Feb 2015

Why China is important to SA

Written by Minister in the Presidency Jeff Radebe

International relations

It took many by surprise when China became Africa's largest trading partner in 2009, surpassing the United States.

Since then, China’s growing presence in Africa has become a subject of discussion, especially among the foreign press. Everyone, from analysts to politicians and ordinary people on the street, suddenly had a view on the Chinese.

President Jacob Zuma and his delegation engaged with the Chinese government on a range of issues.China’s rapid rise as an influential player in Africa has led many to question the nature of its involvement on the continent. Many questioned the intentions of the Chinese while some even went as far as ridiculing products offered to Africans by China as “fong kong”. Some became suspicious when the Chinese started to build roads, dams, stadiums and hotels in Africa. They asked: What does China want in return? Of course, as it invests in Africa, China is taking advantage of the continent’s rich natural resources to meet the growing needs of its people.

By 2013, China recorded nearly R2.2 trillion in trade flows in Africa, making it clear that they want to become the most influential foreign power in Africa. China's total trade with South Africa increased from about R190 billion to R270 billion in 2013 and is rapidly approaching R300 billion.

It is for this reason that President Jacob Zuma’s visit to China in December last year was viewed with keen interest. The State visit to China by our President reinforce the close ties shared between China and South Africa and highlighted the depth of our relations, not only in the political realm of BRICS – the group of five major emerging national economies: Brazil, Russia, India, China, and South Africa - but also in business, agriculture, tourism, cultural exchanges, academic co-operation and scientific research.

South Africa doesn’t see its relationship with China as just based on trade, but a partnership rather, that is aligned to our development goals. China, on the other hand, regards South Africa as a key partner in advancing its relations with the African continent.

This is seen in the context of investments the Chinese have made in South Africa over the past few years and the value such investments have had on our economy. Our relations with China have reached new heights, in the short space of 15 years. It’s hard to believe that bilateral trade volume was aboutR12 billion when the diplomatic relationship was first established.

In 2012, the figure reached nearly R660 billion, which means a 40-fold increase in the past 15 years. Subsequently, this made China South Africa's largest trading partner, largest export market and largest source of import for the past four years. South Africa is also China's largest trading partner in Africa. Between January 2003 and January this year, 38 foreign direct investment projects were recorded representing a total capital investment of R13.33 billion or an average investment of R350.5 million for each project from China. Chinese investments in South Africa have contributed to job creation. During the period, a total of 10 992 jobs were created.

In 2014, the Chinese went a step further in investing in our economy when car manufacturer First Automobile Works (FAW) invested R1.1 billion to build a vehicle assembly plant in Coega, in the Eastern Cape, which is expected to produce up to 35 000 passenger vehicles in the coming years. In 2013, technology producer Hisense opened a factory in Atlantis, north of Cape Town, employing 300 South Africans in the production of goods for export to the broader African market. Cement producer Jidong Development Group and the China- Africa Development (CAD) Fund recently agreed to establish a R1.8 billion cement plant in Limpopo, with a projected production rate of 1 million tons of cement at full production.

As we review the status of our bilateral relations with the People’s Republic of China, we aim to ensure that the excellent growth path that we have already defined is strengthened with our focus on the priority issues of development in South Africa and Africa.

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