Zambia, China agree to increase use of local currency in trade


Zambia and China agreed to encourage greater use of their own currencies in trade and investment, after a meeting in Beijing between Presidents Xi Jinping and Hakainde Hichilema.

The measure will reduce currency exchange costs and exchange rate risks, the two leaders said in a joint statement on Friday. It may also curb reliance on the US dollar, in which copper is priced. The metal accounts for about 70% of Zambia’s export earnings and China accounts for about half of global demand.

“The two sides will also create a favourable policy environment for promoting settlements in local currencies and support a greater role of the Chinese renminbi settlement bank in Zambia,” they said.

Hichilema this week made his first state visit to China since winning power in 2021. He’s faced local criticism for frequent visits to Western nations, at the cost of weaker ties with China, which is by far Zambia’s biggest bilateral creditor and has an out-sized role in a debt-restructuring process under way since 2020.

Since Zambia in June announced an agreement in principle with its official creditors committee that China and France co-chair, it’s yet to sign a memorandum of understanding on the $6.3 billion in debt at stake. There were hopes that Hichilema’s visit could help unlock a deal.

The statement had little detail on any progress toward finalizing a long-awaited agreement, only saying Zambia thanked China for the key role it played in the restructuring process.

“They further expressed appreciation at the efforts that the Chinese side continues to make for a sustainable solution,” the leaders said in the statement.