FS courts Chinese dragon

Investment, business opportunities beckon

The Free State next week hosts its inaugural ‘China in South Africa Week’ as the province leads the way in forging greater ties with the Asian giant that is the world’s second largest economy and tipped by some economists to soon take over pole position from the US.

The April 15 to 19 China Week, which seeks to put the Free State and South Africa on the same page with most of the world’s leading nations that have sought deeper relations with Beijing, is seen providing a window to draw more Chinese investment into the provincial and national economy.

Mondli Mvambi, the spokesperson of the Free State government that is behind the initiative, said it was also in response to the call by national government on South African entities to deepen relations with their counterparts in the BRICS – the economic association to which Brazil, Russia, India, China and South Africa belong.

“The visit by Chinese investors (during the week) is a learning exchange that will result in Chinese investment in our province,” said Mvambi in response to written questions submitted by The Weekly.
He added: “South Africa has long standing diplomatic relations with China. As a province we have visited China and learnt a lot about that country and we want to actualise (what we learnt) into material benefit of mutual trade exchange, research collaboration, business to business relations and strengthening the socio-economic and cultural relations.”

China has remained a bright investment spot for many western multinational companies despite the 2008 global recession.

Most developed countries have acknowledged that as the fastest-growing major economy in the world, China continues to offer global companies attractive investment and business opportunities.
This has prompted developing countries like South Africa to encourage companies in their territories to position themselves for long term trade relations with the Asian giant.

South Africa’s relations with China date back to the 1990s. But over the years, Free State has strengthened its ties with the south China province of Guangdong.
Last year the Free State received an award from Guangdong for being the best cooperating province.

Guangdong, whose capital is Guangzhou, has been the largest province by GDP (gross domestic product) in mainland China since 1989.
The economy of Guangdong is larger than that of most countries in the world. In 2014 the GDP for the province stood at about R 13.2 trillion ($1.1 trillion). The province is responsible for about 10.7 percent of China’s R 124.8 trillion ($10.4 trillion) GDP.
In addition to its dealings with Guangdong, the Free State government is supporting 277 students who are studying in different technical fields at universities and colleges across China.

The China Week will see a delegation of about 500 officials from various provinces and cities of the Asian giant visiting the Free State. Each of the Chinese cities and provinces has unique economic profiles and trade opportunities that local business people could tap.
The main activities of the China in South Africa expo will be held in Bloemfontein but delegates will be allowed an opportunity to visit other districts to see the projects they have invested in and other potential areas for investment.

China has already donated about R45 million to the Free State for the construction of a Demonstration Fish Hatchery Centre.
Most of South Africa’s exports to China are raw materials while China sends manufactured goods.

South Africa’s main exports to China include iron ore, steel, manganese, chrome ore, tobacco, wool, granite, gold, copper, aluminium and motor vehicle spares.
China’s main exports to South Africa include textiles, kidney beans, groundnuts, cotton seed cake, light electronics, capital equipment, paraffin wax and television sets.

When President Jacob Zuma visited China at the end of last year, Chinese President Xi Jinping described South Africa as a comprehensive and strategic partner for China in Africa.

The two countries signed a series of bilateral agreements including a memorandum of understanding on nuclear energy cooperation between the China National Nuclear Corporation and the South African Nuclear Energy Corporation.
China has remained South Africa’s single largest trading partner since 2009. South Africa’s bilateral trade with China increased by 32 percent to R270 billion in 2013 from R205 billion in 2012.

The trade balance has however remained in favour of China, with South Africa’s trade deficit increasing from R36bn in 2012 to R38bn in 2013.
On the criticism by some people for promoting trade with China, Mondli said anyone who decides to ignore China as a trading partner does so at their own peril. He said there was a lot of potential in the Asian economy and South Africa should take advantage of its vast resources and trade with it.

Mvambi said: “China is one of the economic superpowers in the world and that cannot be ignored. If you want to be the best you must play, dine, learn and work with the best.

“We do not idolise anyone but we learn and believe that the world can learn from us. China was once underdeveloped and they leapfrogged development to make their country a contending force to be reckoned with.”
Mangaung Chamber of Commerce and Industry (MCCI) president Nancy de Sousa said while it was a good idea to promote trade with China, the idea should be to open up more avenues for the small player, the local rural people, cooperatives and small, medium and micro enterprises (SMMEs) to enter the Chinese market.

De Sousa said: “There’s a lot of potential amongst our people and we need to support them so that they can sell their products. Chinese products are all over South Africa, what we need to do now is to promote local products so that they can found all over the country too. Some rural people and SMMEs are producing some very good products. We need to strike a balance.”

Some voices in opposition circles and surprisingly even in the trade union movement have criticised the move to strengthen ties with China.
For example the South African Democratic Teachers Union (Sadtu) has said it will oppose plans by the department of education to introduce of Mandarin to South Africa’s public school curriculum saying that would be equal to embracing a new form of colonisation.

And some opposition figures from the Free State were this week questioning the wisdom of hosting the China Week saying there was no guarantee that the Free State will reap the anticipated benefits and that the money to host the event could be used in other areas.

But Mvambi said the time to court China was now. He said anyone not joining the beeline for China would be left out, pointing at how even countries such as Britain, France and Germany – that were traditionally unfriendly and unaccommodating towards China – have since changed tack to develop ever closer ties with Beijing.