Sino-substitution: Chinese foreign direct investment in Zambia

Abstract

Purpose – This paper aims to establish the level (if any) of Chinese State influence on setting the terms of Foreign Direct Investment in Zambia, specifically their influence on improving access for Chinese investors through the establishment of Special Economic Zones. Design/methodology/approach – The paper presents a process trace to test primary archival data and elite interviews against growing academic and popular “China in Africa” literature. Findings – After examining primary data, existing academic and popular literature is found to poorly describe China’s economic influence in Zambia, primarily by largely speculating on non-evident coercive investment practices. Instead, the paper concludes that similarities between new Chinese investment and retreating Western sources in Africa can better be described as “Sino-Substitution”. Research limitations/implications – The primary research has focused on English language Zambian sources; access to further Chinese sources would improve the breadth of the study. Practical implications – The study has found the terms of new Chinese investment in Zambia to be far more calculated, consensual and symbiotic than described in the existing literature. This more balanced view of Chinese investment is important if other foreign investors are to retain or regain competitive advantage in the region. Originality/value – No existing research has traced empirically the process through which the Zambian Government developed Special Economic Zones into the country’s largest investment vehicle, or how Chinese investment came to dominant capital flows within them. As investment in these zones grows, a better understanding of the Zambia–China relationship should help other investors compete, and improve Zambia’s access to capital.