By: Zali Bryson Chikuba and Mbewe Kalikeka
8th January 2026
On Friday, 2 January 2026, Zambia made headlines in local and global media as it became the first African country to accept China’s yuan for mining tax payments. The announcement landed like a policy thunderclap because it touches the three factors that drive Zambia’s economic environment: copper, foreign exchange, and the direction of trade.
In a country where mining revenues underpin macroeconomic stability, even small changes in the currency plumbing can have outsized effects on liquidity, costs, and confidence. Yet the move is best read not as a dramatic attempt to dethrone the US dollar, but as a pragmatic adjustment to a copper economy whose commercial gravity is increasingly tied to China. In fact, the Government is not replacing the US dollar. It is complementing the dollar with the yuan for mining tax payments, adding a second settlement channel that reflects the currency patterns already embedded in Zambia’s trade and financing relations.
That distinction matters because it correctly frames the policy. The US dollar remains central to Zambia’s reserves, external debt servicing, and the broader international payments system. The yuan option is a targeted operational reform aimed at improving settlement efficiency and alleviating pressure on dollar liquidity during peak-demand periods. In other words, the policy is less about choosing sides in global currency politics and more about reducing conversion frictions in the mining value chain, where receipts, procurement, and financing links are increasingly China-facing.
The first argument is anchored in Zambia’s evolving trade profile. Between the third quarter of 2024 and the third quarter of 2025, total export earnings increased from about US$2.9 billion to US$3.6 billion, while copper export earnings rose from about US$1.9 billion to US$2.1 billion. These figures reaffirm what has long been true copper remains the workhorse of the external sector. However, the most policy-relevant detail is how trade partners and payment corridors influence foreign-exchange demand.
Over the same period, Zambia’s exports to China fell from about 23.9% to 8.3% of total exports, underscoring that quarterly shares can fluctuate. If one interprets the yuan reform solely through that narrow export share, the case may appear weaker than it is. But Zambia’s China exposure is not just about what it sells in any given quarter. It is also about what it buys and how consistently it must pay for those purchases. Merchandise imports increased from about US$2.9 billion in Q3 2024 to about US$3.5 billion in Q3 2025, and the share of imports originating from China rose from about 16.8% to 20.5%.
That rising import share means Zambia’s need for China-linked settlement is structural, not episodic. Complementing dollar tax payments with yuan tax payments is therefore a logical step, as it allows government receipts to match China-linked outflows without forcing everything through the dollar corridor first.
Put differently, the strongest trade-based argument for complementing the dollar with the yuan is not merely that Zambia exports copper to China. It is that Zambia’s import bill, industrial supply chains, and procurement channels are increasingly China-facing, so the economy regularly needs yuan-linked payment capacity.
Accepting yuan for a portion of mining taxes broadens the settlement toolkit and reduces the intensity of dollar-demand spikes that can occur when large statutory payments are due and firms rush to secure dollars in a tight market. This is most likely why the authorities have opted to use the yuan as a complement rather than a replacement. The policy therefore works best as a complementary arrangement: the dollar remains the default and anchor, while the yuan option eases bottlenecks and lowers conversion frictions when trade patterns and corporate cash flows make yuan settlement more efficient.
The second argument concerns exchange-rate behaviour. Monthly exchange-rate data for the kwacha-yuan and kwacha-US dollar pairs from early 2020 through August 2025 show that the kwacha depreciated significantly against both currencies, reflecting domestic fundamentals and external shocks. Over that period, the kwacha weakened from approximately K2.1 per yuan to about K3.9 per yuan, a 86.2% depreciation against the yuan. Over the same period, the kwacha depreciated, falling from about K14.4 per US dollar to roughly K28.4 per US dollar, implying a 97.2% depreciation against the dollar.
Clearly, the kwacha weakened more against the dollar than against the yuan. However, this does not mean the yuan is a safe haven or that Zambia should abandon dollar usage. It simply shows that over the recent period, the yuan kwacha – exchange rate was relatively less destabilising than the kwacha – dollar exchange rate. It is therefore credible for Zambia to adopt the yuan as a complementary settlement currency for tax flows already linked to China.
This point is also where the policy should be carefully framed to avoid misunderstandings. Complementing the dollar with the yuan for tax payments should not be mistaken for a shift in the country’s external debt strategy or reserve anchor away from the dollar. The dollar remains the dominant global reserve currency and the main currency for most of Zambia’s external obligations. The yuan mechanism is a settlement option, designed to improve efficiency in a trade corridor that is increasingly China-linked. That boundary protects the credibility of the reform by ensuring it is understood as a targeted operational tool rather than a wholesale strategic pivot.
The third argument concerns the composition of Zambia’s external debt and the practical realities of servicing obligations. Since Zambia’s transition to lower-middle-income status, its external borrowing profile has diversified, and China has become a significant creditor. By 2025, Chinese-linked obligations are estimated to account for roughly 30% of Zambia’s external debt stock, a share large enough to influence discussions about currency management and settlement costs. In that context, complementing dollar payments with yuan receipts can provide a degree of flexibility, particularly where Chinese-linked payments exist within the broader public-sector ecosystem.
It can help reduce the need for repeated conversions when the economy is already interacting heavily with China in trade, financing, and project execution. At the same time, it is essential to recognise that Chinese creditors are not a single, homogeneous entity. Zambia’s China-linked portfolio includes loans from the Chinese Government, government banks such as the Export-Import Bank of China, and private-sector creditors. That diversity means yuan settlement should be pursued pragmatically, instrument by instrument, and not treated as a blanket shift away from dollar-based financial management.
In this light, the yuan tax option can be understood as a cautious reform that expands the state’s settlement toolkit while keeping the dollar at the centre of the system. It allows authorities to reduce unnecessary dollar intermediation, improve the matching of inflows and outflows where China-linked trade is significant, and smooth the foreign-exchange market when corporate demand for dollars becomes concentrated.
If implemented transparently, with clear exchange-rate application, conversion rules, and sensible exposure limits, the policy can improve efficiency without undermining confidence. Zambia’s debate should therefore not be framed as “yuan versus dollar.” It is better framed as how best to keep the dollar as the anchor while using the yuan as a complementary channel for mining tax payments in a copper economy where China’s footprint in trade and financing is too large to ignore.