ECONOMIC CHALLENGES

THE SIGNING of 26 agreements worth R94 billion by the Chinese and South African governments on Wednesday presents an opportunity for the skewed trade relations and perceptions between the two countries to be addressed.

The trade balance favoured China as more than 90 percent of South Africa’s top 10 exports to China were in raw materials, while all of the country’s top 10 imports from China were manufactured products. China is South Africa’s biggest trading partner and accounted for 10 percent of world trade.

There were more than 120 medium- and large-sized Chinese companies running their businesses in South Africa and most of the Chinese companies regarded South Africa as a gateway to expand business.

China has established itself as a giant in world affairs, following 30 years of economic reform and opening up to the world. After numerous bilateral agreements were signed between the two countries this week, the question remains whether they were mutually beneficial.

China has been blamed for the collapse of the South African textile industry, which affected thousands of jobs. There is resentment within the local steel industry, which called for tariff protection, after complaining that cheap Chinese imports

“Chinese consumption growth of commodities has been the single biggest driver of commodity prices over the last ten years, and as China’s economy slows we have seen the devastating impact on commodity demand and prices. Conflicting data points to a gradual to rapid slow-down in the Chinese economy that is further exacerbating the transition pain,” Davids said.

The decline of the platinum, coal and iron ore prices this year saw South African producers restructure operations in a bid to save costs, which affected thousands of jobs. Because the Chinese economy was