SA not just a gateway to Africa for China business
Financiers more likely to invest as countries mark 20-year relationship
CHINA is not just about Kung Fu, and South Africans know that. In office towers around Sandton, Gauteng, people are discussing the possibilities of gaining access to its market and attracting potential Chinese investors. Scholars in the University of Johannesburg are busy studying the way China develops and its implications for Africa. The language is also being taught and learned there. Whereas all across the country, tourism practitioners are embracing thousands of Chinese tourists, who came all the way from the other hemisphere just to get a taste of the South African beauty. China is getting more and more popular and visible day by day in the Rainbow Nation.
The perception among Chinese people about South Africa is also gradually changing. As a Chinese economic correspondent I’ve had numerous opportunities to accompany business delegations who came to seek co-operation from the South African side.
What I hear most often is: “Wow! This is far from what we anticipated!”
Whatever they had in their mind before making the trip, they are all deeply impressed by the modern transport infrastructure, the favourable business environment and the accessible professional services in terms of legal counselling and financial activities. The stunning landscape and hospitable people also made them want to extend their stay in Mzansi than previously scheduled.
Statistics show that the economic co-operation between the two countries has made significant achievements over the years. China has for nine consecutive years remained South Africa’s largest trading partner. China is also its largest source of foreign investment. On the other hand, South Africa is China’s biggest trading partner and the most important destination for Chinese investment in Africa.
In 2017 , bilateral trade grew by 11.7% to $39.17 billion, a more than 20-fold increase from the figure at the beginning of diplomatic relations in 1998. Chinese investment in South Africa has grown from zero to an accumulative total of over $20bn of direct investment, reaching thousands of businesses in South Africa.
In South Africa’s battle against poverty, unemployment and inequality, the Chinese community has also been consistently making its contributions. Currently, there are hundreds of thousands of Chinese businessmen working in Johannesburg, Durban, Cape Town, etc, covering retail, manufacture, logistics, catering and so on.
One of the major players in the South Africa electronics industry, Hisense, has created nearly 2 700 job opportunities over the years. The household ICT company Huawei is not just doing its best to provide excellent telecoms services to South African customers, but also committed to develop local ICT operators by initiating training programmes to the young talents.
Most recently, the Limpopo Economic Development Agency has signed Memorandums of Understanding (MOUs) and a Memorandum of Agreement (MOAs) with nine Chinese companies which committed to investing more than $10bn in the Musina-Makhado Special Economic Zone. That is quite an inspiring signal suggesting that the New Dawn is gaining momentum and charming investors globally. It also means that instead of using South Africa as a gateway to Africa, more and more Chinese enterprises show greater interest in doing business in the South African market itself.
While enhancing mutual economic co-operation, China and South Africa are also cautious of the arising protectionism approach in the international community that tends to undo the successes of global integration during the past decades and make nations isolated again. Trade war hurts everyone, with no exception. China and South Africa are fully aware of that. That is why they have made more determined moves to promote free trade. China pledged to broaden market access and expand imports substantially. South Africa firmly holds the belief that Africa Free Trade Area is a must and has been driving the agenda effortlessly.
As two important emerging economies, China and South Africa have been working together under the BRICS framework and making amazing progress. One of the most applauded being the New Development Bank. Local analysts who have been watching the NDB very closely have shared with me their excitement on how it could help address infrastructure funding deficits in emerging economies as well as to reform the existing global financial institutions.
Despite all speculation and doubts, it turns out the NDB is never just an unrealistic idea. In April 2016, shortly after it was officially launched, the bank announced its first set of loans. In August 2017, the African Regional Centre of the BRICS New Development Bank opened in Johannesburg. And lately, in May this year, the NDB approved a $200m project for the reconstruction of the Durban Container Terminal berth. According to reports, this was one of six projects from the five member countries that was approved by the board with loans totalling $1.6bn, bringing the bank’s total portfolio to more than $5.1bn.
This year marks the 20th anniversary of the diplomatic relationship between China and South Africa. It also marks the centenary of the birth of Nelson Mandela, whose legacy is always worth reflecting on. And, as Madiba once said, “What counts in life is not the mere fact that we have lived. It is what difference we have made to the lives of others that will determine the significance of the life we lead.”
Twenty years on, we Chinese and South Africans have made interesting differences to each others’ lives. Looking forward, we sure will have more fantastic stories to tell.
SOUTH AFRICA IS CHINA’S BIGGEST TRADING PARTNER AND THE MOST IMPORTANT DESTINATION FOR CHINESE INVESTMENT IN AFRICA