Friday, June 14, 2024

USA seems to undervalue China’s role in Zambian Economy: Here is how deep the ties are

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China can easily unlock debt restructuring talks, if Zambia………

• The West and USA underestimate the depth of Zambia-China relationship, and any attempts at decoupling Zambia from China will be futile as their ties are just too deep.

• China is Zambia’s largest trading partner, the largest investor, the largest creditor, largest consumer of Zambian Copper, and the only super power with the longest relationship of over 60 years with Zambia, dating back to pre-independence.

• Zambia hosts one of the largest populations of Chinese expatriates in Africa, made up of entrepreneurs/investors, merchants, traders, farmers, workers, construction managers, last estimated to be about 100,000; but could be more.

By Mwansa Chalwe Snr

In 2021, USA passed the “Strategic Competition Act 2021”. The law was designed to counter China’s growing influence around the world. It frames Beijing as a “political, diplomatic, economic, military and ideological power” and a strategic competitor to the West. And on 23 March, 2021, US President, Joe Biden, in a press briefing, drew the battle lines between the World’s two leading economic powers.
“I see stiff competition with China. China has an overall goal — and I don’t criticize them for the goal. But they have an overall goal to become the leading country, the wealthiest country in the world and the most powerful country in the world,” Biden said. “That’s not gonna happen on my watch.”

The unprecedented flurry of visits to Zambia by high level USA officials, should be seen in the context of this new law and policy. Zambia has been caught up in this stealth war. And this is a major concern for informed Zambians, and the motivation for this Op-ed. The publication of this article during the week that the United States Vice President, Ms Kamara Harris is visiting Zambia, is not a coincidence. It is to bring to the Americans’ attention to see their crusade from Zambia’s perceptive, given our history and deep relations with China, so that they avoid hurting Zambia’s economy through word or deed.

Diplomatic relations

Zambia’s relations with China predates its independence. China provided financial and material support to Zambia’s fight against imperialism and colonialism. In 1962, a number of young Zambians including the famous Zambian post-independence rebel, Adamson Mushala, were sent to China to train as guerrillas with a view to come and fight white rule in Northern Rhodesia now Zambia. Whilst in China, Adamson Mushala met Chairman Mao, who upon hearing that Mushala’s wife was expecting, gave him a parcel which contained baby clothes and toys, with a special request – to name the baby after him.

On the 24th October, 1964, Zambia attained independence from Britain. China and Zambia established diplomatic relations on October 29, 1964 which was a mere five days after Zambia’s independence. The two countries have enjoyed excellent bilateral relations ever since.

During the immediate post-independence period, China provided active support to the Zambian government in its efforts to consolidate its political independence and struggle against western neo- colonial control. In 1971, Zambia was among the 23 co-sponsors of the 1971 U.N. resolution that saw China replace Taiwan at the U.N. General Assembly and Security Council.

Zambia – China’s Economic ties

In terms of economic cooperation, China is Zambia’s biggest trading partner with import and export value totalling $2.6 in 2016 billion, with Zambia exporting $2.1 billion and importing $490million.By 2018, bilateral trade had grown and was in excess of $5 billion. In the first six months of 2022, it was $3.92 billion. China imports the bulk of Zambian copper. China’s total investment in Zambia is estimated at $4 billion in various sectors. China also happens to be Zambia’s biggest creditor with total loans of over $6 billion or 30 per cent of the total foreign debt. Chinese investments in Zambia have grown exponentially since 2000. There is an estimated over 600 Chinese companies operating in Zambia, employing about 50,000 Zambians. Zambia’s economic ties with China are indispensable.

Chinese Infrastructure Projects in Zambia

China has funded massive, multimillion dollar infrastructure projects in energy, roads, dams and communications with loans and grants, since independence in 1964. During the liberation struggle for Southern Africa in the1960s and 70s, Zambia’s founding President, Kenneth Kaunda wanted a safer transport link to the sea for the country’s imports and exports, to bypass the hostile white minority regimes in the South. Zambia approached Western countries to finance a railway link to the port of Dar-es-Salaam in Tanzania, but they all declined arguing it was too expensive and economically not viable. Presidents Kenneth Kaunda and Julius Nyerere of Tanzania, approached Mao Zedong of China for assistance. They were given a $400 million interest free loan to build the Tanzania Zambia Railway (TAZARA) which linked Zambia to the sea port of Dar- es- Salaam in Tanzania. The 1,860 kilometre railway completed in 1975, was China’s biggest international project at the time.
In the road sector, there are various roads that have been constructed over the years. The 300 kilometre Tuta Road with the 2.8km Mukuku Bridge, between Serenje and Samfya road, has the longest Chinese-aided Bridge of its kind in Africa. It was completed in 1983. The other Chinese funded roads include: the 35 km Mongu-Kalabo Road costing $244million in a very difficult swampy flooded terrain of Western Province, that required 26 bridges to be built; the US$207million the Mansa-Luwingu road and the US$108 million 45.5 kilometre dual carriageway from Kitwe to Chingola and many others.
In the energy sector, China has invested heavily in hydro and coal power. The following major energy projects have been Chinese funded and built: 360mw Kariba North Bank Extension at $460m built by Sino Hydro and funded by China Exim and Development Bank of Southern Africa, 300mw Maamba thermal at $830m was funded by Bank of China Industrial and Commercial bank of China, 750mw Kafue Gorge Lower at $2billion constructed by Sino hydro (China) and financed by China Exim Bank.

In the Water and Sanitation sector, China-funded the $150m Kafue Bulk Water Supply Project which supplies some 500,000 people with drinking water and sanitation. Another such project is the construction of the $450 million Kafulafuta dam in Masaiti district on the Copperbelt Province. The multi-purpose dam will benefit about (1,000,000) 1 million people in four districts on the Copperbelt, namely, Mpongwe, Luanshya, Ndola, Masaiti and other areas.
In the aviation sector, China has built the new Kenneth Kaunda International airport terminal at a cost of $$360 million and a new Copper belt International Airport at a cost of $397. In December 2016, the Zambian borrowed some 232 million USD from China’s EXIM Bank to fund its digitalisation and to build more studios for Zambia National broadcasting Cooperation (ZNBC).

Apart from the energy, road, telecommunications and aviation infrastructure projects, China has also funded a number of spectacular social-economic projects in Zambia. These include two big modern football stadiums – 50,000 capacity National Heroes Stadium in Lusaka, and the 49,800 capacity Levy Mwanawasa Stadium in Ndola on the Copperbelt Province; the new government complex conference centre and the Levy Mwanawasa hospital in Lusaka. The Chinese have also funded major housing complexes for Zambia Police Services and the Zambia Air Force. The 2,500 seater, $60 million ultra-modern Kenneth Kaunda Wing of the Mulungushi international Conference Centre, is the latest gift from China. These projects have been partly financed by grants and interest-free loans.

Major challenges in Zambia-China relationships

In the 20th Century, the Sino-Zambia relations revolved around politics and diplomacy. In the 21st Century, this has evolved into deep economic relations. This has resulted into many challenges and conflicts. The major challenges that have occurred in the Sino-Zambia relationship range from industrial relations, lack of sufficient economic benefits to ordinary Zambians from Chinese investments, uncontrolled immigration, racism and the rule of law. The Zambia Human Rights Watch released a detailed report in 2011 of the wide spread labour abuse, union busting and poverty wages paid by some Chinese mining companies to their Zambian employees.

The latest area of challenge is one of geopolitical nature. The West led by the US, has embarked on a crusade to negatively influence Zambia’s relations with China. This has resulted in the current stalemate in Zambia’s debt restructuring talks. This friction is not lost on the Chinese Ambassador to Zambia.

“In the future, the China-Zambia relationship may experience “bad weather” caused by third parties or other external variables. As President Xi Jinping stressed during the phone conversation, both China and Zambia are developing countries and it is China’s long-term and steadfast strategic choice to build solidarity and cooperation with Zambia and other African countries. Under the strategic direction of the two heads of state, China and Zambia should further develop political mutual trust and cooperate more closely through thick and thin, in the spirit of “mutual respect, equality, mutual benefit and common development, giving priority to greater good and promoting greater good through seeking benefit.” Chinese Ambassador to Zambia, Mr. Du Xiaohui, commented during the China-Zambia Trade and Investment Forum in September, 2022.

Sino-Zambia Ties Recalibration

The reality is that despite the massive economic relationship between China and Zambia for the past 20 years, it has not yet trickled down to ordinary Zambians, to reduce poverty and create sufficient jobs. The claimed “Win- Win” situation is a mirage and needs some recalibration. The New Dawn government should focus on this. READ MORE:

Zambia – China Economic Ties Need Recalibration

The lack of benefits to ordinary Zambians has been supported by empirical studies carried out by two Scholars from China’s Hebei University of Economics and Business, Cheng Jian and Comfort Lubinda,

“Even though the Sino-Zambia relation is based on win-win cooperation, the current pattern favours China more, and that China‘s impetus in engaging with Zambia and Africa as a whole is driven by the need to access markets and raw materials as well as on diplomatic basis. The practices of some Chinese companies operating in Zambia challenges the view that China‘s relationship with Zambia is an economic win-win relationship, and a new strategic partnership in the interest of the Zambian peoples, at least, the majority of local Zambians is needed,” The Scholars wrote in their research paper published in the International Journal of Economics, Commerce and Management, United Kingdom.
The Chinese President Dr. Xi Jinping, did admit to the lack of benefits to African countries in March, 2013, while addressing a crowd in Dar –as- Salaam, Tanzania. He promised to take corrective action regarding the African continent’s complaints concerning the lop-sided economic relationship.
“China frankly faces up to the new circumstances and new problems in Sino-African relations, China have and will continue to work alongside African countries to take practical measures to appropriately solve problems in trade and economic cooperation so that African countries gain more from that cooperation. We will strengthen mutually beneficial cooperation with African countries in agricultural, manufacturing and other spheres, helping these countries convert their resource advantages into developmental advantages,” President Xi Jinping said.

USA’s Contribution and economic relationship with Zambia

Zambia has derived immense benefits from its relationship with the United States of America (USA).
The USA assistance to Zambia is implemented by the US agencies, mainly USAID and the Millennium Challenge Corporation (MCC).The US support system expands and improves the quality of health, fights tuberculosis, malaria and HIV/AIDS through the President’s Emergency Plan for AIDS Relief (PEPFAR).And since 2004, the US has provided over US$4 billion to Zambia, and it remains the largest health bilateral funder, averaging US$400 million to US$500 million per year. As in 2021, more than 2.5 million Zambians benefit each day from the U.S. investments in health, education, and other areas. Through the MCC and its grant of US$332 million, the USA has invested in water supply, sanitation and drainage infrastructure, with a goal of reducing the incidence of water-borne diseases.

In terms of commercial relationship, Zambia and the US have very little between them as compared to China. In 2019, Zambia ranked at 150th largest goods trading partner with only $182 million in total (two way) goods trading. Exports were $99Million and imports were $83 million. In 2018, the USA foreign direct investment was $47 million. These are negligible numbers even with improvements since.

Zambia’s current cooperation with the United States of America has been going on in parallel with its cooperation with China. The two top economic powers have been complementing each other. The US needs to compete by ramping up investments and trade through its Private sector. The USA has been sleeping due to its Afro-pessimism and miscalculation of the value of the African market, while China has been seizing the opportunities. Zambia’s relationship with the two, is not a Zero sum game.

Zambia does appreciate the US assistance, but this should not mean that we downgrade our relations with China, and/or adopt US values and cultures like promoting LGBT, which are alien to our African cultures. There is need for the USA to respect Zambia’s independence and sovereignty, as China does.
Zambians on the other hand, shares with the USA the democratic values like freedom of expression and assembly. This Author cannot write a story like this one in China. He will be arrested like the female Journalist, Zhang Zhan who reported on the chaos at the Wuhan Covid-19 centre in February, 2020. She was jailed for four years on a ridiculous charge of “Picking quarrels and provoking trouble”, which is routinely used to suppress dissent in China. In recent years, there have been a number of Chinese business leaders – billionaires – who have gone missing for criticizing government, and others for inexplicable reasons. They reappear after some months. They include Alibaba boss Jack Ma, Bao fan, Guo Guangchang, Xiao Jianhua, Ren Zhiqiang and many others. Also, Chinese ordinary citizens do go missing after taking part in anti-government protests or human rights campaigns.

CONCLUSION

It is crystal clear from the economic numbers that given Zambia’s economic dependence on China, it is irresponsible for the USA to pressure Zambia to decouple its economic relationship with China when they have not. And it is not in Zambia’s national interests to pivot from China, as it will simply lead to economic collapse. Further, it is tantamount to political and economic suicide for any Zambian administration to ignore China’s role in our economy by attempting to delink Zambia from China. In any case, rationally, the fastest way to accelerate Zambia’s economic growth is through its recalibration of the relationship with China, so that our economic relations truly become win-win, rather than the mirage, it is now. China is huge in so many spheres, including its 1.4 billion market that President Dr. Xi Jin Ping offered to President HH to exploit in their phone chat on 31st May, 2022. China is the best conduit to fast track Zambia’s development.

Zambians have noted that President Hakainde Hichilema has said he is resetting the relationship with both the United States of America and China. The Edgar Lungu PF administration destroyed Zambia’s relationship with the US and the West, with their intolerance of criticism. They first expelled the IMF resident representative Dr. Afredo Baldini. Thereafter, they declared US Ambassador Daniel Foote as persona non grata, thereby forcing the US to recall him. The two actions were unprecedented in Zambia’s history

On the other hand, the PF engaged in a lop-sided relationship with the Chinese state. The also maintained what was perceived and described by critics as a generally corrupt relationship with Chinese private and public sector institutions. Zambia became China’s lap dog and poster Child, with Zambians humorously giving it a nick name: “Chambia.” The PF’s loss of power, is partly attributed to this. The Zambian electorate has always wanted to continue with the fore fathers’ non-alignment foreign policy. It has served the country well for almost 59 years. And any administration that pivots too much either to the West or East will pay a heavy price at the polls.

“This issue being pushed of: ‘China versus the US’, is a non-issue….what we have done with each of these countries is to reset our relationship. We are not fighting anyone. We are resetting our relationship; but it is also true that we are a democratic country; we have shared democratic values, but it is also true that we have a special relationship with China, an all-weather friend,” President HH is on record as having said, regarding the geopolitical rivalry playing out between the two economic powers at Zambia’s expense.

In terms of the status of Zambia’s debt restructuring deal, given the “all weather strategic partnership” ranking of Zambia by China, the deal is long overdue. The New Dawn administration has to learn how to deal with China. It needs to know the four critical pre-requisites – which are not for public consumption – in how to approach China in order to be get quick results. Sri Lanka and Ghana have read the script, and they have got their deals faster than Zambia. There are Zambians who can help because they understand the Chinese culture and civilization, and know how to deal with them. In the absence of the correct approach, it will take long to have a deal. The current verbal assurances Zambia is getting from China should not be taken with a pinch of salt. The record for action speaks for itself.

There are lessons for the USA, China and Zambia to learn on how they should relate to each other. The best starting point is the book: China-West Battle ground in Africa: Debt Ridden Zambia. The book is the current authority on the subject, such that, it is currently catalogued by the World’s largest library: the Library of the United States Congress in Washington, and the credible United Nations Library in New York. The book provides the best template on how the three countries should relate on Zambian soil in a win- win and non-confrontational basis.

Mwansa Chalwe Snr is a Chartered accountant and Author. He is an independent financial commentator and analyst. He is the author of “China-West Battleground in Africa: Debt Ridden Zambia” (2021), currently on Amazon.com. Contact: pmchalweATgmailDOTcom

11 COMMENTS

    • Mwansa Chalwe Snr, another well articulated message to those wise enough to lend an ear. I would like to know what your views are on Africa and Zambia in particular transacting in Yuan for all trade done with China? If China was of the view that we pay them for imports from China and get paid for our exports from Zambia in Yuan Renminbi then that would be a win win situation as this will reduce the demand for USD and thus lead to a more predictable and reliable economic environment.

  1. We are told to despise China, but we want the Chinese to vouch for as at Paris Club for our $13Bn debt.
    The US VP is coming to Zambia to punch holes in the Sino-Zambia partnerships and draw us to the West. Why are we lingering with the West if our economic recovery hinges with China? Are we not recently from commissioning the Chinese funded Kafue 750MW of power?

  2. Ctn…Tanzania have only a few days ago entered into an agreement with India to transact in Rupees, India and Tanzania last year having totaled a total of $5 billion in trade now want to trade in Rupees so as to not be at the mercy of
    USD exchange rate volatility which can result in major financial loses on both sides.

    Kindly Mr Mwansa Chalwe Snr, in one of your next articles consider discussing this subject of de-dollarization in favour of the Yen for Zambia-China trade.

  3. This is a non partisan answer to why we still don’t have the second disbursement of funds from IMF – as opposed to Ghana and Sri Lanka’s case: It is our loathing for China.

  4. But it’s true. Why can’t we trade with china using the yuan and India using the rupee and do away with the us system of paying for imports and exports.

    • @ Nazi not accurate, they will have no choice if the instructions come from China and Zambia to transact in Kwacha and Yuan.

      Kenya yesterday announced all fuel transaction to be in Shillings saving that country $500 million dollars.

  5. Very Interesting article. The kind that LT should be encouraging: “both China and Zambia are developing countries” Yes but China relies on itself for its development while Zambia relies on a dream that its ex-colonial masters will come develop it. That is why in 60 years China is about to become the world’s biggest economy while Zambia is among the poorest economies on earth.
    Correction: Tuta was constructed by Cogefar an Italian firm that also constructed the Kitwe Ndola dual carriageway

    • @Kadansa, I think the author meant the FUNDING of the two projects you have mentioned. I may be wrong, but I believe the Italians did not fund the projects. An Italian construction company may have won the bid but that does not mean it was the Italian Govt that provided the funding. I will stand corrected if that’s not what the author meant.

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