Chinese president announces 800-million-dollar investment in Zambia

Feb 4, 2007, 11:55 GMT

Lusaka - Chinese President Hu Jintao on Sunday announced an 800-million-dollar investment package in Zambia on the second day of a two-day visit to the southern African country where a Chinese rush on resources is the source of growing unease.

The investment had already made public on Saturday evening by Zambian President Levy Mwanawasa, who held hour-long talks with the Chinese leader directly after his arrival in the capital Lusaka.

The two also agreed on the creation of a special economic zone, in the town of Chambishi in the so-called Copper Belt north of Lusaka, where Chinese firms would operate free of import duties and VAT.

Chambishi is home to Chinese-owned Chambishi Mines, one of the world's largest copper producers. China last year announced the construction of a 200-million-dollar smelter at the mine, which Hu was scheduled to visit Sunday.

The Zambian and Chinese leaders on Saturday signed a total of eight cooperation agreements on aid and investment.

These included agreements on Chinese technical training for Zambian agriculture experts, an interest-free loan towards road- making equipment, the building of two rural schools and a football stadium, special treatment for Zambian exports to China and work permits for Chinese workers.

China also agreed to write off 3 million dollars in Zambian debt owing to Beijing.

While welcoming the cooperation with China Zambians are worried that buried in the fine print of the deals could be conditions detrimental to Zambian interests.

Zambia's textile industry for one is under threat from cheap Chinese imports. An agreement signed Saturday allow Zambian goods improved access to Chinese markets, increasing the number of tariff- free items from 190 to 400.

Amid fears expressed in Europe and South Africa that China's policies in Africa - where it has invested massively in oil and other natural resources - could lead to 'colonization,' Hu said he was committed to the development of African economies.

'China is looking for strategic and mutual friendship of a win-win situation in Africa,' he said.

Mwanawasa described Hu's visit as a milestone that would strengthen economic cooperation between the two countries and vowed the planned Chinese economic zone would not jeopardize Zambian business interests.

Hu is the first Chinese head of state to visit Zambia since it achieved independence from Britain in 1964.

The Chinese-assisted construction of a stadium at Ndola is designed to help Zambia attract business from teams practising for the 2010 World Cup in South Africa.