China slides into top trading spot

The rapidly growing Chinese interest in Africa is now reflected in China-SA trade, as the oriental giant takes over as number one trading partner – beating the US, Japan, Germany and the UK in the battle for SA trade supremacy. Department of trade & industry figures show that two-way trade volumes with China hit R32.4-billion in the January-to-July period – sliding comfortably ahead of the US in second spot with R21.7-bn, Japan with R19.7-bn in third,, Germany fourth with R17.5-bn and the UK – for many years SA’s top partner – now sixth with R15.2-bn. This was growth in SA-China trade of 11.95% from 8.45% in the same seven-month period last year. It’s a local version of the same trade game that China is playing with the whole African continent – with an especial focus on the sub-Saharan section of the continent – where cheap Chinese products are substituting for African imports from other sources, and replacing even secondhand goods which have previously been pricedominant in certain sectors, like the motor vehicle market. It still remains a very lopsided trade pattern, according to Duncan Bonnett of trade consultancy, Liz Whitehouse & Associates. “The only thing that sub-Saharan Africa exports to China in any quantity are minerals and mineral derivatives,” he told FTW, “because almost everything we produce they are manufacturing – better and cheaper.” This was clearly indicated by trade statistics which show that Africa’s top exports to China last year were mineral products. Imports, however, are predominantly manufactured goods. “That’s right acrossthe- board,” Bonnett added – with the top export products from China into Africa in the past year being machinery, transport equipment, footwear and plastic products. In the African trade league, Angola leads the table. It accounts for 24% of China- Africa trade, mainly because it is the biggest African source of China’s oil imports. SA takes second spot, with 17% of the total intercontinental trade, then Sudan (8%), Nigeria (7%) and Egypt (6%) – and these countries collectively account for 62% of total China- Africa trade. On the positive side, according to Bonnett, China – as a source of affordable goods – is creating consumers in lots of market sectors where they were previously excluded because of price. “What China is doing, in many respects, is creating new market opportunities throughout the continent,” he said. “With cheap TVs, radios, cars, cookers and fridges, there are consumers where they previously didn’t exist before cheap Chinese goods became available in the marketplaces. They just couldn’t afford these things before.” He also added that this was another positive factor. “They are creating a retail revolution across the continent.” But there is also a downside. According to Bonnett, they are destroying African industry. “It just doesn’t have the economiesof- scale, the cheap and regular supplies of power and water, nor the skills that are required,” he said. “They just can’t compete with the Chinese.”