South Africans Should Welcome New Chinese Trade Pact

This newspaper has previously argued that as a consequence of colonial rule, South African corporate and business thinking has long tilted by default toward the West. The fact that the 1994 transition coincided with a United States (US)-led unipolar world sustained such thinking deep into the democratic era. But that unipolar context has changed as China rises to challenge US power. That shift towards multipolarity has further coincided with the fact that, unlike 30 years ago, Western social and economic policy advice can no longer be assumed to serve South Africa’s economic interests.

Climate and social justice ideologies, in particular, have done great harm to competitiveness and living standards in the countries that have applied them and, in so far as they were foisted on South Africa by western NGOs and activists, have contributed directly to stunting its rate of economic growth and sustaining its high rate of unemployment.

It is to be welcomed, therefore, that South Africa has used a Beijing trade summit to lock in a formal economic framework with China.

Last week, South Africa’s Minister of Trade and Industry, Parks Tau, and China’s Commerce Minister, Wang Wentao, signed a “framework agreement on economic partnership for shared prosperity” covering terrain from “trade cooperation” to “investment cooperation”, “new energy cooperation”, and “multilateral cooperation.”

The South African trade ministry has also said the framework will be followed by an “early harvest agreement by the end of March 2026”, which “will see China provide duty-free access to South African exported products and enhance Chinese investment into South Africa”.

That deadline gives the still-to-be-finalised agreement an unusually near-term horizon.

Striking a very friendly tone, South Africa’s trade ministry described the country as “a major destination for Chinese investment in Africa” and “the leading African country in terms of actual investments in China”, and said that there has been “a significant and steady increase in Chinese investments in South Africa … Chinese automotive companies are investing into the South African economy and creating much-needed employment opportunities.”

In comments partly directed to goad Washington, with which relations remain less than friendly, the ministry said that South Africa looks forward to working with China “in a friendly, pragmatic and flexible manner”, while ensuring “consistency with World Trade Organisation principles” and providing “a stable and predictable environment for economic cooperation and win-win outcomes”.

But despite the positive tenor of the remarks, the South African government’s fears about opening the domestic economy to Chinese investment were not far below the surface, with the government saying talks will ensure that “the necessary safeguards are built into the agreement to protect South Africa’s industrial capacity”.

That is going to be a tough ask. South Africa places all manner of regulatory and policy obstacles in front of investors seeking to do business in the country – obstacles that will be alien to China’s extremely efficient, pragmatic, and professional business and investment culture.

The Common Sense has already reported on how South Africa’s government sought to increase tariffs on imported Chinese vehicles in order to shield European and American firms, which are subsidised by taxpayers to assemble vehicles in South Africa, from Chinese competition. That sort of thing will not go down well in Beijing.

The South African business community has been lukewarm in their response to the framework pact with China. Many in that community, especially with ties to Western-domiciled firms, know that increased Chinese entry means more effective competition from world-class professionals with an often-superior work ethic, who run more efficient businesses, and increasingly, as in the case of the auto-industry, produce better products and technology at much lower prices. South Africa’s economy would do well to receive a healthy dose of all of that.