/ 22 August 2023

China still a big target for South Africa, even as its economy shrinks — Patel

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Minister of Trade, Industry and Competition Ebrahim Patel. (Photo by Gallo Images/OJ Koloti)

Despite China’s slowing growth, there is still room for South Africa to close the trade deficit with its powerful economic power.

So says Minister of Trade, Industry and Competition Ebrahim Patel, who spoke to the Mail & Guardian on the sidelines of Chinese President Xi Jinping’s fourth state visit to South Africa, ahead of attending the 15th Brics summit. 

The state visit, held on Tuesday at the Union Buildings in Pretoria, comes as Brics (Brazil, Russia, India and South Africa) leaders prepare to discuss how to broaden their economic pact — forged in the wake of the 2008 global financial crisis. The China-South Africa trade deficit was one of the key topics discussed during the state visit.

South Africa is China’s biggest trading partner on the continent. Bilateral trade between the two countries has grown from less than R1 billion in 1998 to more than R614 billion in 2022.

According to Patel, the trade data does not tell the full story, given that it doesn’t include products going to China through Maputo or gold exports.

Patel said the hope is that more active inward buying missions, such as the ones held before this week’s Brics summit, will help expand South Africa’s access to the Chinese market.

“So we’re going for these targeted approaches. Because, even slowing down as it is, the Chinese economy is so huge,” he said. “South Africa is well positioned, off the back of the state visit, to retain many of its products.

“The challenge is that a slowing Chinese economy will also have an impact on the global economy. So we’ve got to keep an eye on it. When things are slowing down, you have to do even more to hold your own in that market.”

The question is, Patel said, whether China’s measures to stimulate its economy will have the desired effect. South Africa benefits most when China invests in infrastructure, he added. China’s economic plan has put consumption-led growth at the forefront.

“China is not going into recession. It is a reduction from sky-high growth rates to something in the order of 4% to 5%. And at that level, there is still significant demand in the Chinese economy,” Patel said.

Earlier on Tuesday, President Cyril Ramaphosa underlined the need to narrow the trade deficit between South Africa and China, which is skewed in the latter’s favour. In his prepared remarks, the Chinese president said solid relations between the two countries not only benefits them, but also brings stability to a world “which is undergoing transformation and turbulence”.

Meanwhile, Patel told the M&G that South Africa will be making a concerted effort to pursue bilateral agreements with the other Brics members. Intra-Brics trade is currently dominated by China.

The minister pointed to Brazil in particular, saying that trade with the South American country could be expanded. “We share an Atlantic Ocean and we should be trading more vigorously with each other,” Patel said.

“The structures of our economies are very similar. We are both significant exporters of minerals and we both have very strong industrialisation efforts at the moment. But within that there are complementarities that we can find between ourselves.”