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China and South Africa: Testing Times Ahead

(This article has been submitted by a leading expert on international relations.) This year marks the tenth anniversary of the establishment of diplomatic relations between China and South Africa. Throughout this period the relationship between the two countries has been developing rapidly and, as a result, South Africa is now China’s third largest trading partner on the African continent.   However, testing times lie ahead. The upcoming transfer of power to the next President in South Africa, most probably Jacob Zuma, the violent backlash against African economic immigrants and the growing crisis with energy supply which has resulted in shutting down of parts of the South African gold industry have all been causing alarm in Beijing.

Since opening its embassy in China in 1998, South Africa has been gradually changing the orientation of its politics and economic ties, shifting them away from Europe and America and towards China and Asia in general. Government to government discussions between China and South Africa have become a regular occurrence. The closeness of the two countries is mirrored in the UN Security Council. They adopt the same policies on Darfur, Zimbabwe and Myanmar (Burma) opting for a solution that rejects any idea of intervention by Western and pro-Western forces.

Pretoria, just like Beijing, places the strengthening of sovereignty ahead of human rights and democracy. The Chinese model – a political monopoly by the Communist Party coupled with a free market economy – is attractive to the African National Congress. The Chinese argue that strong leadership and a strong state are needed to provide the framework for a burgeoning economy. Sovereignty is of paramount importance to both states, given their experience of European and American domination in the past. China and South Africa are also both keen to see the UN Security Council more clearly reflecting the interests of the developing world.

But despite sharing these views, the two countries have their differences when it comes to forging military alliances in Africa. The reason for this is that they compete with each other in selling weapons to African states, including Sudan. In this case financial considerations prevail over ideological unity.

Trade between China and South Africa has blossomed and is now over $11 billion annually. China is investing in South Africa to an unprecedented extent. In November 2007 the International Construction Bank of China paid $5.6 billion for a 20 per cent stake in South Africa’s Standard Bank. South African investment in China is expanding fast and was worth over $200 million in 2006. Oil refineries, coal mines and breweries head the list.

However, Chinese imports have harmed some sectors of South African economy, especially textiles. In fact, so great was the damage done to the textile and clothing industries that in 2006 China agreed to suspend further exports to allow local manufacturers to recover. Also, Chinese mobile phone and construction firms are penetrating the South African market. This does not go down well with local companies which regard these two sectors as their own territory.

Clouds are also gathering on the political horizon. While President Thabo Mbeki has been pursuing an open approach to foreign investment and trade Jacob Zuma, who may succeed him, has his power base in the trade union movement and as a result is expected to adopt much tougher policies. Trade unions have been vociferous in the debate about Chinese imports taking away jobs from Africans. They also support the opposition in Zimbabwe, a country where China has extensive economic interests. In April they refused to unload a shipment of Chinese arms in the port of Durban which was destined for Harare. If Mr Zuma becomes president – and few doubt that he will – the trade union’s influence on foreign policy of South Africa is bound to grow, creating possible tensions with China.

The Chinese community in South Africa numbers around 300,000 people. Originally they came in with the introduction of gold mining in the 1870s. This week a South African court classified the Chinese as ‘coloured’ thus permitting them to apply for grants. They had complained consistently of being discriminated against in the new South Africa. The Chinese are in the news and Beijing is nervous that the new regime may become protectionist and limit the inflow of Chinese goods. The recent xenophobia – not aimed at the Chinese or other minorities but against fellow Africans – reveals that a populist approach to solving the growing economic inequality would find considerable support in South Africa.

China awaits with some trepidation to hear what the possible future President of South Africa has to say about overcoming the looming economic crisis. A major problem is the power supply. Underinvestment over the last decade has left the country perilously short of electricity. The Chinese can help solve the problem if asked, but as yet no one has signalled any such intention.

Relations between China and South Africa are at a crossroads. China is keen to deepen and expand ties with South Africa, both diplomatic and economic. But it remains to be seen whether the post-Mbeki South Africa will respond in kind.

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