South Africa’s trade relationship with China is expected to strengthen, regardless of the outcome of the US/China trade war which is likely to end in a trade deal that will not solve the power struggle. This is the view of investment strategist at Sasfin Wealth, Mike Haworth, who said the trade war was having little effect on the SA economy and its relationship with China, which was continuing to strengthen due to historical political and economic ties. However, he said a trade agreement that was “long on form but short on substance” was the mostly likely outcome and SA would in future have to make a choice regarding its technology imports. “If there is a trade deal between the US and China the markets will get excited and then calm down and say we have still got issues – the cold war is very much developing between the two countries,” he said. “Issues at the heart of it are IP and spying and technology – how do you ensure your IP is protected, how do you ensure that in that chip there is nothing spying on you? China wants to be a global tech leader by 2025 in 10 areas of industry. That scares Trump and that’s why he wants to put up barriers,” he said. “What is going to get interesting is that SA is going to have to choose between Western and Eastern technology, and that’s where the new cold war will be fought – at a commercial technological level. It won’t be fought over nuclear.” he said. Haworth said SA’s trade relationship with China would continue to grow and the latter had already invested massively in infrastructure development in SA, although the sum total was difficult to quantify as investors tended to quietly participate in the economy. One of its major investments is the construction of the $747.3-million (R11- billion) Beijing Automotive Industry Group’s automotive park at the Coega Industrial Development Zone. Chinese investors also committed to investing $10 billion (R147.2 billion) for the development of an industrial park in the MusinaMakhado special economic zone at an investment summit in Beijing last year,” he said. They plan to build a (4600 megawatt) coal power plant same size of Medupi and they are building it outside of the Eskom grid,” he said. “They have mining licences and industrial licences and will build a metallurgical coal mine, factories, a town/ city, hospitals and a shopping centre. There are a lot of Chinese people in Zimbabwe so it’s going to be massive and there is going to be a lot of movement across border,” he said.
INSERT: SA will have to choose between Western and Eastern technology and that’s where the new cold war will be fought. – Mike Haworth