At the invitation of his Chinese counterpart Xi Jinping, Zambian President Hakainde Hichilema is visiting China from September 10 to 16, which marks a milestone in their longstanding relationship, dating back to when the southern African country gained independence in 1964.
With talks between the two parties premised on mutual benefit, the meeting between the two heads of state will further deepen the decades-long China-Zambia diplomatic relationship, which is guided by good faith, sincerity and fruitful cooperation across various areas including trade.
Data from the Observatory of Economic Complexity shows that during the last 26 years, trade between China and Zambia has been on an upward trend. While China’s exports to Zambia increased at an annualized rate of 16 percent, from $20.2 million in 1995 to $951 million in 2021. At the same time, Zambian exports to China also rose at an annualized rate of 31.8 percent, from $1.73 million in 1995 to $2.26 billion in 2021.
In recent years, the two countries have traded various commodities including coated flat-rolled iron, tractors, refined copper, raw copper and raw tobacco, driving growth in both countries amid the devastating impacts that the COVID-19 pandemic and the Russia-Ukraine conflict unleashed on global supply chains.
In the case of Zambia, whose economy rebounded in 2021, with real gross domestic product (GDP) expanding at 4.6 percent from a contraction of 2.8 percent in 2020, trade with China was a major driver for growth. The southern African country was able to weather many geopolitical storms thanks to robust copper prices and favorable external demand from major trading partners including China.
However, Zambia is not out of the woods – since 2022, challenges in key sectors including agriculture, mining and construction have impeded the pace of post-pandemic recovery. The landlocked southern African country certainly faces an uphill task, given an increased import bill driven by spillovers from the Russia-Ukraine conflict, falling copper prices and reversed portfolio capital flows. These capital flows are a result of uncertainty surrounding debt restructuring, which triggered the depreciation of the Kwacha, Zambia’s currency, and put pressure on official reserves.
However, on the brighter side, Hichilema’s visit to China, which focuses on enhancing cooperation with the Asian giant in trade and investments, energy, infrastructure development, mining and agriculture, could turn the corner for Zambia.
In fact, while Zambia’s recovery is expected to strengthen, with GDP expanding by 4.5 percent per year over 2023-2025, China will play an indispensable role in realizing this goal. According to the World Bank, robust copper demand from China and commencement of fertilizer production at newly established plants will broaden the base of GDP growth. Together with policy reforms across key sectors such as agriculture, business and energy, Zambia could boost fiscal sustainability and expand private sector-led growth.
To support Zambia’s target, Chinese enterprises in the country have started to explore new models of practical cooperation with their African counterparts – the move seeks to further unlock growth potential by enhancing manufacturing and value addition capacities across key sectors, including agriculture.
In a recent example, on April 27, Hichilema participated in the opening ceremony of the UCFCL 300,000 MTPA Urea Project, a China-led $595 million investment, the first modern urea factory in Zambia and neighboring countries. The project, which will provide 300,000 tons of urea annually, will significantly reduce agricultural costs, boosting farm productivity, improving food security and creating new job opportunities in the agricultural sector, the major source of employment in the country.
In another example, on June 3, 2022, Zambia officially commissioned three state-of-the-art milling plants funded by China. With a combined capacity to produce 520 tons of mealie meals per day, the three industrial milling plants have contributed in reducing the price of mealie meals used in preparing the country’s staple food, improving food security and creating new jobs in the process.
These projects that explore new models of practical cooperation, together with other Chinese investments, firmly contribute to Zambia’s efforts to advance structural transformation of the economy, epitomizing the slogan, “invest in Zambia, produce in Zambia, buy in Zambia.” The country indeed benefits from the input of Chinese technology and expertise.
During Hichilema’s visit to China, new agreements and enhanced economic cooperation between the two parties with shared interests will significantly boost trade and investments, promote partnerships between Chinese and Zambian enterprises and encourage Chinese technology transfer in key sectors, particularly agriculture and business. While both countries stand to benefit enormously, the enhanced cooperation will further eliminate structural barriers impeding Zambia’s economic recovery.
Alexander Ayertey Odonkor, is a global economist with a keen interest in the social, environmental and economic landscape countries, particularly in Asia, Africa and Europe. The article reflects the author’s opinions and not necessarily the views of The Southern African Times.
