Zuma makes a tour of the production facilities in the Transnet manufacturing plant in Koedoespoort, Pretoria, before he rolls 95th electric locomotive off Transnet’s factory on March 19th, 2015. The locomotives are bought from China South Rail and built in South Africa with technology transfer. (People’s Daily Online / Sissy Zhang)
Despite the economic growth slowdown in emerging markets, strong demands from the Chinese market have brought business and prosperity to South Africa in 2015, highlighted by unprecedented wine and fruit exports to the oriental giant.
According to South Africa Wine Industry Information & Systems, South Africa’s total wine export to China reached 11,848,894 liters from November 2014 to October 2015, recording an 85 percent year-on-year growth rate. For the very first time, China has become one of South Africa’s top 10 wine export destinations. In contrast, South Africa’s 2015 GDP growth is anticipated by the International Monetary Fund to be about 2 percent.
In agribusiness, statistics from the South Africa Citrus Growers’ Association (CGA) show that grapefruit exports to China has doubled from 654,000 cartons in 2013, to 1,342,000 in September 2015. Valencia oranges exports have increased from 1,120,000 cartons to 1,829,000 cartons so far this year.
Although South Africa’s overall exports have declined 6.22 percent in the first six months, thanks to demand from the Chinese market, citrus exports data have shown a defiant growth of 7 percent according to SARS. Justin Chadwick, CEO of CGA, believes the increasing demand for southern hemisphere citrus is the result of Chinese consumers having more disposable income to spend on imported fruit.
Sub-Saharan Africa’s economic ties with China are inseparable. According to the statistics in 2014, the share of China-Africa trade in Africa’s total foreign trade had increased from 3.82 percent to 20.5 percent in the last 15 years.
“Many friends expressed their concern over China’s economic performance,” wrote Tian Xuejun, Chinese Ambassador to South Africa in his opinion piece published on IOL website, “President Xi Jinping vividly likened China’s economy to a huge ship sailing on the sea. Any ship, whatever its size, may occasionally experience unstable sailing.”
Tian explains, “China’s economy has entered a state of ‘new normal’ with accelerated transformation towards a higher end. China is not obsessively pursuing growth speed.”
According to Tian, the core concept and the strategic path of such a process is to promote transformation in five aspects, namely: realizing innovation-oriented growth; intensive growth; consumption and investment driven economy; the decisive role of the market in resource allocation; and inclusive and shared economic benefits.
“The economic transformation of both China and Africa are highly complementary,” Tian affirms, “Both sides could offer each other opportunities, which will promise a new and broader space for future co-operation. “
International industrial co-operation will be the focus of China-Africa co-operation.
Tian points out that the value of industrial output in the sub-Saharan region only accounts for 0.7 percent of the global total, while manufacturing industry in most African countries contributes less than 15 percent to GDP. “Although industrialization is a weak point in Africa, economic transformation will be the engine for future development.”
Instead of simply exporting products, China will be exporting industries and skills “which will effectively help African countries accelerate the building of a complete industrial system and manufacturing capability”, says Tian.
In October, China pledged $50 billion towards industrialization projects in South Africa ahead of the summit of the Forum on China-Africa Cooperation in Johannesburg. The pledge was announced when Zhang Xiangchen, vice minister of commerce of China visited South Africa early this year.
According to a DTI statement, China will also provide 50 technical experts in building and upgrading of industrial parks and new power plants, 40 000 training opportunities in different sectors and 200,000 industrial managers to train and develop local employees.
Earlier this year, China Africa Development Fund (CAD Fund), an equity investment fund, which aims to diversify the financial vehicles that facilitate Chinese investment to Africa, announced that it will reach its full size of funding of $5 billion in 2015. So far, the fund has invested $2.3 billion in 80 projects ranging from infrastructure, manufacturing, agriculture, power stations, power transmission to industrial zones in more than 30 African countries.
Shi Jiyang, CAD Fund President, said the fund will progressively invest in projects which have the potential [spur] manufacturing growth.
“China will continue to uphold the principles of ‘sincerity, real results, affinity and good faith’ and support Africa’s economic transformation so as to achieve win-win results,” Tian concludes.
According to the statistics in 2014, trade between China and Africa exceeded $220 billion and China’s investment stock in Africa surpassed $30 billion, an increase of 22 and 60 times respectively over the figures in 2000.
(This story was originally published in Business Day on December, 2nd, 2015)
