Zambia’s relations with China dates as far back as Zambia’s post political independence days. Zambia was the first country in Africa to sign diplomatic relations with China in 1964, and since then Chinese investors have become increasingly prominent players in Zambia’s key economic sectors. Economic cooperation between China and Zambia has continued to grow ‘’for example, about 5 percent of Zambia’s copper output (estimated at 570,000 cubic meters in 2008) is produced by Chinese mining companies, and almost all the products from the Chinese mining companies are sold on the London Metal Exchange, where China buys at least 20 percent of Zambia’s annual copper production.

Chinese investment in Zambia has exceeded US$ 1 billion (as of December 2009) and created about 15,000 job opportunities. Some notable Chinese investment in the country includes; NFC Africa Mining, the Zambia China Cooperation for Economic Development Company, and the Jinchaun Mining Group. Chinese investments in infrastructure projects have also played an important part in Zambia’s economic development, with projects such as; the Tanzania Zambia Railway (TAZARA), the Chambishi Multi Facility Economic Zone, rehabilitation of the hydro electric power plant at Kafue Gorge, establishment of the Lumwana Power Project at Lumwana Mine in Solwezi, the expansion of the Lafarge Cement Plant, construction of the Government Complex building, and a number of road construction and rehabilitation works.

Chinese investment in Zambia is expected to grow further with the recent signing of an Investment Promotion and Protection Agreement (IPPA) with a Chinese private mining company - Zhougui Mining Group whose pledged investment is about US$ 5 billion. The project, which will mine copper and other minerals in North Western and Copperbelt provinces and employ over 1,000 Zambians, will be one of the largest investments by a private foreign company into the country.

The main sectors in which Chinese investment has flowed into the country over the last 10 years are; Mining, Manufacturing, Construction, Tourism, Agriculture and the Service sector. The other sectors are Finance, Real Estate, Health and Transport. Pledged investment in mining constitutes over 88 percent of the total pledged Chinese Investment in the country (in US$ terms). The total value of these pledges is US$ 5.5 billion, with over 2,800 jobs planned. The main investors in this sector include Zhougui Mining Group, NFC Africa, Tycoon Mining Group, Central African Mining and Zanmeng.

Furthermore, Chinese firms (the Jinchuan Mining Group and China Non-ferrous Metals Mining Company) have acquired two of Zambia’s strategic mining companies that had been struggling with the negative impact of the global financial crisis. The Jinchuan Mining Group acquired 51 percent majority shares in Zambia’s only nickel mine, Albidon Mining Company after the original owners pulled out of the mining due to low metal prices on the international market.

Jinchuan initially injected US$ 7 million as part of a financial restructuring deal that gave them majority shares in the mine. China Non-ferrous Metals Mining Company (CNFC) acquired Luanshya Copper Mine (LCM) for US$ 50 million after the original owners, Enya Holdings BV, pulled out of the mine in January 2009 citing low copper prices on the international market. The Chinese firm acquired 85 percent shares in the mine pledging to invest over US$ 400 million in re-capitalization, and construct a state-of-the-art leach plant at a cost of US$300 million at Luanshya mine.

Chinese investment in the manufacturing sector has the highest number of pledged employment by Chinese companies in the country (52%) even though the value of the investment in US$ terms is less than in that in the Mining sector. The value of pledged investment in the manufacturing sector is US$ 583 million with 9,115 pledged employment. Investment in this sector includes the Chambishi Copper Smelter at the Chambishi Multi Facility Economic Zone, Sino Metals Leach and Acid plant, and Chiman Manufacturing.

Pledges in the construction sector by Chinese companies have amounted to US$ 44.7 million and employment of 1,977 people. The projects have included government contracts in infrastructure development, road rehabilitation works and property development. The leading companies in this sector have been; Fifteen MCC Construction and Trade Limited, China Hainan, China Gansu, Mei Mei Investments and CBMI Construction.

Pledged investment in tourism by Chinese companies’, amount to US$ 26.4 million with planned employment of 569 people. The main Chinese investors in the tourism sector are; the Golden Bridge Hotel and the Zambian International Hotel. Agricultural investment pledges by Chinese companies have reached US$ 12.5 million and pledged employed of 1,217 people. The leading companies that have invested in agricultural projects in the country include; China Harvest Investments and Jonken Friendship Farm.

The service sector comprises of companies in retail trading, wholesale, supplies and general dealing. Chinese pledged investments in this sector amount to US$ 21.7 million and employment of 965 Zambians. The main investments in the sector are from; Golden Honesty Africa Development Ltd, Budget Stores and Sinozam Investments.

Investment by Chinese companies have also been undertaken in other sectors such as Financial Institutions (Bank of China), Transport and Real Estate, with pledges collectively amounting to US$ 14 million and employment of over a 100 people.

Chinese Investments in Zambia have had a positive spin off effect on the Zambia-China bi-lateral relations. For example Zambia and China are currently implementing the Beijing Plan of Action entailing among other measures; debt relief to the Zambian government, establishment of Chinese Economic and Trade Zones in Zambia, construction of sports stadiums, and provision of Chinese grants for partnership projects between Zambian and Chinese companies.

Zambia’s interest in attracting more Chinese investments is as a result of the growing influence of China on the world’s economy. China has contributed an average of 14 percent to the growth of the world economy since 1978 when it started the policy of reform and opening up, and its investments continue to rise globally especially in countries such as the United Kingdom and the United States America.

The Zambian government is determined to continue attracting more Foreign Direct Investment (FDI) into the country and aims at focusing on the south to south investment which includes India, China and the Middle- East, among other countries.
 

Attachment: 

Total FDI and Chinese FDI Data - 2000 to 2009.xls