Iron ore storage at Yingkou Port. China mainly imports raw materials from Africa. (Sheng Li/Reuters)
China overtook the United States to become Africa's single biggest trading partner in 2009, with 13.9% of the continent's trade, ahead of the US with 13%, but figures show that Africa is a minor player in China's overall trade.
China's trade with Africa reached $166.3-billion in 2011 and nearly $200-billion in 2012. Total foreign trade with South Africa has reached $45-billion, which makes up a significant portion of China's trade with the continent.
South Africa is China's biggest African trade partner and China is the primary destination for South African exports, followed by the US, Japan, Germany and India.
But the 2011 figures of the National Bureau of Statistics of China show that trade with South Africa is very small compared to China's trade with other countries.
About 12.7% of South Africa's total exported goods and services go to China, while Chinese goods and services make up 14.3% of South Africa's total imports.
China's imports from Africa continued to grow at a much faster rate than its exports, widening its trade deficit with the continent.
Exports from China
Exports to Africa from China for 2012 were $100-billion against $110-billion of imports from Africa. The imports have risen 26%, twice the speed of China's imports from other markets.
By the end of 2012, China's foreign direct investment in Africa was roughly $20-billion, with 75% going to sectors such as finance, processing and manufacturing, trade-related services, agriculture and transportation — although, depending on which Chinese source is quoted, the figure could be about $14-billion.
It is also hard to get reliable figures for African investment in China, but Professor Calestous Juma from Harvard University's Kennedy School of Government estimates $10-billion has been invested by Africa in China just in manufacturing, information communications technology and pharmaceuticals.
Large South African-based corporates are also taking advantage of China's growth and investment opportunities there. Brewing giant SABMiller has opened 50 breweries in China and Sasol is operating in the Ningxia Hui and Shaanxi provinces.
An Ernst & Young report released this year found that South Africa invested last year in 75 projects in Africa, more than any other country, a compound growth of 57% in locally originated investment projects in the rest of Africa since 2007.
The main companies investing are MTN, Standard Bank, Shoprite, Sanlam, Tiger Brands and Nampak.
Investment falls
Investment flows into Africa fell last year, in line with the global trend, but have risen by a compound rate of 12.8% since 2007, Ernst & Young said. During that period, the continent's share of global investment rose from 3.2% to 5.6%.
Jenny Chen of PwC said the bulk of the trade deals being facilitated by China were still coming from that country's state-owned companies.
"Many of these companies are doing trade from a foreign direct investment perspective."
She did not believe that trade between privately owned Chinese companies and Africa would increase significantly in the future and the state would continue to drive most of the investments.
Chen said China did not see South Africa as a gateway to the continent — it was doing business directly with the countries it wanted to work with.
That skills are not being transferred, although not a problem in South Africa, remains an issue in many other African countries and has led to continued criticism of China's methods of investment.
China looking to new sources
Analysts believe that, although new investment projects and shifts in policy have been initiated to meet China's new needs, including its agricultural demand, Africa still remains a largely passive recipient of Chinese manufactured goods and a net exporter of mineral commodities to China.
The mining, oil and gas sectors remain important, and there is a spirited struggle for related goods coming from both Western firms and China.
But, as Chen points out, China has also found itself having to look to new agricultural sources to feed its growing population and this has introduced a new level of interaction.
Pressure is being placed on the Chinese government to ensure that there is a better balance between exports and imports to and from Africa and China's government has said it plans to do more to encourage domestic consumption and imports.
Vicki Robinson, Standard Chartered Bank's head of corporate affairs for Southern Africa, said there are still many unexplored opportunities for increased Africa-China trade and scope "to explore trade finance opportunities".
South Africa's major exports to China have largely been mining products like iron and steel, nonferrous metals and heavy chemicals. On the other hand, South Africa imports machinery, clothing, televisions, communication equipment and footwear.
Lack of collaboration on trade is a missed opportunity
The Trade Law Centre said in a report that the present level of raw material exported from South Africa to China did not reflect South Africa's 2011 gross domestic product, two thirds of which was generated by the services sector, followed by agriculture and industry.
Robinson said that African countries' lack of collaboration on trade is a missed opportunity, as it precludes the economies of scale that would make exports cheaper.
Stanley Subramoney, strategy leader of PwC Africa's South market, said African companies had to offer finished manufactured products to China if they hoped for more balanced trade.
"At the moment, China takes resources from Africa, makes them into something and then exports them to Africa."
There is hope that China's plans to encourage more domestic consumption and more imports will create space for African manufacturers to compete, especially since China's labour costs are rising and more and more people are moving to the cities.
It's believed that, eventually, factories in Africa and Southeast Asia might be able to compete with Chinese manufacturers.
Qu Xing, president of the China Institute of International Studies, was recently quoted as saying that China's manufacturing sector had started to relocate to other countries and he believed that African countries should take advantage of this trend.
"Frankly speaking, if African countries fail to provide competitive investment incentives and skilled labour forces, they will probably miss another good development opportunity," he said.
The onus on Africa is to develop the skilled and semi-skilled labour needed for growth and to increase competitiveness.
South Africa is ranked 54th in the World Economic Forum competitiveness report (China is 29th), with companies listing restrictive labour regulations, an inadequately educated workforce and government bureaucracy as some of the reasons.