4 November 2006

South Africa And China

AllAfrica.com is running a Business Day article on South Africa’s interests at the upcoming China-Africa Forum in Beijing. it would appear that, while South Africa is “keen to see increased aid to” Africa, it is particularly “interested in gaining greater access to the vast Chinese manufactured goods market”, mainly in the form of cuts “in Chinese tariffs on goods to which value has been added” since it is “the only country in Africa that exports manufactured goods to any large extent”.

Furthermore, much like happened when South Africa and China reached an agreement on SA’s textile industry, the article points out that “SA is likely to push for a Chinese commitment to voluntarily restrict exports when local industries are threatened”.

South Africa’s overall thinking was quite clearly expressed by its Reserve Bank governor, Tito Mboweni, who said: “Let’s strengthen our relations with China.” He pointed out that while “The US might still be portrayed by some as the major economic growth engine in the world … in reality that picture was changing”, with China contributing more now (24.5%) to global domestic product than the US (16.3%). This should no doubt worry the US and Western markets, since they are the largest trading partner of South Africa in terms of total trade, with Germany and the UK falling second and third respectively. Historically, South Africa has always been within the Western sphere of influence, but this may change.

From China’s point of view, South Africa is probably the key to the continent, for two main reasons. The first, obviously, is trade related, because South Africa is quick becoming Africa’s new “colonial” power. While SA woos China to try and restrict its exports, SA has not been so kind to the rest of Africa. As the Christian Science Monitor points out, “South African foreign assets throughout Africa totaled about $5.1 billion in 2004, spanning a wide range of sectors from telecommunications to mining”.

South Africa accounts for about 25 percent of Africa’s total GDP and has produced striking trade balances with less developed African economies - a concern to regional leaders.

In Zambia, South Africa has supplanted former colonial power Britain as the country’s largest foreign investor. South Africans have poured about $300 million into Zambia since 1993, according to the Zambia Investment Centre. In 2005, Zambia held a trade deficit of more than $600 million with South Africa. Moreover, nearly half of Zambia’s imports are South African.

As David Robins, Pick n’ Pay’s deputy chairman acknowledged “[South African firms] have kind of moved in with a significant amount of brute force on the African continent.” This has led to the same sort of criticisms against South Africa that have been used regarding China’s threat to local businesses. It would seem, then, that being a favoured ally with South Africa would secure access to the rest of the continent, at least by proxy.

Secondly, South Africa is viewed as a top priority in terms of a possible diplomatic ally on the UN Security Council. Currently, SA holds a two-year, non-permanent seat on the Council, but has been pushing for the inclusion of African and Latin-American countries to have permanent seats on the council and a veto. As the Business Day article noted, South Africa’s Foreign Minister Nkosazana Dlamini-Zuma held talks on Thursday with China’s equivalent, Li Zhaoxing “to discuss SA’s upcoming membership of the United Nations Security Council”.

Several studies have predicited that “globalization is likely to take on much more of a “non-Western face”", with China and India giving it “more of an Asian look and feel“. South Africa, it would seem, is fast becoming a poster-boy for this global trend, as is Africa as a whole.