Developmental Impact of Zambia-Sino Relations

PESA Editorial - Zambia - 2Q2018/19

Zambia’s relation with China can be traced back to 1949, before Zambia’s independence in 1964[1]. Zambia was one of the African countries supporting the participation of China in the United Nations[2]. Despite various misunderstandings between the two countries, the Zambia-China relations have been cordial. Formal diplomatic relations were established shortly after Zambia’s independence. The official relations between China and Zambia was triggered following the visit of President Kaunda to China, in which the Chinese government provided active support to the Zambian government to consolidate political independence and struggle against western colonialist control.

 

Zambia’s relations with China have grown rapidly[3]. Zambia exported an average of 75.5% of its total merchandise exports to China from 2010 to 2016, which decreased marginally to 73.4% in 2017[4]. The top exports of Zambia to China are raw copper, refined cooper and precious stones.  Other exports include tobacco, inorganic chemicals, cement and sugar.

 

Raw and refined copper constitute 51.8% and 28.3% respectively of Zambia’s total exports to China from 2010 to 2016, which decreased to 35.7 % and 16.1% in 2017[5]. After 2013, Zambia’s total exports to China declined because China looked away from exports and infrastructure investment and focused on consumer-led growth, which slowed down the demand and lowered the price for copper.

 

China has invested enormously in Zambia over the last ten years which provides a platform to deepen China’s involvement in Zambia. In addition, this investment reflects the strength of the bilateral relations and the confidence that China has in Zambia’s economy. Mining is the main sector that has benefitted from China’s investment in Zambia[6]. China has also invested in energy, transport (rail and infrastructure), manufacturing and special economic zones, trade, agriculture and health[7]. Investments in other sectors in Zambia exceeded USD 724 million in 2017[8]. This is significantly less than the total mining investments which totalled USD 2.7 billion in 2017. Foreign Direct Investment (FDI) inflows increased by an annual average of 16.9% from USD 471 million in 2011 to USD 663 million in 2016, which increased to USD 1.091 billion in 2017[9].  This could be due in part by concerted efforts by the Zambian government to attract more investments and a recovery in commodity prices driven by demand for copper cathodes in China.

 

PESA Editorial - Zambia - 2Q2018/19
Source: UNCTAD 2018, UNCTADStat Database.

 

There are over 500 Chinese companies operating their businesses in Zambia and this has created thousands of jobs in Zambia.  Furthermore, valuable infrastructure has been built in Zambia by the Chinese government, such as roads and bridges, hospitals, schools, and stadiums.  Forestry and wild life protection, water and sanitation are other areas that the Chinese government continues to support Zambia.

 

Although Zambia has significantly benefited from Chinese investments, it is argued that the relation seems to favour China instead of Zambia. Zambia’s exports to China are still concentrated on a few commodity products while China’s exports to Zambia are relatively diverse and constituting of manufactured products.

 

Notwithstanding, the future looks bright for both countries as there are full potential trade opportunities if there will be redesigning of trade and investment policies. Zambia can maximise its benefits from dealings with China if the country can work on expanding its capacity in terms of entrepreneurs. Furthermore, Zambia need to strengthen local institutions and create an enabling environment for foreign direct investment, especially in agriculture, infrastructure, tourism and manufacturing. Designing of appropriate policies to reduce trade barriers can improve the bargain of Zambia in its economic relation with China.


[1] MoFAPRC 2015. Chinese Embassy in Zambia Holds the First Award Ceremony of Chinese Ambassador's Award of Friendship, on the Ministry of Foreign Affairs of the People’s Republic of China Website, viewed on 6 August 2018, from http://www.fmprc.gov.cn/.

[2] Resnick, D. and Thurlow, J. 2014. The Political Economy of Zambia's Recovery: Structural Change without Transformation?, International Food Policy Research Institute: Washington, D. C. Available At: https://papers.ssrn.com/ [Last Accessed: 12 September 2018].

[3] Leslie, A. 2014. Chinese Investments in Zambia: The Role of Government in Protecting Workers, University of Florida: Gainesville. Available At: http://sites.clas.ufl.edu/africa/ [Last Accessed: 12 September 2018].

[4] UNCTAD 2018a. UNCTADStat Database, United National Conference on Trade and Development: Geneva. Available At: http://unctadstat.unctad.org/ [Last Accessed: 31 July 2018].

[5] UNCTAD 2018a. UNCTADStat Database, ibid.

[6] Haglund, D. 2009. ‘In It for the Long Term? Governance and Learning among Chinese Investors in Zambia's Copper Sector’, The China Quarterly, Vol. 199, pp. 627-646. Available At: https://www.cambridge.org/ [Last Accessed: 12 September 2018].

[7] [7] Haglund, D. 2009. ‘In It for the Long Term? Governance and Learning among Chinese Investors in Zambia's Copper Sector’, ibid.

[8] UNCTAD 2018a. UNCTADStat Database, ibid.

[9] UNCTAD 2018b. World Investment Report: Annex Tables, on the United Nation Conference on Trade and Development Website, viewed on 21 June 2018, from http://unctad.org/.


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