October 2011
China And Africa. Zambia - China: Trade, Politics, and Development.
Scope : In little over three decades, the Bilateral relationship between Zambia and the
Peoples Republic of China has been cemented with a stronghold foundation, but then again, as interests have been reciprocated allying both over time, politics and economic imbalance has caused trade and development to be somewhat controversial in their
Relationship. This paper will also look at the historical and contemporary ties between the two economies.

In the Late 1960’s, shortly after Zambia’s Independence, China constructed a
2000km railway linking Zambia to Tanzania, in order to provide an alternate route to seaport trade for Zambia. This gesture, showed China’s interest in building ties with the
Southern African State, and it also showed, that China could be a dependable ally of the
Zambia. Zambia in turn also reciprocated, supporting the One China policy and also co- sponsoring China’s bid in the UN Security Council. Since then, both states have become affiliates with the sole purpose of steadfast development through trade and aid.
After time and effort have been put into building political ties, investments made among allied states tend to incline economic gains and this gives birth to a new type of partnership among states. Chinese Investments in the Zambia can be dated back to the period of Zambia’s Post-independence, this was the late 1960’s.
First wave of Chinese Investments came into Zambia in forms of Development aid and

has since then developed and increased, reaching nearly all sectors of the Zambian economy. Chinese Investment in Zambia has grown posthaste over the last decade and this is because of the historical friendship that has existed between the two states.
Kenneth Kaunda, The first president of Zambia describes the Sino –Zambian relationship like this : The Chinese investments in Zambia today are different than the investments of the 1960s and 70s – today there is a lot of economic interest (...) [but] I believe that, even today, the history of political friendship between Zambia and China plays a very important role for Chinese investments in Zambia. (Bastholm, 2009, p. 124)

Between a period of 1993-2006, FDI stock of more than 570 million USD and 200
Chinese companies was recorded by the Chinese Centre for Investment Promotion and
Trade (CCIT).. (Bastholm, 2009, p. 124) . The Chinese investment in Zambia was recently emphasized by Hu Jintao, in February 2007 on his visit to Lusaka. In his address, he stated the Chinese interest in building One of its Multi-Facility Economic
Zones (MFEZ’s) ,in the State. President Hu also pledged that a total of $800 million would be spent over a three year period, and about 50,000 new jobs will be created by the year 2010. In Overall, China has become the third largest and most important investor in the southern African state. The high influx of FDI is very important for the growth of
Zambian economy and it serves as a source of external finance.
Chinese OFDI operates with high amount of political control and in-house central planning , since, the Chinese government decided to instill its “Go-Out policy” OFDI has grown and is Controlled by State Owned enterprises (SOEs). (Bastholm, 2009, p. 122)
.Chinese OFDI in Zambia is has infiltrated in all sectors of the economy.

The Chinese Influx of OFDI into the Zambia serves as an Alternative source of investments in the Zambian Economy, this of course , gives room for negotiations with parties other than the Washington consensus, so as the PRC is forced to outsource resources in order to fuel its demanding growth in consumption of resources and also its economic growth, It is an advantageous opportunity for the Zambia to enhance and boost development. Chinese FDI In Mining.
Zambia is the leading copper producer in Africa, constituting 40 percent of its total exports and 60 percent of Africa’s copper. Demand is growing, but in china the production is paced at a slow rate, China needs the large imports of copper from and
Zambia and Chile (Bastholm, 2009, p. 128).
China, in June 1998, purchased the Chambishi mine in Zambia and this gives china control over a mine that produces between 5-10 percent of Zambia’s total copper output.
Since the purchase of the first mine in Zambia by CNMC, other copper related facilities have also been purchased by the CNMC. The proceeds of these investments are returned to a parent company in China and it from there spills to the smaller branches in the
Zambia. Notably since the purchase of the mine the Group has invested about
150million US$ in order to transfer and improve its capacity into a producer. This was operationalized in 2003. (Bastholm, 2009, p. 128)
The Chinese government plays a crucial role in its overseas investments as it creates room for it s state-owned and private owned companies to directly invest in external states. The purchase of the Mine in Chambishi is an example of the diplomatic support put in by Chinese government backing of its Companies.

“Chinese government officials paid a lot of attention to buying this mine. A lot of government officials were involved (...) The decision [to invest] was made in the CNMC headquarters in China in cooperation with the Chinese government (...) We have a lot of support from the Chinese government (...) I do not think CNMC would have invested in the Chambishi mine without the support from the Chinese government. (Bastholm, 2009, p. 129)

Chinese FDI in Construction. In the Construction sector, the large scale projects are Donor or government financed, foreign companies in Zambia have the projects to share amongst themselves ,as the construction sector is dualistic ,smaller domestic companies handle the small scale projects or they are contracted as sub-suppliers to large scale companies. This is because it is both labor and capital intensive. The construction sector in Zambia is responsible for building infrastructure, sectors e.g. aviation, transportation and other large housing projects. (Bastholm, 2009, p. 130)
One can see the relationship shared between the PRC and the Zambian government , historical ties and aid have strengthened the position of China in Zambian monetary affairs and it helps Chinese investors get favorable market conditions.

Chinese FDI in Agriculture The Chinese investments in the agricultural sector is central to the backing of the
Chinese ministry of Agriculture. CSFAC, a Chinese parastatal, has purchased three farms, Jhonken Estates, Jhonken Friendship farm and China-Zambia friendship farm,
These farms produce eggs, beef, wheat and other products, for the markets of
Zambian locals, Surprisingly, all three investments were all financed by a loan obtained from the Chinese Ministry of agriculture. The Chinese Government has been the financial backbone of most out of state investments, as it gives loans and aid in order to ensure its foreign investments yield some profit. According to Ms Ma. The GM of the
Zambia-Friendship farm : Some [agricultural] companies would be facing a very difficult and tough situation without the help from the Chinese government. if the government does nothing these farms will or go may go bankrupt – it’s quite possible. They would be in very big problems. (...) The government has to give us support otherwise we would be facing very difficult times. (Bastholm, 2009, p. 133)

It has though, been reported that these Farms will serve as long-term suppliers to the
PRC as it faces a problem of industrialization and economic growth, and thus, the available fertile land in China is being teemed with Chinese investors.
The Chinese Agricultural investments in the Zambia is still on the rise, According to Ms
Li, the MD of Jhoken Estates : “As far as I know there were only two Chinese farms in Zambia, when we invested in Jhonken Estates in 1994, but now I think there are more than twenty Chinese farms in Zambia – and still more are coming in. (Bastholm, 2009, p. 132)

Bilateral Trade The Case of bilateral trade between Zambia and The PRC has been in permanent escalation since the Chinese government decided to “tax exempt” all of the Zambian

commodities. This was an initiative that encouraged bilateral-trade vigorously.
In the early 1990’s bi-lateral trade was at 20million USD but reaching 2005 it increased to 300million USD. China, zero-taxed commodities reaching 442 being imported from
Zambia (Mutesa, 2010, p. 170)
Though the Bilateral trade is growing as ties are increasing politically, some resentment towards Chinese investment has also been instigated among Zambian Locals.

Growing Issues.
The Chinese investors operating in Zambia have been linked to abuse of labor laws , the local population is increasingly growing bitter towards the increasing Chinese population. Some of the Chinese investors pay workers exploitative wages and the
Zambian government does not have the institutional capacity to check and sanction law breakers, The Chinese investors have also been linked with the hiring of unskilled and semi-skilled Chinese workers, by law, foreigners are only issued permits to do the work that the local population cannot do, but in the case of Chinese workers in Zambia,
Chinese Investors have been accused of crowding out the local –population.
Michael Sata, leader of the opposition front in Zambia had also accused the Chinese firms of bringing in business cartels that tend to hire only Chinese counterparts as suppliers. (Mutesa, 2010, p. 173)
Sata also used anti-Chinese rhetoric , in order to gain political support when he was running for office against Levy Mwanawasa ,in 2006 Zambian Presidential elections. (Lucy, 2008)
This is a sign of growing resentment among the African population and this is because of the view that Chinese workers are taking away jobs from locals.

This is not the only country in Africa, where the growing Chinese presence is facing resentment, In other resource rich African countries , it has even grown less popular .
In African countries like Nigeria and South Africa, domestic criticism is on the rise and this can tarnish the image of the Chinese Multi-national corporations if not taken care of by the government. The Local population where the resentment is growing, should be involved and brought into the trade with China. Among Suggestions given that can help improve relations in Zambia, One is the story of
William, a boy in Zambia who grew up in a Chinese farm in Zambia and because of this
,he was opportune to learn Chinese, this increased his job prospects (Deborah, 2012) In
Addition some of the Chinese foreigners have the main problem of communication with the Zambian locals, and this has been an issue especially in cases where Chinese foreigners come in contact with law enforcement officer and cannot defend or make a case for themselves.

Conclusion

As Sino-African ties are improving, and Chinese investors in most of African countries , the Chinese Government should in Collaboration with African States try to improve relations between its local population and Chinese labor workers and investors. Chinese investors should keep in mind that there is also a growing presence of investors from
Brazil, India, Russia and other developing nations like turkey all increasing their presence on African soil. As it is no Accident that all the leaders of BRICS are meeting in south-
Africa soon. (Economist, 2013)
In Addition, African leaders Most Importantly Need take advantage of the Situation, and resources at its disposal, as the world will not always need the recourses from the African
Counties, an example of this is how countries like the U.S has reduced its demand for Oil and diversifying into the development of Shale Gas, Cases like this , should cause and create room for long-term planning among African government policies, for the Greater development of the African Continent.

References.

Brautigam, Deborah. "Learning Chinese In Zambia." Weblog post. China In Africa: The Real Story. Blogger, 12 July 2012. Web.

Mutesa, Fredrick. "China and Zambia: Between Development and Politics." The Rise of China and India in Africa: Challenges, Opportunities and Critical Interventions. London: Zed, 2010. 167-78. Print.

Bastholm, Anders, and Peter Kragelund. "State-Driven Chinese Investments in Zambia: Combining Strategic Interests and Profits." New Presence of China in Africa. Amsterdam: Amsterdam UP, 2009. 117-40. Print.

Corkin, Lucy. "Chins's Strategic Infrastructural Investments In Africa." China's New Role In Africa and the South. Oxford: Fahamu, 2008. 134-50. Print.