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South Africa - China Relations

South Africa announced in November 1996 that it would switch recognition from Taiwan to China as of 01 January 1998. China established official relations with South Africa in 1998, which was made possible with the end of the Cold War and dismantlement of the apartheid system. Ever since, the two countries have moved closer with "win-win partnerships". By 2015 over 350,000 Chinese citizens were living in South Africa, mostly undertaking commercial ventures and small businesses.

In August 2010, South Africa and China signed the Beijing Declaration for the Establishment of the Comprehensive Strategic Partnership. As strategic partners, they achieved several milestones in their relations, notably South Africa’s inclusion as a full member of the BRICS Forum; South Africa’s Deputy President Kgalema Motlanthe’s visit to China in September 2011; and the visit to South Africa by Vice-President Xi Jinping in November 2010.

President Jacob Zuma said on 05 December 2014 that China's growing influence in Africa would allow the continent to free itself from “colonial shackles” as he wound up a visit to Beijing. Zuma's government had denied the Tibetan spiritual leader the Dalai Lama several visas in recent years and maintained a strongly pro-China foreign policy, while Beijing has expanded its footprint to become the biggest trading partner of South Africa and the African continent.

“The emergence of China as a power among others gives or offers an opportunity to African countries to be able to free themselves from the shackles that are really colonially designed,” Zuma told an audience of students at Tsinghua University in Beijing. Zuma added that in African countries' relations with “Europe in particular, you are regarded as either a former subject or a second and third class kind of a person”.

But “the relationship between China and African countries, particularly South Africa, is different”, he said. “We relate as brothers and sisters to do business together, not because one is a poor cousin.” Zuma said: “If we work together, we in a sense represent a different world than the world that has been dominated by the North.”

In the Closing Remarks to the Johannesburg Summit of the Forum on China-Africa Cooperation, Sandton ICC, Johannesburg, 05 December 2015, President Zuma said "This relationship between Africa and China is not new. It is a longstanding historic relationship that is based on a history of solidarity and the support we received from China as we fought colonialism and apartheid on the African continent decades ago. China was there when we needed help most and we will never forget that solidarity and comradeship."

At the Plenary Session of Johannesburg Summit of the FOCAC with President Jacob Zuma of South Africa, 06 December 2015, President Xi Jinping said "We have approved the Declaration of the Johannesburg Summit of the Forum on China-Africa Cooperation and the Johannesburg Action Plan (2016-2018) of the Forum on China-Africa Cooperation, and determined to jointly commit ourselves to strengthening and consolidating the "five major pillars" including equality and mutual trust in politics, win-win cooperation in economy, exchanges and mutual learning among civilizations, mutual assistance in security, and unity and coordination in international affairs."

Xi Jinping pointed out that the Chinese side will uphold the policy of sincerity, real results, affinity and good faith and the correct viewpoint of righteousness and benefit toward Africa and continue to work with the African countries to forge ahead and make unremitting efforts to realize common development of China and Africa.

Trade between South Africa and China has been booming since the late 1990s and is likely to expand even more rapidly over the next decade. In 2005 China was ranked South Africa's fifth largest trading partner. In 2003, imports from China accounted for 6.5% of total South African imports while exports to China accounted for 2.4% of total exports. Despite the rapid growth in South Africa-China trade, South Africa's two largest trade partners, Germany and the US respectively, represented more than twice the value of China total trade.

China has become South Africa's largest export market and biggest trading partner. Total bilateral trade between China and South Africa reached R61.9 billion ($8 billion) between January and July 2009, according to the South African Revenue Service. Total trade with the U.S. was only R42.1 billion ($5 billion) during the same period. South Africa imports appliances, clothing, footwear, and plastic products from China. Iron ore, gold, copper, chrome, wine, timber, and paper pulp were South Africa's primary exports to China. Trade with China is structurally imbalanced because South Africa exports commodities while China supplies value-added manufactured goods.

China perceived its policies in Africa as founded on mutual benefits rather than exploitation. China's primary interests in Africa were unblocked access to resources and impeded access to markets; its philosophy was mercantilist and it adhered to ASEAN principles of non-interference. There was no consensus whether China's policy of non-interference would impact on good governance or definitions thereof and whether this would assist on peace and security and conflict resolution issues. China did not precondition its assistance on the development of democracy.

While the Western world views Africa as a "development burden", China sees Africa as a "commercial opportunity", which has focused China's strategy in developing a parallel market for energy security and commodities. China's design is to monopolize the entire commodity chain, from mining, financing, processing, and shipping to developing new exchanges that will eliminate the middle man of the Western-dominated metal and mineral exchanges. In addition to this new parallel trading model, China is pursuing a coalition investment strategy manifested by targeted special economic zones (SEZ).

China was excluded from Middle East oil reserves (apart from Iran) and is often blocked from open market purchases (like CNOOC's bid for Unocal, "vetoed" by the US Congress), leaving Africa as the only option. Strong relations with Africa will also enable China to gain a toehold in the global economy and counter rising competition from Japan. China is establishing mining, trading, manufacturing, assembly, and logistics hubs throughout Africa. At the same time, China is facilitating cooperation between several industries, such as banking, mining and oil, in each economic zone to form a coalition investment that can better dominate the market.

China's relations with South Africa differ from China's relations with the rest of Africa. South Africa has not been designated as an SEZ despite its role as the economic powerhouse and transportation hub for sub-Saharan Africa. China is not attempting to invest in the mining and resource sector here. Instead, China was pairing up with large South African companies, such as Standard Bank, to gain better access to the rest of Africa.

Zijin Mining Group bought a 20 percent stake in the $100 million Blue Ridge platinum mine and the Sheba Ridge platinum project on South Africa's Bushveld Complex. The Oppenheimer family sold a third of its stake in Anglo American to China Vision Resources for $550-600 million in November 2006. Industrial and Commercial Bank of China's (ICBC) mad a $5.5 billion purchase of 20 percent in South Africa's Standard Bank in 2007.

Otherwise, China was just a source of cheap imports that threaten local manufacturers. South African manufacturers have faced stiff competition from Chinese imports, resulting in South-South "competition" rather than "cooperation." South Africa's reticence most likely arises from China's insistence on controlling the entire supply chain via Chinese-owned companies and its failure to localize, i.e., employ South Africans and tap into locally-owned suppliers.

South Africa is likely to remain of interest to China. South Africa still has significant known deposits of gold, PGMs, ferro-metals, diamonds, and other minerals, and the potential for further discoveries, given new exploration and mining technology, despite being a mature mining country. South Africa is the dominant economic force on the continent and offers a developed-world "gateway" to the rest of Africa. It is virtually self-sufficient in food supply, has a well-developed infrastructure and industrial capacity, significant skills (albeit a shortage of sufficient skills), accounts for some 30-40 percent of the continent's GDP, and produces 50 percent of its generated electricity. South Africa has one-third of Nigeria's population but nearly five times its power-generating capacity.





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Page last modified: 18-01-2016 18:38:29 ZULU