The price of China’s eco­nomic sup­port

South Africa-Chi­nese re­la­tions have no doubt been mu­tu­ally ben­e­fi­cial. How­ever, cer­tain con­cerns re­gard­ing Chi­nese in­flu­ence on the lo­cal po­lit­i­cal econ­omy re­main.

Finweek English Edition - - OPINION - Ed­i­to­rial@fin­week.co.za is an as­so­ciate pro­fes­sor of in­ter­na­tional po­lit­i­cal econ­omy at UCT’s Grad­u­ate School of Busi­ness. He is the deputy chair­per­son of the ed­i­to­rial board of New Agenda, as well as a mem­ber of the ed­i­to­rial boards of Global Gov­er­nance

theFo­rum on China-Africa Co­op­er­a­tion sum­mit, which will take place in Jo­han­nes­burg next month, will once again cast a spot­light on the re­la­tions be­tween South Africa and China. Since the es­tab­lish­ment in 1998 of diplo­matic links be­tween the two coun­tries, the bi­lat­eral re­la­tion­ship has grown rapidly to be­come one of the clos­est be­tween an African coun­try and the emerg­ing global su­per­power.

The im­por­tance both coun­tries at­tach to the bur­geon­ing re­la­tion­ship is un­der­scored by the fre­quency of high-level vis­its un­der­taken by po­lit­i­cal lead­ers in re­cent years. Un­der­pin­ning the strong po­lit­i­cal and diplo­matic ties has been grow­ing eco­nomic co­op­er­a­tion.

Viewed through China’s lens, SA’s boun­ti­ful min­eral wealth has el­e­vated Pre­to­ria-Bei­jing re­la­tions to strate­gic im­por­tance. Also, China views SA’s re­gional power sta­tus as jus­ti­fi­ca­tion for el­e­vat­ing co­op­er­a­tion to a strate­gic level. This ex­plains why China pushed hard to ex­tend an in­vi­ta­tion to SA to join the Brics group­ing. The cre­ation of the Brics Devel­op­ment Bank rep­re­sents an op­por­tu­nity for SA to tap into an al­ter­na­tive source of finance to ad­dress the econ­omy’s devel­op­ment needs. Thanks to China, SA is also a mem­ber of the Asian In­fra­struc­ture In­vest­ment Bank.

In SA’s strate­gic cal­cu­la­tions, China’s im­port re­sides pri­mar­ily with it be­ing a grow­ing source of for­eign in­vest­ment that SA needs des­per­ately to ame­lio­rate press­ing do­mes­tic so­cial chal­lenges, no­tably high un­em­ploy­ment, poverty and in­equal­ity. SA re­gards China’s sup­port as cru­cial to pro­mot­ing Africa’s in­ter­ests in the United Na­tions and other mul­ti­lat­eral in­sti­tu­tions. SA also views the deep­en­ing of eco­nomic links with China (and with the other Brics coun­tries) as cen­tral to its eco­nomic strat­egy of di­ver­si­fy­ing its ex­ter­nal trade away from Europe. There is no doubt that the SA-China re­la­tion­ship is in many ways com­ple­men­tary and is poised to be­come stronger and grow fur­ther in the fu­ture. Yet the ques­tion this raises is whether SA can suf­fi­ciently ac­com­mo­date China’s needs and, if so, at what cost. Sat­is­fy­ing China’s needs will de­pend on the ex­tent to which do­mes­tic con­stituen­cies in SA – mainly labour unions, the busi­ness sec­tor and civil so­ci­ety for­ma­tions – feel that their con­cerns about China’s in­flu­ence on SA’s po­lit­i­cal econ­omy are be­ing ad­dressed. Labour unions have voiced con­cerns about the im­pact of Chi­nese tex­tile im­ports on lo­cal jobs and wages: they have blamed the ‘neo-colo­nial’ na­ture of the trade re­la­tion­ship for the de-in­dus­tri­al­i­sa­tion of the SA econ­omy. The lo­cal busi­ness com­mu­nity has ques­tioned SA’s de­ci­sion to grant China mar­kete­con­omy sta­tus, mak­ing it very dif­fi­cult for lo­cal firms to prove that the Chi­nese gov­ern­ment gives its com­pa­nies an un­fair ad­van­tage. Also, China’s eco­nomic ex­pan­sion into Africa has been seen as a threat by South African com­pa­nies who have lost mar­ket share in SA’s ‘near abroad’.

Civil so­ci­ety or­gan­i­sa­tions have voiced un­easi­ness over the bale­ful in­flu­ence of the ex­pand­ing SA-China eco­nomic re­la­tions on SA’s for­eign pol­icy. The Dalai Lama visa de­ba­cle at­tests to the re­al­ity that eco­nomic prag­ma­tism has trumped the for­eign pol­icy ide­al­ism of the Man­dela years.

China has shown that it is at­tuned to the sen­si­tiv­i­ties of South African do­mes­tic pol­i­tics. That is why, for ex­am­ple, it pre­vi­ously ac­ceded to SA’s re­quest to im­pose quo­tas on its tex­tile ex­ports (al­beit for only two years) and un­der­took to work with SA to cor­rect the un­bal­anced trade pro­file be­tween the two coun­tries – by urg­ing Chi­nese firms to ex­pand in­vest­ment in the coun­try’s man­u­fac­tur­ing sec­tor and pro­mote lo­cal ben­e­fi­ci­a­tion of raw ma­te­ri­als.

It is clear, how­ever, that China’s re­spon­sive­ness and flex­i­bil­ity in this re­gard will re­main con­di­tional upon SA main­tain­ing un­fet­tered ac­cess to its min­eral re­sources for Chi­nese firms, upon not ques­tion­ing China’s pol­icy po­si­tions in mul­ti­lat­eral fo­rums and upon not in­ter­fer­ing in China’s do­mes­tic af­fairs – as ev­i­denced by the Dalai Lama af­fair. China’s eco­nomic sup­port for SA, there­fore, comes at a price. The ques­tion is whether South Africans are pre­pared to pay it.

There is no doubt that the South Africa-China re­la­tion­ship is in many ways com­ple­men­tary and is poised to be­come stronger and grow fur­ther

in the fu­ture.

Chi­nese Pres­i­dent Xi Jin­ping shakes hands

with South African Pres­i­dent Ja­cob Zuma at The Great Hall Of The Peo­ple in Septem­ber in

Bei­jing, China.

Dalai Lama

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