South Africa is finding it increasingly difficult to compete with China
And the implication is that the trend will continue without regulation or a sudden spurt in local competitiveness.
The analysis of trade data by the school of international development at the University of East Anglia in the United Kingdom also found that South Africa would have exported about $100-million a year more than it did during that period were it not for China’s aggressive entry into the Southern African region. This excludes export losses outside the continent.
South Africa was finding it increasingly difficult to compete with China, both domestically and internationally, said lead researcher Rhys Jenkins, leaving local companies to introduce “more capital-intensive technologies, or move out of the most labour-intensive product lines in each industry”.
Most of the job losses were among unskilled or semiskilled workers.
According to the study, more than 70% of all jobs lost to imports during the nine-year period reviewed were lost to Chinese imports. This is a dramatic increase from the 17% of total job losses attributable to Chinese imports in the preceding nine years, from 1992 to 2001, as South Africa reopened its doors to the world. The jump corresponds to China joining the World Trade Organisation, the researchers point out.
The study also confirms that South Africa’s exporting of raw materials to China has seen a massive increase since 2005, but this has been more than offset by the importing of consumer goods and capital equipment, leaving a trade deficit not far shy of $4-billion a year.
Funded by the UK’s Economic and Social Research Council, which is in turn funded by the British government, the study is unapologetic about its aim to “focus the efforts” of South African policymakers in their consideration of the trade relationship with China – and what appears to be an imminent shift toward a more protectionist stance on imports, even while acknowledging the benefits that cheaper imports have brought for consumers..