China urges Zambia to dump the US dollar for use of local currency in trade

Zambia’s President Hakainde Hichilema arrives to attend the 36th Ordinary Session of the Assembly of the African Union at the African Union Headquarters in Addis Ababa, Ethiopia February 19, 2023. REUTERS/Tiksa Negeri
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BEIJING, (Reuters) – China and Zambia will push for greater use of local currency settlement in their trade and investment, the countries said in a joint statement on Friday after their leaders met.

The move was to facilitate enterprises of both countries to reduce exchange costs and exchange rate risks, Chinese state media which released the statement said.

The nations also will strengthen cooperation in mineral exploration and hold high-level exchanges between their militaries.

President Xi Jinping said on Friday China supports Zambia in safeguarding its national sovereignty, security and development interests, while encouraging more imports from the southern African country.

Xi met Zambian President Hakainde Hichilema in Beijing and the two countries upgraded their ties to a “comprehensive strategic cooperative partnership”, Chinese state news agency Xinhua said. Xi vowed to work with Zambia to expand cooperations covering infrastructure, agriculture, mining and clean energy.

Zambia is seeking to restructure its external debt with China and find more trade opportunities with the world’s second-largest economy.

Hichilema thanked China for supporting the African Union’s accession to the Group of 20 major economies at its Sept. 9-10 summit in New Delhi, and for its positive role in resolving Zambia’s debt problem, Xinhua said.

It was not immediately known whether China and Zambia signed any debt agreements.

China has significant commercial interests in Zambia, having invested in over 30 projects through its Belt and Road Initiative between 2014 and 2023, according to data compiled by the American Enterprise Institute think tank.

It shows the projects were worth $11.3 billion in total, ranging from the energy sector to agriculture and aviation.

China also takes around one fifth of Zambian exports, predominantly copper.

“Zambia abides by the one-China principle, highly appreciates the guiding concepts and principles of Chinese-style modernisation, and hopes to learn from China’s development experience,” Hichilema said at the meeting with Xi.

Xi said China was encouraging the entry of more Zambian high-quality products into the Chinese market and supporting more Chinese-funded enterprises to invest in Zambia.

Hichilema will be in China until Saturday.