"The Malawi Government believes that by setting up this company, the country will create employment and bring additional export earnings instead of exporting job opportunities to other countries," said Banda.

President Bingu wa Mutharika earlier this year announced the ban on exporting unprocessed cotton, saying the country exports jobs in such a way.

"It's the wish of the Malawi Government under President Bingu wa Mutharika to ensure that all cotton grown in Malawi must be processed right here so that farmers earn more money on their crop," said Banda.

Balaka's District Commissioner James Manyetera said the newly invested Chinese cotton plant would offer an alternative market to disgruntled cotton growers, thus boosting prices for their produce, adding the growers had found a trustworthy market for their crops.

Currently Malawi, where over 60 per 100 people live in abject poverty mainly in rural areas, produces over 75,000 tons of cotton annually and just about half of it is processed locally while the rest is all exported raw.

Former Chinese Ambassador to Malawi Ling Songtian said both Malawi and China would equally benefit from the establishment of the cotton company in Balaka.

"The establishment of the company will transform cotton into Malawi's second biggest forex earner because President Bingu wa Mutharika has put in much prominence in this commodity," he said, adding, "Currently, tea is Malawi's second major export earner."

Chief of Traditional Authority Nsamala of Balaka Charles Mhone said he was happy with the establishment of the factory because his people working as casual laborers there are currently receiving K300 (slightly more than $2) per eight-hour day, which is higher than the Malawi Government's standard minimum wage of K167 per day.

 (Reporting from Malawi)