ANALYSIS
By Chris Alden and Yu-Shan Wu
South Africa, a leading economy on the African continent, and China, the largest developing country in the world, have forged a unique partnership. Operating at bilateral, continental and multilateral levels, the governments are actively striving to realise the comprehensive strategic partnership envisaged in 2010.
Enhancing these developments is South Africa's status as home to the continent's largest and oldest Chinese community, a concentration of Confucian Institutes and an active Chinese media presence. With the pace of trade and investment picking up, coupled to closer international cooperation with Beijing through the G-20 and BRICS grouping, South Africa-China ties are assuming a significant position in continental and even global affairs.
It is also a relationship of paradoxes, breaking with many of the assumptions that underpin contemporary analyses of 'China-Africa' ties. For instance, until recently South African investment into China far exceeded in depth that of China into South Africa.
Moreover, while economic ties between the two countries have extended beyond the conventions of resource extraction and infrastructure financing seen in other African countries, this appears to be changing.
Finally, the vocal criticism of Chinese policies levelled by some local trade unions, businesses and civil society representatives contrasts with the positive attitude in other quarters and increasingly warm party-to-party relations.
Bilateral ties
Following the establishment of formal diplomatic ties in 1998, relations have advanced gradually from the cautious approach adopted by former president Thabo Mbeki to a more all-embracing character under President Jacob Zuma. At present the most significant link, apart from diplomatic relations, is economic with two way trade accelerating since 2009, jumping by 32% between 2012 from R205 billion to R270 billion in 2013, thereby making China the country's largest trading partner. The momentum building behind more than a decade and a half of cooperation is producing closer economic ties that mirror the burgeoning bilateral diplomatic relationship.
Yet ironically one of the strongest features of its bilateral ties is also the most challenging. Like most of South Africa's trade relations, it has a large trade deficit with China, driven by South Africa's high imports of value-added goods and China's increasing demand for mineral products. Moreover, commercial competition with China in certain sectors like textiles has caused some like Moeletsi Mbeki to worry about 'de-industrialisation'. As a result there have been concerted efforts by both governments to address such challenges through mechanisms such as the Joint-Ministerial Working Group.
In terms of FDI, South African companies have enjoyed a degree of success through their presence in China, such as the case of South Africa's media conglomerate, Naspers and its investment into China's largest Internet company, Tencent. Still when the Industrial and Commercial Bank of China (ICBC) took a 20% stake ($5.5 billion) in South Africa's Standard Bank - said to be one of the largest foreign direct investments into the country - there were high hopes of further expansion of commercial relations. South Africa is deemed a 'mature' market with established and highly competitive players in strategic sectors (such as mining) and its strong regulatory framework and institutional structures seem to pose obstacles for new commercial entrants from China.
However, the recent announcement of Chinese financing for local beneficiation through a steel plant in Phalaborwa, is arguably part of a new trend aimed at employment generating investment for South Africans. This seems to be echoed in the expansion of Hisense and the FAW automotive manufacturing plants, discussions for the revival of the Coega Industrial Development Zone and even a prospective mixed-use residential, retail and light-industry facility east of Johannesburg.
No comments:
Post a Comment