliance would be April 1, 2016, and that firms would lose their licenses to operate if they failed to meet it, Xinhua reported, citing the state news agency New Ziana.

The law has been controversial since it came into force in 2010, with the main areas it targets including mining, agriculture and banking.

There is currently no estimate of how many firms would be affected, the Xinhua report said.

"Our business will be affected by the new policy and we are considering how to comply with the government's regulation before the deadline," a member of staff with Zimbabwe Nantong International, a construction firm, told the Global Times Sunday.

The staff member declined to be named as he is not authorized to speak to the media and did not offer more details about how the company will be affected.

The Global Times failed to reach the Chinese Embassy in Zimbabwe on Sunday.

Experts in China said the move by the Zimbabwean government came amid mounting economic woes in the country, such as a pile-up of foreign debt and plunging exports, and they warned that the move could increase alarm among foreign investors in the country.

"This policy is extremely unfair to foreign investors, and will cause losses for them. It also undermines the credibility of the Zimbabwean government and raises flags among foreign investors," said Zhang Ning, a research fellow with the National Academy of Economic Strategy at the Chinese Academy of Social Sciences.

"Due to sanctions, Western companies' investment in Zimbabwe is limited, and the country's foreign investors are mainly from China, India, and some African countries such as South Africa," Zhang told the Global Times Sunday. There is an economic nationalist element in Zimbabwe, Zhang noted.

Won't help Zimbabwe

Wang Wen, executive director of the Chongyang Institute for Financial Studies at Renmin University of China in Beijing, told the Global Times Sunday that the measures taken by the Zimbabwe authorities favor its nationals, but would not in any way enhance the competitiveness of Zimbabwean companies.

"The policy will bring adverse effects for the nation's economic development and long-term economic interests," Wang said.

Nonetheless, Wang noted that Chinese companies should abide by local laws when investing in Zimbabwe.

"It also remains to be seen to what extent the law will be enforced this time," Wang said.

There has been a drop in foreign investment in Zimbabwe over the past three years, which has been blamed partially on the unpredictability of its investment policies, the Xinhua report said. 

In 2014, bilateral trade between China and Zimbabwe reached $1.241 billion, up 12.4 percent year-on-year, and double the trade volume in 2010, according to a report by the Xinhua News Agency in December 2015.

China has been one of Zimbabwe's major investors in recent years, according to the same Xinhua report. About 100 large and medium-sized Chinese enterprises currently have projects in the country, and China's non-financial direct investment into Zimbabwe in 2013 exceeded $600 million, more than from any other country that year, the report said.

Chinese exports to the country include mechanical and electrical equipment, textiles, and high-tech products, the report said.