China-Zambia engagements: is there change, what has changed and why?

ABSTRACT

This paper examines China-Zambia bilateral relations from a historical perspective. In particular, it looks at how these relations have been changing in emphasis from the pre-independence era to the present and the factors associated with these changes. Both quantitative and qualitative methods were used to collect data. Secondary data were mainly collected from government reports, while qualitative data were collected from some key informants using in-depth interviews. The discussion and analysis is informed by the pentagonal analytical framework. The findings demonstrate that bilateral relations been the two countries have been changing but only in emphasis; from the pre-independence period, which was characterized by support for the liberation of Zambia, through the provision of development aid immediately afterward, and now to the current focus on trade and investment, which is more economic in orientation. It has also been frequently argued that the contracting process for loans should be more transparent so that it is inclusive and not just left to the executive arm of government without involving the national assembly. In order for Zambia to benefit from this engagement the country needs good leadership, but this has been lacking until recently.

KEYWORDS:

• China
• Zambia
• debt
• Belt and Road Initiative
• agency
• relations

1. Introduction

China’s signal foreign policy initiative in the last decade has been the Belt and Road Initiative (BRI), a massive global program of infrastructure construction, among other elements. However, the internal contradictions of this project, such as the debt traps it has helped create and the tensions between its geopolitical and geoeconomic aspects have resulted in its substantial scaling back in recent years.¹ Some claim that China is deliberately trying to entrap other countries and compromise their sovereignty through debt,² but this has been largely debunked.³ Nonetheless debt to China has become a significant issue in some countries on the continent, protestations to the contrary notwithstanding.⁴ Indeed, this has become the most prominent issue in Zambia-China relations.

Zambia was the first country on the continent to default on its international loan obligations during the COVID pandemic and there have since been extensive discussions with creditors, with China the largest of these, about how to restructure the country’s debt.⁵ Chinese aggregate loan commitments in Zambia account for 43% of Gross National Income (GNI),⁶ with much of this taken on in order to build infrastructure.⁷ As Brautigam explains,⁸ “it has been Zambian politicians exercising agency, and multiple, uncoordinated Chinese companies and creditors advancing funds that have landed Zambia in its current state of insolvency.”

This paper explores the evolving nature of Sino-Zambian relations, including debt, and is based on qualitative and quantitative data that were collected during the month of September 2022. The research design made use of both secondary and primary data. Various government ministries were visited, and interviews were conducted with key informants. Some of the relevant ministries approached included those of Finance and National Planning, Home Affairs, Defence, and Internal Security and Energy. The Ministry of Finance and National Planning provided information about the value of China’s support to Zambia from a historical perspective, as well as the actual projects supported, and how that specific support was acquired. The Ministry of Finance and National Planning plays a central role in this study as it is the custodian of all government agreements of a monetary nature, be they grants, loans, investments, or other. The inclusion of the Ministry of Home Affairs and Internal Security and the Ministry of Defence is also of cardinal importance to the study’s ability to address the peace and security component of the pentagonal framework. As this component is a critical part of the support to Zambia by China, both ministries received significant amount of loans⁹. Interviews were also conducted with a limited number of non-governmental stakeholders, such as various academics and the Zambia-China Friendship Association to, inter alia, document their perceptions of Chinese support to Zambia¹⁰.

This paper is structured as follows. The next section deals with the analysis and discussion focused on application of the pentagonal analytical framework outlined earlier in this special issue. The framework consists of domestic politics, economic factors, security issues, regional relations, as well as international relations and their interactions, used to explain the shifts in the bilateral relations between China and Zambia. These factors do not work in isolation but overlap and at times reinforce each other.

Of particular interest in the analysis and discussion sections is the interrogation of the bilateral relations. The section on bilateral relations focuses on how Zambia contracts external loans and grants, especially from China, and includes examination of Zambian agency. Further, the paper examines in detail the developmental impact of the bilateral relations between the countries. The beneficial aspects of these relations are also discussed. Finally, the paper ends with some final remarks arising from the discussions in the preceding sections.

2. Analysis

As already noted, there are many drivers that explain the current bilateral relations between China and Zambia that should be considered as the factors for analysis. The first of these is what can be considered as economic cooperation driven by domestic, economic and international factors with respect to the two countries.

2.1. Economic cooperation

It is important to note that China has supported Zambia from pre-independence using diplomatic relations and development assistance. One significant development project was the construction of the Tanzania-Zambia Railway (TAZARA) in the mid-1970s, covering a distance of 1,860 km. After that, from the late 1970s to the 1990s China itself underwent economic reform. This period coincided with the economic liberalization that was undertaken in most African countries, including Zambia. Such reforms facilitated the flow of foreign investment into Africa, especially from China.¹¹ The subsequent period, from the late 1990s until now, has also seen significant change as China has become a major outward investor rather than a net importer of capital. The economic success of China has generated significant demand for natural resources, giving rise to the policy to encourage its state-owned enterprises (SOEs) to invest outside the country.

In 2006, the Chinese market accounted for 10% of Zambia’s exports at USD381 million, compared to USD 0.94 million in 1998.¹² Zambia’s main export item to China is copper. The increase in the export of copper was spurred by the China Nonferrous Metals Mining Group’s purchase of Chambishi copper mine in 1998. Other Chinese SOEs and private companies have also invested in the mining industry. Currently, China is the second major destination for Zambia exports after Switzerland and it is the second largest source of Zambian imports after South Africa.¹³ Much of the copper is traded via Switzerland, which accounts for 60% of the global trade in metals,¹⁴ and is subsequently reexported to China.

As more Chinese SOEs and companies started operating in Zambia, other engagements also deepened as more banks started offering loans to Zambian government agencies. Over the period of 1967–2006 Chinese loans amounted to USD409.4 million and on top of that there were grants of USD5.4 million.¹⁵ From 2002 Chinese lending has diversified, with more private institutional lenders providing loans to government agencies and ministries. According to Mwanawina,¹⁶ between 1992 and 2006, China provided support to Zambia in various forms such as grants, loans, special loans and technical support amounting to US$116.1 million. These kinds of support assisted in addressing some of the challenges Zambia was going through. A breakdown of these loans and aid funds shows that the targeted areas included were the TAZARA project, economic technical support, and a new government complex.¹⁷

Grants have been restricted to the provision of food relief, implements, and general goods. These started to be given during the pre-independence era and have continued. Many projects of national significance have been undertaken with grant aid from China. Zambia received help from China when the country was really desperate and in dire need.¹⁸ Projects such as the roads to Kaoma and between Serenje and Mansa between the 1970s and 1980s are examples of such development cooperation.

Overall, China’s footprint is very visible in Zambia’s economic landscape. At the recently held Zambia-China Trade and Investment Forum in Lusaka (on NaN Invalid Date), the current Zambian president Mr Hakainde Hichilema emphasized the importance of Chinese investors to the development of value-adding industries.¹⁹ Currently however, Zambia is mainly exporting raw materials in the form of minerals, timber, and agricultural produce. Zambia’s exports to China in 2021 are estimated to have been US$1.2 billion against US$896 million worth of imports during the same period.²⁰

Zambia thus needs a new partnership with China based on increased exports of value-added goods.²¹ President Hichilema further stated that the occupancy rate in the three Chinese multi-facility economic zones in Zambia is low. The President, therefore, encouraged Chinese investors to set up such industries in these special economic zones, preferably as joint ventures with Zambian companies.²² This is a demonstration by the President of the need to ensure that Zambia and its people maximize benefits from foreign investment. Although it may be too early to assess the leadership of the new government with respect to putting the interest of Zambians first, if the current indicators or pointers continue in this trajectory, there is some hope that wider positive benefits from these bilateral relations may finally start to trickle down to the Zambian population. How this is to be actualized in policy is now a key question. The President recently made his first official visit to China.

Unlike other investors in Zambia, China has an organized power structure within the country. According to Shi and Li,²³ “In Zambia, a ‘pyramid of power’ exists within Chinese associations from the Chinese embassy at the top, to associations and individual Chinese and companies.” Some associations “may even take orders directly from homeland governments (provincial and municipal) and promote subnational and party policies within the Chinese community in Zambia.” This well-organized power arrangement can partly explain the influence of Chinese investment in Zambia.

There is currently a growing debate regarding renewed US-Zambia relations. Indeed, it is a fact that ever since the new government of Zambia led by Mr Hakainde Hichilema came into being at the August 2021 elections, Western countries, especially the US have done a lot to strengthen relations with Zambia. In 2022, a US-based company called KoBold invested over $150 million in the Lubambe Copper Mine near Chililabombwe Town in the Copperbelt Province of Zambia.²⁴ Of more significance is the visits to Zambia by high profile US government officials, especially the visit by the US Vice President to Zambia in March 2023 as well as the interest by the US in the manufacturing of batteries for electric cars in both the Democratic Republic of Congo and Zambia.²⁵

The renewed bilateral relations between the US and Zambia have compelled some commentators to state that Zambia is moving away from China by getting closer to the US. What should be noted however, as the current president has explained on different occasions, is that the now strengthened relations with the US will not lead to weakening relations with China. The China-Zambia relations are historical and will remain strong. The implications of the strong relations with the US and other western European countries, however, are that Zambia may have stronger negotiating capacity with China around issues such as debt. We now move to a discussion of Zambian indebtedness to China.

2.1.1. Current status of indebtedness to China

The current accumulation of the loan portfolio of Zambia, especially after the cancellation of many previous loans under the Highly Indebted Poor Countries Initiative (HIPIC), and the country’s defaulting on current external loans in 2021, has generated a lot of debate across the world. Zambia’s external debt stood at about US$14.8 billion inclusive of guaranteed debt owed by the state-owned companies as at December 2021.²⁶ Out of this total, US$ 6.14 billion is owed to China alone, translating to over 40% of the country’s external debt (Table 1). China therefore is the largest single lender to Zambia.

Table 1. Zambia’s exposure as at end of December 2021.

CREDITOR NAME	AMOUNT (USD)
GRAND TOTAL China	6,268,150,693
(A) Central Government External Debt
EXIM CHINA	3,050,260,533
INDU COM BANK CHIN	493,107,654
CHINA DEV BANK	512,241,331
BANK OF CHINA (ZM)	288,846,228
POLYTECH	202,228,814
CATIC	98,468,128
STARLITE	41,591,654
CHINA MINSHENG BANK	39,729,576
JIANGXI BANK	33,058,749
GOVT OF CHINA	23,546,292
TOTAL China Central Government	4,783,078,958
(B) SOEs Guaranteed External Debt
ZESCO	276,265,415
China Exim	7,639,261
ICBC	268,626,154
KGL	981,796,585
China Exim/ICBC	981,796,585
DBZ	27,000,000
CDB	27,000,000
PSPF	52,726,058
ICBC	52,726,058
ZAMTEL	22,200,276
ZAMTEL/HUAWEI	22,200,276
TOTAL SOEs Guaranteed	1,359,988,334
(C) SOEs Non-Guaranteed External Debt
ZESCO	125,083,401
China Exim	107,079,157
ZCCZ	1,482,633
Mpande Limestone	727,581
CMEC	15,794,030
TOTAL SOEs Non-Guaranteed	125,083,401

Source: Ministry of Finance and National Planning, 2022.

As Table 1 shows there are three types of loans which Zambia has borrowed from China in the recent past; China to the Central Government of Zambia (US$ 4.8 billion), Chinese SOE activities that are guaranteed (US$ 1.4 billion), and SOE Non-Guaranteed investment (US$ 125.1 million). It is important to state that these loans were applied in various sectors including energy, health, education, transport infrastructure, defense, water supply and sanitation, and information and communication technology (ICT). In the social sectors of health and education, some of the loans were used to build hospitals and schools across the country, while in the transport sector, the loans were used to construct various roads and bridges. One significant project which has been undertaken in the energy sector is the construction of the Kafue Gorge Lower Power Station. This power station, once it is fully operational, is going to increase power generation in the country to above 750 MW. Loans have also been applied to water supply and sanitation, which are critical in the area of poverty reduction and disease prevention, in particular those diseases related to poor sanitation and lack of access to safe drinking water such as cholera, dysentery and typhoid.

Among the country’s SOEs loan acquisition by the Zambia Electricity and Supply Corporation (ZESCO) is significant. It is a parastatal company that manages power in the country from generation, transmission and distribution. Currently this organization is highly indebted, and it is widely believed that it has been abused by different ruling parties in Zambia by siphoning financial resources from it and investing them in political activities. Whether or not this may continue in the era of the “New Dawn” government under the leadership of President Hichilema in Zambia only time will tell.

2.1.2. Loan acquisition processes, procedures, and agency

This section discusses the processes and procedures that are followed in the contracting of loans by the government. What is the role of the Ministry of Finance and National Planning? What is the role of the line ministry in loan contracts? Are the technocrats involved and at what stage? Who finally approves the contracts? Negotiating for the acquisition of loans is a long process and involves many stages. This is irrespective of whether a loan is from China or from any other country. The only difference is that the demands or rather the terms and conditions of the loans from China are flexible, do not interfere in the internal politics of the debtor countries, and are simplified compared to loans, for example, from multilateral lending institutions.²⁷ Nevertheless, there are 15 stages in the process of acquiring an external loan which starts with the line ministry identifying the project based on the priority areas of the National Development Plan and ends with loan effectiveness according to the agreed conditions (see Figure 1).

Figure 1. Current loan contracting process.

Source: Ministry of Finance and National Planning, 2022.

The loan acquisition process thus shows a clear procedure that is followed when contracting a loan. It shows that the sector ministries are involved, especially from inception, as the officers play a critical role in the identification of the project. The Ministry of Finance and National Planning decides where to find the money among creditors if the project cannot be supported by the budget. The minister in the sector ministry is equally important in this process as well as the Cabinet, which gives approval. The Cabinet consists of Ministers (politicians) and the President together with the Vice-President. In terms of legal checks on the agreement, these are provided by the Attorney General, who ensures that all legal matters regarding the agreement are thoroughly addressed. While it is not fully clear how the negotiations are conducted, or how decisions finally made in each one of the stages, it is clear is that the politicians seem to dominate in decision-making and this where the process can be abused by those who may be greedy.

Although this process appears to be water-tight and transparent, experience shows that the system failed to detect the over-borrowing in the past 10 years. And this is to the extent that the country has been defaulting in its obligations to repay external creditors whose total loans stand at over US$14 billion. It appears from the interviews that the Chinese actors have a clear vision of what they want during negotiations, but there are substantial power differentials between the two countries going by the seemingly unfair bilateral decisions. The unfair relations are exemplified by the apparent lop-sidedness in terms of the benefits therefrom. It can therefore be argued that the Zambian negotiators have a somewhat limited ability during the process of debt negotiations as shown by their failure very often to get the best deals for the country.

There have been concerns by many observers over the way these debts are contracted. This then brings into question the role the technocrats play in the various government ministries. However, be that as it may, the debt contracting process does not only involve technocrats, as politicians make the final decisions. This calls for good leadership from the politicians who should have the interest of the country at large at heart. However, good leadership has eluded many African countries, including Zambia. Therefore, it remains to be seen how the new government of August 2021, also known as the “New Dawn Government,” will change these negative perceptions about politicians and their representation of the people’s interests. As a way of correcting the past ills in debt contracts, the new government has enacted the Public Debt Management Act of 2022 to ensure that all debt acquisition by the government has to be approved by the National Assembly and not just the Cabinet. The bill leading to this Act was overwhelmingly supported in Parliament. This move will enhance transparency and ensure that the loans that will be contracted going forward will be beneficial to the people. It is thus expected that the people’s representatives will ensure that the people whom they represent benefit, and further curb carelessness in acquiring loans.

2.1.3. Stakeholders’ perception regarding acquisition of loans

The perceptions of some stakeholders regarding how loans are contracted, especially those from China, are varied. There are those who firmly believe that there is no transparency, and that China uses unconventional methods in the way loans are contracted.²⁸ There is a general perception that the agreements that have been entered into with China have been done so in secrecy. “In terms of the process negotiations for deals, the Chinese model in some cases avoids using the conventional government structures,”²⁹ instead preferring to deal with high-ranking government officials.

Others, however, are of the view that Chinese officials are open people and that it all depends on the negotiators from host countries.³⁰ It is further explained that the argument that Chinese are not honest when negotiating for deals with host countries is just propaganda from western academics and media organizations designed to demonize a fellow competitor in the global market.³¹ This respondent further explained that China as a developing country is not bound by the framework used by developed countries. Other stakeholders have argued that the process of contracting a loan from China is simplified and faster compared to other lenders.³² There are no complicated conditions attached.

The apparent weakness by the negotiators in Zambia could in fact be due the language problem. Whereas many Chinese speak English, Zambian teams comprised of those who do not understand the Chinese language.³³ Negotiations that are carried out through translations may cause some misrepresentation of facts. But what is needed in all of this is good leadership.³⁴ Although the model of negotiations used by China appears to be flexible, it requires that the Zambian negotiators have a clear vision and ensure that the host country gets some reasonable benefits from these bilateral relations. Moreover, although this model of negotiating for loans with China is credited for its flexibility, it often lacks transparency and is therefore susceptible to allegations of corruption.

2.2. Regional relations

In terms of regional relations, with the Southern African Development Community (SADC) China extracts both value and resources. Because of Angolan oil, SADC has generally had a trade surplus with China in recent decades, but when oil is excluded the balance of trade favors China in the order of almost 2:1,³⁵ with some resource exporters such as Zambia and South Africa running particularly large trade deficits arising from the higher value added and demand for manufactured products. This is exemplified by the fact that the cost of shipping a container from China to Durban is more than double that on the return journey, where it is primarily lower-value, often unprocessed, raw materials that are being transported outwards.³⁶

Within the Southern African region, South Africa is the largest player in terms of trade. Almost all the other countries in SADC have some significant trade with South Africa. Even at a global level of comparison South Africa is Zambia’s largest trading partner.³⁷ Surprisingly, there is little rivalry between South Africa and China in terms of trade in the region as their areas of focus are not the same. While China’s main focus is on the extraction of raw materials, South Africa is more involved in commercial and other services. Furthermore, suffice it to state that Zambia’s trade with South Africa is more driven by the private sector in contrast with the involvement of the SOEs from China. Nonetheless, the only key role that South Africa plays in China-Zambia relations is that most exports, largely raw and semi-processed materials, pass through the port of Durban in South Africa. Regional relations are muted in explaining the bilateral relations between China and Zambia.

2.3. Peace and security

The pentagonal framework breaks down the various areas of relations for easy comprehension. Without doubt, support in the area of peace and security is seen as another form of relations between countries. Throughout the region, China has played a key role particularly in the liberation of many countries such as South Africa, Zimbabwe and Zambia. Apart from moral and diplomatic support, several liberation movements have been funded by China in the fight for their freedom.

In the case of Zambia and particularly in the area of defense and security, the Zambia Ministry of Defence also received support from the disbursement of loans. The army for example has received various types of military equipment as well as training from China. Further, the Ministry of Home Affairs and Internal Security has benefited financially from the Chinese Government. China has significantly supported the internal security of Zambia over the past 10 years. The focus of this support/loans has been in the provision of equipment supplies to the Ministry of Home Affairs and Internal Security amounting to over US$35 million. Other areas of support include support to the Public Security System Safe City Project, and the construction of over 2,000 houses for security personnel. Although the level of support may not be large in terms of how much has been spent, it has made a marked difference in the long run as the aggregate amounts over 20 years are quite significant.

3. Discussion

In this section, attention shifts to discussing the impact of the bilateral relations between China and Zambia. In particular, the interrogation relates to the developmental impacts of the relations between these two countries, to a large extent using the pentagonal framework to inform the analysis. In the second section, the evaluation of the cooperation between the two countries is with respect to whether or not these bilateral relations have been a win-win situation.

3.1. Developmental impacts of China-Zambia relations

There is now an extensive body of literature on the nature of Chinese developmental impacts in Africa.³⁸ China’s development impact has been particularly controversial in Zambia. As Aidoo³⁹ notes, “Zambia’s dependence on copper mining, labor issues, and its government actions in relation to China have contributed to diverse political contentions and popular discontent in democratic Zambia.” Chinese people have been killed in Senegal, Zambia, and the Central African Republic for example,⁴⁰ due to the poor safety record of Chinese-owned companies, and violent conflicts between workers and Chinese company owners over conditions of service and salaries.

China is the world’s biggest consumer of copper and when the price for this was high demand from that country was associated with an economic boom and poverty reduction in Zambia.⁴¹ However, when copper prices fell the economy slowed and the government attempted to maintain popular support through a Chinese loan-funded infrastructure expansion or “bonanza.”⁴² This included the construction and operation of Ndola Airport and a second terminal at Lusaka International Airport.⁴³ However, this infrastructure boom resulted in a substantial accumulation of debt, which along with debt from other sources, such as the US-based Investment Company Blackrock, proved unserviceable, particularly in the context of the COVID-19 induced economic contraction.

China has undertaken a variety of other developmental initiatives and projects in Zambia over recent decades, including building a multi-facility economic zone (MFEZ) in the north of the country in Chambishi, a “sub-zone” in Lusaka East MFEZ,⁴⁴ and another “sub-zone” in Chibombo in the center of the country. Zeng⁴⁵ details the multiple problems and under-performance of these zones. For some, the Chambishi zone is a “pseudo” economic zone designed merely to give tax breaks to the Chinese mining company that operates it,⁴⁶ NFCA. The displacement of local small business by Chinese companies and traders in these areas has been a source of political contention in Zambia, but new large-scale investments in mining have also brought new jobs.⁴⁷ These large-scale companies proved resilient to the downturn associated with the global financial crisis given their Chinese state-backed nature, which makes them concerned with security of supply rather than just short-term profitability considerations – what Lee⁴⁸ has called “encompassing accumulation.”

Substantial capital continues to be invested by Chinese companies, creating significant employment but note that this is only projected rather than realized investment and job creation). Foreign investment may also undermine national development by repatriating profits, reducing tax revenues if incentives are given, outcompeting local firms and myriad other impacts. There is also almost no evidence of knowledge spill overs from Chinese companies to Zambian ones and very few cross-border linkages,⁴⁹ despite largely unsupported claims that China is industrializing Africa through offshoring.⁵⁰ The Chinese firms have weak industrial linkages/connections within the domestic economy as the raw and semi-raw materials are exported to China for further processing. The manufacturing share of Chinese foreign direct investment in Africa was 13.2% in 2017,⁵¹ although there are some examples of effective Chinese industrial clusters on the continent, in Ghana for example.⁵² According to one source there are over 600 Chinese companies operating in Zambia with a total of more than US $3.8 billion invested,⁵³ suggesting that much of the projected investment will not be realized.

As noted in Table 2, China has invested in the establishment of special economic zones. In fact, Zambia was the first African country to setup special economic zones under the FOCAC, after the 2006 declaration that 5 multi-facility economic zones would be established within the continent. The first zone to be set-up was the Zambia-China Economic and Trade Cooperation Zone (ZCCZ) operated by the China Nonferrous Metals Mining Group (CNMC). It started operating in 2007. The zone comprises two sub-zones. One is the Chambishi MFEZ which is anchored around the copper smelter located within the same zone. The main activities in the Chambishi special zone are copper processing, metallurgy, electronics, and light manufacturing. The second zone is the Lusaka East MFEZ which focuses on light manufacturing. ZCCZ zones offer prebuilt factories and warehouses connected to water and electricity for lease to their clients. The ease of setting up a company within the zones is the major attraction to prospective clients. By September 2021, ZCCZ was employing 10,000 locals, with 78 companies operating, 59 operating in Chambishi and 19 in Lusaka East.⁵⁴ The cumulative investment at ZCCZ was USD 1.667 billion and had created 12,775 jobs. Thus, ZCCZ has created a good number of job and helped diversify the Zambian economy. The third Chinese special economic zone is the Jiangxi MFEZ located in Chibombo District in the northern part of Lusaka. MFEZ are long term ventures that take time to mature, although the general experience with them in Sub-Saharan Africa has been somewhat disappointing given the general absence of a regional product cycle with significant FDI.

Table 2. Chinese investment and employment 2019–2021.

Year	Amount in US$	Jobs
2019	6,525,403,091	20,790
2020	721,627,649	11,524
2021	2,835,713,181	42,618
Total	10,082,743,921	74,932

Source: Zambian Development Agency 2021.

ZCCZ was the pioneer MFEZ in Zambia, but as of 2021 there were two special economic zones operating without any connection to Chinese ownership. These include the Lusaka South MFEZ, and the Sub Sahara Gemstone Exchange Industrial Park in Ndola. Jiangxi is the newest special economic zone which started operating in 2021 after investing US$50 million on infrastructure having a total expected investment of US$600 million. Jiangxi offers rental of ready built factory shells with office space for lease.

By 2021 companies with a total of 19,874 employees that were operating within the Chinese zones accounted for 488 out of the total of 503 companies operating in all zones. The employees within the zones “accounted for 50% of manufacturing sector employees for 2021.”⁵⁵ These employment figures are modest considering the level of unemployment in Zambia. Amongst zones that have been operating for 5 or more years, the median zone in Asia has 10,500 employees, while in Latin America the median zone has 3,500 employees.⁵⁶ When one compares the Asian and Latin American zones, the Zambian zones have only created approximately half the number of jobs per unit, and there may also have been some job displacement as noted earlier associated with these. However, it is evident that there are several factors that can explain that low job creation. For example, zones in Zambia are involved in capital-intensive production while most of those in Asia and Latin America focus on light manufacturing.

China has also been active in promoting its “soft power” in Zambia,⁵⁷ through for example the Confucius Institute at the University of Zambia. This was inaugurated after the University of Zambia contacted the Chinese embassy and US $10 million was secured from part of a loan given to the Ministry of Finance and National Planning. As of 2022, 25 students have graduated from the Institute and another 40 are at various stages of study.⁵⁸ During the negotiations, the Zambian side appeared to be weak, perhaps partly as a result of language issues. As loan amounts from China have been reduced there has been an increasing emphasis on cultural exchange.⁵⁹ About 4,000 students are currently being trained in China. The scholarships offered to Zambian students are a demonstration of the fact that the bilateral relations between the two countries are diversified. They go beyond economic relations. The knowledge and skills obtained from Chinese educational institutions have been critical for the development of Zambia.

Other major infrastructure projects that China has been involved in include the Kafue Lower Hydro-Power Project, which will have the capacity to supply 750 megawatts of electricity when completed.⁶⁰ According to this interviewee once this project is fully operational Zambia will have enough power to export to neighboring countries and the quality of the work undertaken is good. This is being developed through a public-private partnership.⁶¹

There is also China-Zambia cooperation through the Renewable Energy Technology Transfer Project established under the United Nations Development Programme’s Solar Energy Centre for Technology Promotion and Transfer. The funding for this came through the United Nations Industrial Development Organization and is implemented through the Ministry of Energy in Zambia and the Ministry of Science and Technology in Zambia.⁶²

Some argue that we are now in post-liberal “multiplex” world order.⁶³ However recent research has argued that China has engaged in overreach and has experienced substantial push-back on attempts to increase its influence globally.⁶⁴ In part this was as a result of the weaponization of the meme of “debt trap diplomacy” by Western and other powers⁶⁵ and the creation of new institutions to counter China’s influence, particularly “the Quad” of the US, Japan, India and Australia and the AUKUS (Australia, UK, US) military alliance. In Zambia the structural power of Western-dominated international financial institutions is demonstrated by the recent loan agreement with the International Monetary Fund (IMF), which included the condition that Zambia will “totally cancel 12 planned projects, half of which were due to be financed by China EXIM Bank, alongside one by ICBC [Industrial and Commercial Bank of China] for a university and another by Jiangxi Corporation for a dual highway for the capital.”⁶⁶ At the same time, World Bank projects, mostly focused on social sectors are continuing.

Undoubtedly, China has made huge contributions in Zambia in terms developmental projects, investments and trade. The largest investments have been in the mining sector through the CNMC in the Kalulushi District of the Copperbelt Province of Zambia. The next important Zambian sector in which China has been of great influence is in infrastructure development and one very visible Chinese firm in this sector is AVIC International Corporation. As noted above, in the manufacturing sector, China has established three special economic zones; one in Chambishi (ZCCZ), Lusaka East, and owned by a provincial government. The next section deals with the extent to which all these Chinese investments have been beneficial to Zambia.

3.2. China-Zambia relations: who is the winner or loser?

This has always been a controversial question. Many will argue that Zambia has not benefitted economically as much, in terms of jobs, exports and growth, as China has from these bilateral relations. The major argument in support of this viewpoint is that the impact of Chinese investment has been perceived to cause hardships among Zambian communities through, for example, environmental damage in particular in mining and forest areas or job displacement by migrants or imports. In addition, it is now well documented that many Chinese firms do not offer decent jobs to workers and safety concerns are rarely addressed.⁶⁷ The fact that most of the materials are exported to China in their raw form is another concern that strengthens this argument. In other words, lack of value-addition to most of the raw materials that are exported to China from Zambia supports the contention that Zambia is benefiting less from these bilateral relations than it could.

The opposite contention is that Zambia has significantly benefitted from its association with China. It has already been argued that the two countries have a long history of working together. According to interviews conducted with some stakeholders, there is a general agreement that Zambia has indeed benefited from its relations with China. Investment in the energy sector is vital as energy powers industrial development.⁶⁸ The investment in the Kafue Lower Hydro-power Project is thus seen to be a game changer once it is fully operational, with the opportunity to export power to some neighboring countries that have huge energy deficits. Besides, Zambian technocrats have received training in renewable energy.

Support/loans from China have been focused more on infrastructure development though, particularly on roads and buildings for hospitals and schools as well as infrastructure in terms of water supply and sanitation.⁶⁹ For example, it is envisaged that the Kafulafuta Water Supply Project in Copperbelt Province of Zambia being undertaken by the Chinese will supply clean water to more than one million people. It is also noted that Zambia has a huge infrastructural deficit and therefore Chinese support in this area is especially important.⁷⁰ This is justified owing to the fact that other lenders, such as the multi-lateral institutions, are more focused on social development.⁷¹

Nevertheless, many observers are of the opinion that the bilateral relations may not have benefited both countries equally. While some level of benefits have accrued to each country, the scale favors China, which has gotten a market for its manufactured products, sites for investment, and contracts for overseas projects. However, the potential for Zambia to achieve a win-win situation out of these bilateral relations is not farfetched. What is needed is for its leaders to have the political will even amidst the power imbalances between the two countries to be able to leverage these relations to maximum benefit for the national population. Already the current president has demonstrated good leadership by engaging with the Chinese president first through a phone call conversation early this year to ask if he could assist Zambia by helping create an environment through which the country could restructure its external debt.

More recently, at the Zambia-China Trade and Investment Forum emphasized the importance of foreign investors partnering with local ones through joint ventures. Through such partnerships it is expected that more benefits will accrue to Zambia, especially joint ventures which involve setting up of industries with significant value addition. This is a demonstration of good leadership and agency by the current leadership. It is hoped that the time will soon come when Zambia will start maximizing the benefits from these bilateral relations.

4. Conclusions

This paper is anchored on the analysis of the bilateral relations between two developing countries. All this has been done through the prism of the pentagonal framework, which includes the factors of domestic politics, economy, peace and security, and regional as well as international relations. Regarding economic cooperation, the initial phase after Zambia’s independence focused more on China’s development aid to Zambia, particularly in the area of infrastructure development which culminated in the construction of the TAZARA in the mid-1970s. The TAZARA rail line is considered to be the flagship project of the bilateral relations between China and Zambia.

Later in the 1990s, the bilateral relations shifted to become more economic in nature due to reforms that were undertaken in both countries, thereby facilitating investment, especially by Chinese firms in the extractive sectors, infrastructure development, manufacturing, agriculture, and forestry in Zambia. Both Chinese state-owned and private enterprises invested in Zambia in these diverse sectors. The opening up of the economies in both countries via changes in their domestic policies were key in the enhanced economic cooperation between the two countries. However, development aid to Zambia from China also continued flowing, targeting in particular the social sector and infrastructure development such the construction of schools, hospitals and stadiums.

The large debt accumulation started after 2012. To date Zambia owes China in excess of US$6 billion. Contracting this debt has been surrounded by controversy even though it is against the backdrop of a clear process for contracting loans. Where the problem appears to occur is that politicians are in charge of final approvals and there is a lack of transparency and space for corruption at this point. There is mistrust between the politicians and other stakeholders who feel that many politicians do not mean well for the country, especially with the perceived lack of transparency when acquiring loans from China.

It is widely perceived for example that the Zambian actors lack agency when it comes to negotiations for loans with their Chinese counterparts given that they have no firm framework upon which to base these negotiations. This is why, going forward, the current government has enacted a new law called the Public Debt Management Act of 2022 that will ensure that future debt acquisition will have to be finally approved by the National Assembly, who are the people’s representatives, in order to allay any suspicions of malfeasance. It must also be emphasized that during the recent debt restructuring deal for Zambia with the IMF/World Bank and other lending institutions the country’s agency during these negotiations seems to have been in evidence as the deal was relatively favorable.

The discussion has further shown that Zambia has continued to receive support from China in the area of national security. Various categories of support have been given to Zambia such as equipment for both internal and external security. At the regional level China has continued to play a prominent particularly in trade and investment in such countries as Angola, Mozambique, Tanzania, Zambia, and South Africa. The only concern is the fact that most of the exports from the SADC region to China are raw materials while the region imports manufactured goods from China.

Currently, the bilateral relations between China and Zambia are under scrutiny by many observers across the world due to the heightened relations between Zambia and the US. One of the schools of thought is that the US is uncomfortable with the Chinese influence in Zambia and Africa in general. The current Zambian president Mr Hakainde Hichilema has maintained that China will always remain an “all-weather friend” of Zambia in spite of the strengthening bilateral relations between the US and Zambia. Realistically though, it may be too early to take a position on this matter. Zambia has continued receiving support from China despite the fact of the improved US-Zambia bilateral relations, as evidenced by China’s role in ensuring that Zambia achieves its debt restructuring program and sees a continued flow of Chinese investment into Zambia. There is no compelling evidence to suggest this will change.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Notes on contributors

Godfrey Hampwaye

Godfrey Hampwaye is a former senior lecturer of Geography at the University of Zambia. He is cureently a Research Fellow at the Southern African Institute for Policy and Research in Lusaka, Zambia, and also a research associate in the School of Hospitality and Tourism at the University of Johannesburg.

Pádraig Carmody

Pádraig Carmody is a Professor in Geography at Trinity College Dublin and a Senior Research Associate the School of Tourism and Hospitality at the University of Johannesburg.

Phoebe Mokgadi Ramaloko

Phoebe Mokgadi Ramaloko is a PhD student at the University of Urbino in Italy. Her research work focuses on China-Zambia relations. Her other research interest is on special economic zones.

Notes

1. Carmody and Wainwright, “Contradiction and Restructuring in the Belt and Road Initiative: Reflections on China’s Pause in the ‘Go world’”; Carmody, Zajontz, and Reboredo, “From ‘Debt Diplomacy, to Donorship? China’s Changing Role in Global Development,” 198–217.

2. Chellaney, China’s Debt-Trap Diplomacy.

3. Brautigam, “A Critical Look at Chinese ‘Debt-trap Diplomacy’: The Rise of a Meme”; Singh, “The Myth of ‘Debt-trap Diplomacy’ and Realities of Chinese Development Finance.”

4. cf. Versi, “Africa’s China Debt Red Herring.”

5. Wheatley, Cotterill, and Yu, “China’s Pivotal Role under Scrutiny as Zambia Seeks Debt Relief.”

6. Brautigam, “A Critical Look at Chinese ‘Debt-trap Diplomacy:’ The Rise of a Meme.”

7. Zajontz, “The Chinese Infrastructural Fix in Africa: Lessons from the Sino-Zambian ‘Road Bonanza’.”

8. See note 6 above 1349.

9. ‘The Ministry of Defence (Zambia Air Force) received $1,232 million for purchase of planes, military equipment, and construction of housing between 2006–2019, while the Ministry of Home Affairs received $439 million. These loans amounted to $1,671 million, while the total amount of the loans signed between 2000–2020 was $7,813 million (Brautigam and Wang 2021); Brautigam, “A Critical Look at Chinese ‘Debt-trap Diplomacy:’ The Rise of a Meme.”

10. Brautigam and Wang “Zambia’s Chinese Debt in the Pandemic Era.”

11. Kragelund, “Knocking on a Wide-Open Door: Chinese Investments in Africa.”

12. Mwanawina, China-Africa Economic Relations: The Case of Zambia.

13. Bank of Zambia, Direction of Trade Fourth Quarter.

14. Dobler and Kesselring, “Swiss Extractivism: Switzerland’s Role in Zambia’s Copper Sector.”

15. See note 12 above.

16. Ibid.

17. Ibid.

18. Phineas Bbaala, Head of the Department of Government and Management Studies, University of Zambia, interview with the authors, September, 2022.

19. Zambia Daily Mail, “News,” September 27, 2022.

20. Ibid.

21. Ibid.

22. Ibid.

23. “Home Away from Home: The Social and Political Roles of Contemporary Chinese Associations in Zambia.” quoted in Large,“Home Away From Home: The Social and Political Roles of Contemporary Chinese Associations in Zambia,”162.

24. Daily Nation Zambia, Newspaper News, April 5, 2023.

25. Ibid.

26. P. Mfungo, and Muyunda, Ministry of Finance and National Planning, interview with the authors, September 23, 2022.

27. P. Mfungo, and Muyunda, Ministry of Finance and National Planning, interview with the authors, September 23, 2022.

28. Phineas Bbaala, Head of the Department of Government and Management Studies, University of Zambia, interview with the authors, September, 2022.

29. Phineas Bbaala, Head of the Department of Government and Management Studies, University of Zambia, interview with the authors, September, 2022.

30. Prof. S. Simukanga, Former Vice-Chancellor of the University of Zambia, interview with the authors, September 13, 2022.

31. Dr. F. Mutesa, Director, Centre of Excellence in Renewable Energy Project, Lusaka, interview with the authors, September 14, 2022.

32. P. Mfungo and Muyunda, Ministry of Finance and National Planning, interview with the authors, September 23, 2022.

33. Dr. Ngalande, Director, Lusaka Confucius Institute, University of Zambia, interview with the authors, September 21, 2022.

34. Prof. P. Jain, Director, Lusaka, Centre of Excellence in Renewable Energy Project, interview with the authors, September 26, 2022.

35. Carmody, “The Geopolitics and Economics of BRICS Resource and Market Access in Southern Africa: Aiding Development or Creating Dependency?”

36. Ibid., 866–867.

37. See note 13 above.

38. See for example Brazys, Elkink, and Kelly, “Bad Neighbors? How co-located Chinese and World Bank Development Projects Impact Local Corruption in Tanzania”; Carmody, Kragelund, and Riberedo, Africa’s Shadow Rise: China and the Mirage of African Economic Development; Jenkins, How China is Reshaping the Global Economy 9.

39. “Dialectics of Popular Discontent and Democracy in China’s Engagements in Zambia,” 131.

40. Murphy, China’s Rise in the Global South: The Middle East, Africa, and Beijing’s Alternative World Order.

41. Carmody, “An Asian-Driven Economic Recovery in Africa? The Zambian Case.”

42. Zajontz, “The Chinese Infrastructural Fix in Africa: Lessons from the Sino-Zambian ‘Road Bonanza’.”

43. Xinhua, “Zambian President Commissions Chinese-Built Modern Airport Terminal.”

44. Zeng, Multi-facility Economic Zones in Zambia: Progress, Challenges and Possible Interventions.

45. Ibid.

46. Michel, Beuret, Woods, and Valley, China Safari: on the Trail of China’s Expansion in Africa.

47. Carmody and Hampwaye, “Inclusive or Exclusive Globalization: The Impacts of Asian-Owned Businesses in Zambia.”

48. Lee, The Specter of Global China: Politics, Labor, and Foreign Investment in Africa.

49. Kopinsky and Carmody, The Political Economy of Chinese FDI and Spillover Effects in Africa.

50. Lin and Xu, “China’s Light Manufacturing and Africa’s Industrialisation”; Sun, The Next Factory of the World: How Chinese Investment is Reshaping Africa.

51. Large, China and Africa: The New Era.

52. Tang, Coevolutionary Pragmatism: Approaches and Impacts of China-Africa Economic Cooperation.

53. Dr. F. Mutesa, Director, Centre of Excellence in Renewable Energy Project, Lusaka, interview with the authors, September 14, 2022.

54. ZDA, Guidelines on Facilitation and Registration of Investments in Zambia.

55. Ibid.

56. Jenkins et al., How China is Reshaping the Global Economy.

57. Zou and Jones, “China’s Response to Threats to Its Overseas Economic Interests: Softening Non-Interference and Cultivating Hegemony.”

58. Dr. Ngalande, Director, Lusaka Confucius Institute, University of Zambia, interview with the authors, September 21, 2022.

59. Benabdallah, Shaping the Future of Power: Knowledge Production and Network-Building in China-Africa Relations; Carmody, Zajontz, and Reboredo, “From ‘Debt Diplomacy to Donorship? China’s Changing Role in Global Development.”

60. Mr B. Mainza, Principal Officer, Ministry of Energy, Lusaka, interview with the authors, September 21, 2022.

61. Scarfe, Zambia’s New IMF Deal Shifts China to the Backseat.

62. Prof. Jain, Director, Lusaka Centre of Excellence in Renewable Energy Project, interview with the authors, September 26, 2022.

63. Stuenkel, Post-Western World: how Emerging Powers are Remaking the Global Order; Acharya, The End of the American World Order.

64. Hala, “Combating Beijing’s Sharp Power: Transparency Wins in Europe”; Patey, How China Loses: the Pushback against Chinese Global Ambitions.

65. Brautigam, “A Critical look at Chinese ‘Debt-trap Diplomacy:’ The Rise of a Meme”; Carmody, “Dependence not Debt-Trap Diplomacy.”

66. Scarfe, Zambia’s New IMF Deal Shifts China to the Backseat.

67. Schoneveld et al., The Developmental Implications of Sino-African Economic and Political Relations: A Preliminary Assessment for the Case of Zambia; Hampwaye and Bbaala, “Sino-Zambia Relations: Responses from Below.”

68. Mr B. Mainza, Principal Officer, Ministry of Energy, Lusaka, interview with the authors, September 21, 2022.

69. P. Mfungo and Muyunda, Ministry of Finance and National Planning, interview with the authors, September 23, 2022.

70. Dr. F. Mutesa, Director, Centre of Excellence in Renewable Energy Project, Lusaka, interview with the authors, September 14, 202.

71. P. Mfungo and Muyunda, Ministry of Finance and National Planning, interview with the authors, September 23, 2022.