China and SA - a match made in heaven?

Since we first saw China
and SA establishing
diplomatic ties in 1998, that
was the start of a burgeoning
economic and trade
relationship, according to
Taku Fundira, a researcher
for the Trade Law Centre of
Southern Africa (tralac).
“To date,” he said, “we
have witnessed considerable
achievements in Sino-SA
economic trade cooperation
and increases in bilateral
trade.”
The figures behind
this statement show that
China became SA’s largest
export destination in 2009
– overtaking the US. Trade
statistics from the World
Trade Atlas (WTA) reveal
that total trade between the
two countries reached the
equivalent of R105-billion in
2009 – accounting for 17% of
China-Africa trade.
This share, according
to Fundira, places SA as
China’s second top African
trading partner after Angola
– a home of oil and mineral
resources.
“The most recent
engagement between
the two countries is the
comprehensive strategic
partnership (CSP) signed by
President Jacob Zuma and
his counterpart Premier Hu
Jintao on August 24,” he said.
The CSP is no short
memorandum of agreement.
The declaration contains
38 bilateral co-operation
agreements, ranging
from political dialogues,
trade, investment, mineral
exploration and agriculture
agreements to joint efforts in
the global arena – such as in
the United Nations (UN) and
the Forum on China-Africa
Co-operation (Focac).
“The signing of the
CSP can be viewed as a
commitment to further
strengthen the bilateral
relations between the
countries,” said Fundira,
“and establish a viable longterm
relationship which
takes into account not only
the political but also the
commercial interests of both
parties.”
Although there are political
and economic gains in this
south-south configuration
– this relationship is not
without its challenges,
Fundira added.
This especially with labour
movements, he noted, which
accuse Chinese competition
for job losses.
Fundira also pointed out
that trade between the two
countries mirrored that of SA
and its traditional northern
partners – where SA exports
are mainly primary resource
based-products and imports
are mainly manufactured,
value-added products.”
“The prevalence of nontariff
barriers that exist
especially for agriculture,”
he told FTW, “further
exacerbates the concerns as
these are hampering SA’s
penetration of the China
market.”
But, despite these concerns
and given the current
forecasts of China’s future
economic size and political
weight, Fundira insisted
that “the logic of improving
relations seems irrefutable”.
It’s a two-way trade
between benefits and
disadvantages, he added –
but tends to come out on the
winning side.
Tralac’s recent publication
– ‘South Africa’s Way Ahead
– Looking East’ – noted that
expected losses (employment,
wages, and production) in
certain sectors would be
offset by the opportunities
created in other sectors with
a competitive potential.
“Thus, in the long run,”
said Fundira, “it will allow
SA to develop and expand
trade in its competitive
sectors. Affected sectors such
as clothing and textiles need
to be realigned and adopt
new technologies – while
opportunities exist in the
chemicals, plastics and nonferrous
metals sectors.”
But Fundira does not
suggest that the inevitable
growth in China should be
seen as an attack on SA – and
it shouldn’t encourage this
country to adopt a purely
defensive posture.
“While SA dines in the
dragon’s lair, there should
be a common understanding
amongst SA stakeholders
of China role’s in the global
economy,” he said. “The SA
government needs to inform
its stakeholders that China’s
rise is inevitable and we
should not avoid engaging
China effectively on the
trade front.
“Concentrating only on
defensive positions, on how
to limit China’s impact, is
counter-productive, and will
ensure that the Sino-SA
relationship remains skewed
in ways that suit the Chinese
economy far more than that
00515 FTW quarter page 2/3/10 6:24 PM Page 2 of SA.”