Zambia-China Upgrade Bilateral Ties - Pen Comprehensive Strategic Cooperative Partnership

Africa's second largest copper producer Zambia has penned down a Comprehensive Strategic Cooperative Partnership with the worlds second largest economy, China.

The announcement was made during President Hakainde Hichilema's official state visit to China which took place from 10th to 16th September 2023.

The new Partnership comes on the backdrop of a historic US$6.3 bilateral debt restructuring deal between Zambia and its bilateral lenders signed in Paris, France in June 2023.

The trip to China provided a great opportunity for Zambia to discuss its external debt situation with one of its largest official creditor China, with the hope of accelerating signing of MOU's with each official bilateral lender by October 2023.

The delay in the debt restructuring process has stifled economic transformation agenda as Zambia's credit rating essentially remains in default. In August 2023, Zambia's Minister of Finance revised the 2023 forecast GDP growth rate from 4% to 2.7%. This is happening amidst high inflation driven by a weak foreign exchange rate, climate change, and high petroleum prices.

Signing of respective MOU's with each official creditors is cardinal as it will trigger the disbursement of US$189m being the third instalment under US$1.3bn IMF Extended Credit facility signed in September 2022.

It will also pave way for signing of a further US$6.8bn debt restructuring deal with commercial and private lenders, including Eurobond holders, on comparable terms under the G20 Common Framework.

The new Zambia-China Partnership, signed on 15th September 2023 at the Great Hall of The People in Beijing saw the two countries elevate their traditional bilateral relations to expanded cooperation in mining, agriculture, clean energy and infrastructure.

The Agreement will also include high level military cooperation, greater use of local currency settlement in trade and investment programs, and rehabilitation and revamping of the TAZARA rail line and the Mulungushi Textiles Ltd.

Speaking during the signing ceremony, Chinese President Xi Jinping reiterated that the two countries have enjoyed cordial bilateral ties for nearly 60 years.

As such, he emphasized the need to continuously advance cooperation between China and Zambia, strengthen solidarity and coordination, practice true multilateralism, safeguard common interests of developing countries and live up to the expectations of the two people's.

A joint communique issued by the two governments said the Beijing talks were held in a very cordial and friendly atmosphere which gave the two leaders an opportunity to exchange in-depth views on bilateral ties, China-Africa relations, and international/ regional issues of mutual interest.

"The meeting reached extensive and important consensus, with the two leaders agreeing to upgrade the bilateral ties between the two states for comprehensive, strategic and cooperative partnership," it said.

President Hichilema, who is the first southern African President to he hosted by Xi this year, had taken a week long visit to China carrying along some of his key Ministers such as Hon. Garry Nkombo - Minister of Local Government & Rural Development,

Beijing is very critical in Zambia's debt restructuring process as two-thirds of the $6.3 billion debt with official creditors is owed to the Export-Import Bank of China.

Zambia and the People's Republic of China have enjoyed cordial bilateral relations for 60 years following the establishment of diplomatic ties between Chairman Mao Zedong and President Kenneth Kaunda. The strong relationship between the two founding fathers led to construction of China's flagship infrastructure project in Africa, the 1860km Tanzania-Zambia (TAZARA) Railway in 1970.

Considering that the railway is now old, the new Comprehensive Partnership includes an agreement to upgrade and renovate the railway.

Earlier this year, Hakainde Hichilema commissioned the 750MW Kafue Gorge Lower Power Station which was financed and constructed by China. The new power station is Zambia's largest infrastructure investments in four decades.

President Hichilema's visit was of great significance to Zambia-China and Africa-China relations. It allays previous fears which suggested that Zambia's relationship with the oriental giant had soured.

Susiku I. Nasinda is a Development Finance Expert. He holds a Master of Philosophy in Development Finance from Stellenbosch University, South Africa.