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Zambia - China Relations

Zambians have not forgotten that a couple of years ago their miners had to fight to get minimum wages from Chinese investors. The protests resulted in riots which turned deadly. Still, in a 2016 poll 72 percent of Zambians said that China's economic and political influence is positive.

China's presence is visible all over Africa. But nowhere as much as in Zambia, the African nation where it invested the most money last year. The ties between Beijing and Lusaka are strong and have existed for decades. China has invested in the mining and industrial sectors, but also in agriculture. Some Zambians denounce this Chinese presence as a form of neo-colonialism.

Many experts regard President Xi Jinping's Belt and Road Initiative as a debt trap for vulnerable countries, which may lose some of her valuable assets to China in the case of payment default. Unlike Western creditors and Multilateral Development Banks (MDBs), China does not grant debt relief when a debtor nation fails to meet the repayment terms. Zambia owes a third of its foreign debts to China. Chinese funds were used to retune the Kenneth Kaunda Airport, the Zambia National Broadcasting Corporation, ZESCO, the electricity company, and many others. Failure of Zambia to meet its repayment obligations to China Exim Bank has resulted in some of the assets being relinquished to the Asian country for a period of time. China has already taken over ZNBC. Apart from the editorial policy of the network, everything else is managed by Star Times owned by Chinese interests. All cash payments that have to do with ZNBC are made to Star Times. Then Star Times is also in charge of the signal and has been empowered to license local operators. That arrangement will last 25 years to allow China recover the $273 million it loaned the country to achieve digital migration. Discussions are underway concerning the eventual takeover of both ZESCO and the Kenneth Kaunda Airport by Chinese companies as the country has repeatedly defaulted on loan repayment. Pushed to the wall to repay its debts to China, Zambian authorities have been diverting donor funds meant for social sector spending to debt repayment, a situation that forced the United Kingdom's DFID to suspend funding to the Ministry of Education.

According to the Zambian government, the country owes China up to 30 percent of its $9.4 billion foreign debt. The true figure could be even higher. The records "do not include parastatal loans and government guarantees," former Information and Broadcast Minister Chishimba Kambwili said in 2019. "If we count all the project money and guarantees, Zambia should owe China in excess of $23 billion." Zambia has denied accusations that the government has accumulated a lot of debt by borrowing from China and putting up some key public assets, including the national broadcaster and the Kenneth Kaunda International Airport, as collateral. China denied these allegations as well.

The process of moving from analogue to digital broadcasting repeatedly made headlines as facts about the deal gradually came to light. Exim Bank of China issued a $273 million (243 million) loan for the digital migration project. China's media corporation StarTimes, which obtained the loan on behalf of Zambia's state broadcaster ZNBC, agreed to set up a joint venture named TopStar. This purpose vehicle, comprising StarTimes and ZNBC, gained control of two important licenses - signal distributor and content service provider.

The government said after the migration, ZNBC would be in charge of content and TopStar in charge of air transmission, including the equipment. Zambia's competition laws forbid any single media entity to hold the two types of licenses concurrently. It was shocking that TopStar was not only in charge of air transmission, but was also in the market as a major content provider.

Another loan from the Exim Bank of China, this for $365 million, was issued for the construction of the new curved glass wing of Kenneth Kaunda International Airport. In addition to the airport construction, a second loan was provided to modernize the Zambian Air Force (ZAF). It is an open secret because everyone sees Chinese military personnel working at the other air traffic control tower that is owned by ZAF. Officially, the Chinese are there to provide training and capacity building to Zambia's air force, which controls the nation's air traffic. The Chinese have set up a parallel structure at the airport, but they do not have absolute control of the nation's airspace, contrary to rumors on social media platforms.

China is a leading source of foreign direct investment in Zambia. While data on Chinese investment in Zambia are incomplete, Chinese firms have invested substantial amounts in the country, primarily in the mining sector. Zambia signed an agreement in July 2009 with Zhonghui Mining Group, which committed to invest US$3.5 billion in mining projects in the Copperbelt and Northwest provinces.

Chinese-controlled copper output could increase as investments come on line, including at the Luanshya Copper Mine, which China Nonferrous Metal Mining Co. (CNMC) acquired in 2009 for USD 50 million after the mine's previous owners put it in suspended care and maintenance status. Also in 2009, a Chinese company acquired Albidon Nickel Mine in Mazabuka from its Australian owners.

CNMC and another smaller Chinese copper firm signed a deal in 2006 to invest USD 220 million to build a 150,000-ton copper smelting plant, which became operational in 2008. Chinese-owned firm CBMI Construction was contracted by France's Lafarge to construct a USD 120 million expansion of its cement plant in Lusaka, which was commissioned in November 2008. The new plant produces 2,000 tons (80,000 50-kilogram bags) per day. China set up a US$900 million Multi-Facility Economic Zone (MFEZ) in Chambishi, Copperbelt Province underwritten by the Chinese business community and the People's Republic of China. Zambia is the first African country to have a Chinese MFEZ. The Chambishi Copper Smelter (CCS), commissioned in October 2009 in the MFEZ, has a capacity of 150,000 tons of concentrates annually. Chinese developers started construction on a 570 hectare MFEZ near Lusaka in 2010. The US$350 million project would create an economic zone near the international airport to include residential areas and industrial and commercial activities. In early 2009, the Chinese Government signed agreements to loan and grant Zambia a further USD 67 million as part of the zone and other projects.

In January 2010, China provided USD 39 million to TAZARA, the dilapidated railway China built from Kapiri Mposhi, in central Zambia, to Dar Es Salaam, Tanzania in the 1970s. The Zambian government reported that the capital injection was an interest free loan and that the Chinese government would also provide technical assistance to the troubled railway to improve operations. China is also active in road construction in Zambia and is engaged in "stadium diplomacy" by funding and building a new soccer stadium in the Copperbelt.

There is plentiful criticism in Zambia of Chinese investment regarding how the deals are conducted, the quality of Chinese products, labor rights of workers in Chinese entities, and the use of Chinese imported laborers rather than locals. There are glaring examples of large government procurements from China that were not competed per procurement regulations. In the case of road projects, the Chinese-built road from a border point with Zimbabwe, the main artery for imports from South Africa, washed out just 18 months after construction. The Chinese owned Collum Colleries mine has been shut down repeatedly due to worker deaths but remains operational. Nevertheless, Chinese presence in Zambia is solidified by their cut rate prices and their willingness to do deals and to provide highly concessional financing.

Chinese embassy officials insist that the PRC is not engaged in economic and social development activities here but rather focuses exclusively on its commercial relationship with Zambia.

In 2013, the friendly and cooperative relations between the People's Republic of China and the Republic of Zambia continued to grow rapidly, with steady progress in practical cooperation in multiple areas. The two countries enhanced their political trust as a result of the frequent exchange of high-level visits. In March, Zambian President Michael Chilufya Sata sent a congratulatory letter to Xi Jinping on his election as the Chinese President.

In April 2013, President Sata paid a state visit to China and attended the Boao Forum for Asia Annual Conference 2013. He had talks with President Xi Jinping and met with Premier Li Keqiang and CPPCC Chairman Yu Zhengsheng. The two sides signed six agreements covering the areas of economy, culture and financing. In January, Zambian Minister of Chiefs and Traditional Affairs Nkandu Luo headed a delegation of 14 vice-ministerial level Zambian officials to the second ministerial workshop hosted by China for Zambia. In 2013, many vice-ministerial level Zambian officials visited China for either private purposes or attending meetings. In February,Vice Minister of Land and Resources Wang Min visited Zambia. In December, Vice Minister of Civil Affairs Dou Yupei visited Zambia.

Over 500 Chinese-invested enterprises operated in Zambia, covering such areas as mining, agriculture, manufacturing and infrastructure development. China provided financing support to major projects in Zambia such as the upgrading of Mbala-Nakonde road and Mansa-Luwingu road and the expansion of Lusaka International Airport. Positive progress was made in the development of the Zambia-China Economic and Trade Cooperation Zone. The Zambia-related cooperation projects under the framework of the Forum on China-Africa Cooperation (FOCAC) were implemented smoothly.

On January 8, 2017, Foreign Minister Wang Yi held talks in Lusaka with Foreign Minister Harry Kalaba of Zambia. Wang Yi expressed that Zambia is an "all-weather" friend of China in Africa that stands together through storms and stress and shares weal and woe. The traditional friendship between China and Zambia, which was personally forged by Chairman Mao Zedong and President Kenneth Kaunda, has taken deep roots in the two peoples' hearts and become even firmer as time goes by. At present, China is Zambia's second largest trading partner, main investment source country and main contractor of infrastructure construction.

Since the Johannesburg Summit of the Forum on China-Africa Cooperation (FOCAC) held in December, 2015, investment and trade cooperation between the two countries have stridden forward and grown substantially against the backdrop of weak world economic recovery, which has formed a gratifying momentum of the vigorous development of China-Zambia cooperation. China has become the most important and reliable cooperation partner of Zambia in realizing independent and sustainable development.

Harry Kalaba stated that Zambia sincerely appreciates China's great support to Zambia's national independence and its selfless assistance to Zambia's national construction, and especially thanks China for helping to build Tazara in case of its own lack of wealth. The Zambian people hold good feelings towards China, and will always bear in mind China's help. Zambia regards China as the most reliable strategic partner, and is satisfied with the progress of practical cooperation between the two countries. The country hopes to receive more support from China in the future.

In total, according to official government statistics, Zambia is envisaged to spend about $20 billion between 2011 to 2021 on its infrastructure. 83 percent of these projects will be funded and implemented by Beijing-affiliated companies. A further factor fueling the fear of Chinese taking over the country is the sheer number of Chinese entering Zambia and establishing permanent businesses. Data from Zambia's National Council for Construction reveal that nearly 90 percent of registered foreign contractors in Zambia are Chinese.

There is no accurate figure of the number of Chinese nationals now living in Zambia. According to 2014 data from the Zambian home affairs ministry, the total number of Chinese in the country was then around 20,000. The late Zambian president Michael Sata claimed, when running for election in 2006, that 80,000 Chinese residents were "infesting" the country. Some researchers put the current figure at around 100,000. Many ordinary Zambians say they feel as if there are at least a million Chinese living in their country.





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Page last modified: 05-12-2021 19:00:43 ZULU