Author: George Schoneveld

Publisher: CIFOR

Published: 2014-03-26

Total Pages: 47

ISBN-13:

This scoping study evaluates the nature, scope, and scale of Chinese trade and investment relations in the primary sector of mineral-rich Zambia. It details how, despite diplomatic ties dating back to the liberation struggle of the 1960s, economic and political relations between the two countries matured only over the 2000s. This has focused primarily on the mining sector, with Chinese companies, many of which are state owned, investing heavily in mineral prospecting, copper mining and smelting, and associated (service) industries. With most investment activities targeting the mining sector, contrary to popular perception, China’s direct participation in other primary sectors, such as forestry and agriculture, is negligible.
With Zambia’s economy long struggling under external debts, Chinese investments have made a valuable contribution to Zambia’s economic recovery. Most significantly, capital injections in the mining sector have led to a rehabilitation of dilapidated mining infrastructure, while enhancing the country’s production capacity through the construction of new processing facilities and the development of greenfield mines. These investments have proven to be more stable and less subject to commodity price fluctuations than their Western counterparts. Moreover, while Chinese investors are widely criticized for their poor corporate performance, on most labor-related and environmental dimensions, Chinese mines perform on-par with industry averages. Chinese investors do appear more inclined to rely on close relations with the Zambian government and geographic clustering with other Chinese investors to forge a favorable and stable operating environment, which could adversely impact on their social responsiveness and government revenue generation. However, early evidence appears to contradict many of the long-held assumptions about Chinese economic and political participation in resource-rich countries.