Zambia And China Agree To Promote Local Currency in Trade

Presidents Xi Jinping and Hakainde Hichilema concluded meetings in Beijing with an agreement to encourage use of their currencies in trade and investment deals.

In a joint statement, the two nations said that the measure is designed to reduce currency exchange costs and exchange rate risks.

Hichilema’s visit to Beijing was his first since being sworn in as President of Zambia, and balances Zambia’s trade interests after many visits to and from major Western nations.

Use of Zambian and Chinese currency will also limit the countries’ reliance on the US dollar, the currency with which copper is priced. 70% of Zambia’s export earnings come from copper; half of all global demand for the metal comes from China.

Part of the joint statement declared that Zambia and China “will also create a favourable policy environment for promoting settlements in local currencies and support a greater role of the Chinese renminbi [trading currency] settlement bank in Zambia”.

The agreement is likely to bring the finalisation of Zambia’s debt restructuring one step closer. In June, a debt restructuring framework was announced after many months of anticipation. A memorandum of understanding to initiate the debt restructuring has yet to be signed by all parties, with China being Zambia’s biggest bilateral creditor.