The China conundrum – threat or opportunity?

While some are sceptical of whether China-Africa trade benefits Africa as much as China, those in the know say that much depends on whether African countries and businesses position themselves to leverage the strategic opportunities that have opened up as a result of China’s involvement in the African continent. It is therefore important that stakeholders from all industries gather to discuss China-Africa trade on a regular basis to discuss and pave the way forward for increased trade between African and Chinese businesses, says Duncan Bonnett of Whitehouse and Associates. “China can be a major threat – but can also be a partner, depending on how it is approached. It is important therefore to be smart about how one goes about business and in that regard it is important that if SA is to compete with China (and other powerful countries) an ‘SA Inc’ strategy must be developed.” China has become the world’s top manufacturer, surpassing the United States, with a manufacturing industry that produces a range of sophisticated equipment beneficial to Africa’s development. Africa on the other hand has strategic resources such as oil that China needs to meets its energy demands “China is geared towards working with Africa and gets what it is that Africa needs and wants. The question is whether we understand China,” said Bonnett. The importance of the bilateral relationship between China and Africa was emphasised at the World Economic Forum 2011 held in Cape Town in May, where President Jacob Zuma said during the opening session, “Africa should interact with China in a way that benefits both countries.” This statement no doubt recognises the fact that Africa has much to gain from forming economic ties with countries such as China in order to achieve economic growth targets, say the organisers of the China Africa Business Forum that will be held at Gallagher Convention Centre in Johannesburg on October 20 this year. “Trade statistics with China reflect the potential that exists for expanding the commercial relationship. Trade between South Africa and China has grown by more than R100 billion (US$13.6 billion) since 1998, when full diplomatic relations were established. Total trade amounted to R119.7 billion ($16.3 billion) at the end of 2009, growing by 2% from 2008 to a total of R118 billion ($16 billion),” reads a statement. “China’s involvement in the African economy has also made it possible for African countries to diversify their trading partners, thereby reducing their vulnerability to primary commodity price shocks, and increasing competition among importers of African commodities. This has enabled South Africa and other African countries to weather the 2008 financial crisis with more resilience than if trade depended on Europe and the US. Africa is currently experiencing economic recovery with growth increasing from 1.7% in 2009 to 4.7% in 2010.” An October/ November 2010 report by Stats SA indicates that exports from South Africa to Asia increased by R6.6 billion to R21.5 billion, in comparison to Europe where exports increased by R1.1 billion to R15.0 billion and the US where exports increased by R0.6 billion to R6.4 billion.