Special Report

South Africa is targeting a new alliance with China as growth slumps

South Africa's President Cyril Ramaphosa (2nd L) waves as he walks past Indonesia's President Joko Widodo (L), China's President Xi Jinping (C) and Russia's President Vladimir Putin (R) during a family photo session in front of the Osaka Castle at the G20 Summit in Osaka on June 28, 2019. (Photo by Tomohiro Ohsumi / POOL / AFP)

In an attempt to strengthen a commercial alliance that has been disrupted by the Covid-19 pandemic, South Africa and China are working on a renewal of their ten-year strategic partnership.

The bid to renew the relationship, which was last decided in 2014, was confirmed on Monday at the Chinese Embassy in Pretoria by South African Finance Minister Pravin Gordhan and Chen Xiaodong, China’s newly appointed ambassador to South Africa.

According to Gordhan, the agreement, which the partners expect to finalize by the end of the year, will concentrate on sectors like higher education, skills transfer, health, digital economy, science and technology.

China is the largest trading partner in South Africa, but in the midst of the global downturn caused by the Covid-19 pandemic, business has plunged. In the first half of the year, trade between the two countries dropped by 27.6 percent, with Chinese imports from South Africa falling by 32.2 percent to $8.68 billion, according to data from China’s General Administration of customs. Chinese exports to South Africa slumped to $6.2bn by around a quarter. Last year, overall trade between countries stood at $43.2bn.

Compared to 6.1 percent in 2019, the IMF predicts that Chinese GDP will grow by just 1.2 percent this year, while South Africa will contract by 8 percent following pre-pandemic growth of just 0.2 percent in 2019. In early September, Ramaphosa announced that in talks with business and labor, the government was finalizing another big economic plan, but companies are conscious that previous proposals have been left unimplemented.

Although South Africa hopes that China’s new alliance will restore the relationship to its economic pre-eminence, negotiations will also provide an opportunity to renew diplomatic ties. In March, outspoken Chinese ambassador Lin Songtian was recalled from Pretoria, known for Twitter diatribes against the United States. Songtian had bluntly commented on the shortcomings of South Africa’s investment climate, warning that to attract investors and resuscitate the economy , the government had to renovate its infrastructure and revitalize state-owned enterprises, including Eskom power utility. As Eric Orlander, co-founder of the China-Africa project, writes, his replacement by ‘strong hitter’ Chen provides an opportunity to improve relations.

Chen ‘s appointment to the post reaffirms the perception of Beijing that South Africa remains the continent’s most significant diplomatic outpost. “Chen is a senior diplomat in both Africa and Asia with a long resume,” he says.

Some South Africans remain skeptical about improving relations with China, considering the commercial opportunities.

In most cases, when it comes to sourcing construction and infrastructure financing, China has become the go-to partner, mostly through transactions that are not so straightforward. Like other countries on the continent, South Africa is starting to look to China for infrastructure funding bailouts. Ralph Mathekga, an independent political analyst based in Johannesburg, says that this will create a dependence on China’s expertise and financing in maintaining infrastructure on the continent, establishing dependency ties with China.

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