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Bank of China Will Use Zambia Unit to Boost Renminbi Trade Clout
Zambia is a major copper producer and much of it goes to China- Zambia has faced delays in restructuring its external debt
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By Matthew Hill
The Bank of China plans to use its office in Zambia to increase trade using renminbi with the southern African nation and others in the region, part of Beijing’s efforts to diminish use of the dollar.
The plan announced by the lender’s vice president, Lin Jingzhen, follows a state visit that Zambian President Hakainde Hichilema undertook to China in September during which the two governments agreed to conduct more business using their own currencies. The world’s fourth-biggest lender by assets, state-owned Bank of China is the nation’s only bank with a presence in Zambia and operates as a clearing facility.
“We will earnestly act upon our responsibility and leverage our role in Zambia to support other African countries to provide holistic services and products related to RMB and to promote the use of RMB in bilateral trade and economic activities,” Lin said in a meeting with Hichilema in Lusaka, the capital. He noted that his trip was the first to Africa by Bank of China management since the pandemic.
China has been pushing to boost the use of its own currency and challenge the dollar’s historical dominance. Zambia is Africa’s second-biggest producer of copper and China accounts for about half of global consumption of the metal, which is used in electrical wiring.
The two nations have had close historical ties, but relations have become increasingly strained over the past three years. China is by far Zambia’s biggest creditor and the government has been in default since 2020.
The government has been struggling to restructure about $12.7 billion in external debt since becoming Africa’s first pandemic-era sovereign defaulter. Bank of China accounted for about $70 million of the total by the end of last year.
Hichilema and Lin didn’t comment on the restructuring talks, which deadlocked last month after official lenders co-led by China rejected a revamp deal in principle that Hichilema’s government had reached with holders of $3 billion in eurobonds.
— With assistance from Taonga Mitimingi
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