By Mwansa Chalwe Snr
Zambians must be curious to know what was achieved by President Hichilema’s most important, and potentially consequential trip that he has undertaken in his two years reign. The joint communique that was released may be too technical and difficult to interpret by many ordinary citizens in terms of how beneficial the trip will be in their lives. They, therefore, deserve a sober, objective, non-partisan evaluation and analysis of the visit.
The Author of this article is an expert on China – Zambia economic relations having written a credible book on it, which is catalogued in United Nations Library in New York and United States Government Library of Congress in Washington. READ MORE: https://www.amazon.com/CHINA-WEST-BATTLEGROUND-AFRICA-Geo-Economic Competition/dp/9982913174
Sino-Zambia ties not yet win-win
The current relationship between Zambia and China – like many other African countries-has not been the purported win-win by China. The benefits have not yet sufficiently trickled down to ordinary citizens, in terms of reducing poverty and creating sufficient jobs. China has benefited more than Zambia. President Xi Jinping is on record as having admitted the same, ten years ago while addressing a crowd in Dar- es Salaam as quoted by the New York Times. President Xi Jinping promised that his government would take corrective action regarding the African continent’s complaints about 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.
The lack of sufficient benefits for Zambia from its relationship with China was confirmed in a study by Chinese Scholars from 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. A new strategic partnership in the interest of the Zambian peoples, at least, the majority of local Zambians is needed,” The Scholars wrote in the International Journal of Economics, Commerce and Management, United Kingdom.
It is on the basis of this lop sided relationship that there has been a clarion call by Zambian patriots including this Author, that the New Dawn administration ought to reset and recalibrate the relationship so that it truly becomes a win-win situation as President Xi Jinping promised. READ MORE: https://www.lusakatimes.com/2021/07/27/zambia-china-economic-ties-need-recalibration/.
Presidents Xi Jinping and Hichilema joint Collaboration Communique
The Chinese and Zambian Presidents released an impressive and comprehensive communique of collaboration at the end of the Zambian President’s visit, as a deliverable. It covered a wide range of issues from security to geopolitics. But our focus is on economic issues, which citizens are primarily concerned about. The economic issues that the two countries undertook to collaborate on were: the promotion of clean energy, mining and exploration, agriculture and agro – processing, trade and investment, tourism promotion, manufacturing as well as supporting the upgrade and renovation of the TAZARA Railway and reviving Mulungushi Textiles in Kabwe.
It may be useful to focus and elaborate more on four economic sectors that the two countries committed to work together on, which could be transformational to the Zambian economy by accelerating its growth and diversification. These are the sectors that are underperforming and provide the greatest opportunity.
In agriculture and agro-processing, the two Presidents committed themselves to the following: “The two sides will implement the Joint Statement on Deepening Agricultural Cooperation and Ensuring Food Security. The Zambian side will provide necessary support for Chinese investment in Zambia’s agriculture sector. The Chinese side encourages Chinese businesses to participate in cooperation throughout the industrial chains of agricultural products and invest in production of fertilizers, pesticides and agricultural machinery in Zambia,” the Communique stated. “The two sides recognized that a redeveloped Mulungushi Textiles factory with modern efficient technology will align with the Zambian Government’s development strategy of industrialization and promotion of agro-processing and value-added exports to China, which also creates jobs and alleviates poverty, especially among the rural communities engaged in cotton growing.”
As regard to the promotion of the Green economy they said: “The two sides will establish a green development strategic partnership and enhance cooperation on environmental protection, combating climate change green economy, and emergency risk response mechanism, among others. The two sides will deepen mutually beneficial cooperation on renewable energy such as photovoltaic power, and electric vehicle industries to promote energy transition and ensure energy security.”
The Tourism sector was also an important area of focus for collaboration between China and Zambia, as it is underutilized at the moment with very few Chinese tourists. Zambia has started providing Chinese tourists free visas. China, on the other hand, has listed and included Zambia in the second batch of pilot countries for outbound group tours by Chinese travel agencies. They also agreed to explore the introduction of direct flights between Zambia and China so as to promote tourism between the two countries.
The promotion of diversified trade between two countries is vital. At the moment, Zambia’s main export to China is copper, which runs in billions of dollars. But this is a mirage in terms of benefiting the Zambian economy, as most of the money does come to Zambia. There is a need for the aggressive promotion of Zambian’s non-traditional exports, especially agricultural products, to the massive Chinese market in order earn foreign exchange. The communique said: “The Chinese side will actively explore the possibility of providing market access to more Zambian products and provide facilitation for holding trade promotion events in China. The two sides encourage greater use of national currencies in trade and investment, and help businesses of both countries reduce costs of currency
exchange and lower exchange rate risks. The two sides will also create a favourable
policy environment for promoting settlements in local currencies and support a greater role of the Chinese Renminbi (RMB) settlement bank in Zambia”. There was, therefore, a call for an effective De-dollarization of trade between the two countries by the communique.
How beneficial to Zambians was the China Trip?
The contents of the joint communique was very comprehensive, wide ranging and impressive. The contents leaves one with no doubt that China is making serious attempts at addressing the complaints about the lack of sufficient benefits for ordinary Zambians in the current economic relationship. The communique did not just focused on infrastructure development, as it was in the past. It is, therefore, vitally important that the joint communique’s implication and potential impact on the economy and on ordinary folk, is explained.
President Hichilema’s trip was undoubtedly beneficial in so many ways. The immediate overarching benefit of the trip is the reinvigoration of Zambia’s relationship with its most important diplomatic and economic partner by far. The resulting upgrade of the relationship from all “Weather Friendship” to “Comprehensive Strategic Cooperative Partnership”, amounts to the recalibration of the relationship that this Author has always been calling for. The relationship upgrade is likely to come with immense benefits and potential opportunities for Zambia. Prior to President Hichilema’s visit, many World leaders had visited China. The number of 2023 Head of State visits to China is unprecedented. This is due to the fact that it is an important driver of various countries’ economies. READ MORE: https://www.lusakatimes.com/2023/04/26/world-leaders-rush-to-beijing-how-china-can-facilitate-zambias-fast-economic-recovery/
In the event that the government immediately starts implementing most of the undertakings in the joint communique, the potential benefits to Zambia are immense. They include the following: reduction in cost of living including mealie meal, as the increased non-traditional exports will increase foreign exchange inflows and strengthen the kwacha; thousands of jobs will be created through mass employment creation sectors like agriculture and tourism as a result of access to the huge Chinese market; there is likely be an acceleration in transitioning to the green economy through renewable energy and EV technology; better and favourable bilateral debt restructuring deal with China due to the upgraded relationship, and in general, China will facilitate fast tracking the diversification of Zambian economy so that the over dependency on mining can be put to bed and we start getting better deals.
One should also expected some investment flows following the President’s meetings with some big Chinese Private Sector players like of internet giant Tencent, automaker BYD and telecom majors Huawei and ZTE. At ZTE, an MOU with the company to set up a smartphone assembly plant in Zambia. At BYD (Build Your Dream), a global leader in electric vehicle (EV) manufacturing, the company was invited consider investing in Zambia because it has the right mineral resources necessary for producing their components.Already, ZDA announced some pledged investments of about $1.4 billion. In Solar power.
President Hichilema should be congratulated for this very successful trip by all Zambians of goodwill. In the meeting with President Xi Jinping, he undertook to learn from the Chinese experience. The lowest lying fruit for the President to start the learning process, is reforms in the governance and management of State Owned Enterprises (SOEs), as I recommended in my latest article. China’s success is partly attributed to how it carried out reforms of SOEs when it introduced its new system of Socialist Market Economy from 1978.The Private Sector was allowed to thrive alongside SOEs, with some of the latter companies, even being listed on Stock Markets in order to introduce market discipline in the way they conducted their businesses. This resulted in great transformation in the performance of SOEs. READ MORE: https://www.lusakatimes.com/2023/09/13/how-idc-reforms-can-grow-economy-boost-job-creation-and-tax-revenue/
In 2024, Zambia and China will celebrate 60 years of diplomatic relations and the two countries have designated the year as: The Year of Business Cooperation. It is important for the USA and the West to understand that Zambia’s relationship with China is too deep to decouple. And if they dig just a bit deeper, the numbers and physical structures in Zambia, associated with China, will tell them the full story. READ MORE:https://www.lusakatimes.com/2023/03/27/usa-seems-to-undervalue-chinas-role-in-zambian-economy-here-is-how-deep-the-ties-are/
It must be realized that Zambia’s relationship with the West and China is not a zero sum game. What China provides, the West have failed to provide due to their economic and political system. And China cannot provide Zambia with what the West can provide. Zambia needs both of them.
The writer is a Chartered Accountant and Author. He is an independent financial commentator, Analyst and a Semi-retired MSME Consultant. He is also an Op-Ed Contributor to the Hong Kong based, Alibaba owned, and South China Morning Post (SCMP). Contact: [email protected]