Africa is not just navigating its relationship with China

• Introduction
• Diminishing trade with the US and Europe?

Introduction

Earlier this month, President Ramaphosa attended a state visit to China with President Xi Jinping before the 9th Forum on China-Africa Cooperation (FOCAC) in Beijing. Around 40 African nations were represented, and South Africa's President Cyril Ramaphosa attended the Summit with members of the new Government of National Unity, including Agriculture Minister and Leader of the Opposition John Steenhuisen.

Other GNU delegates in attendance were ministers of international relations and cooperation, science, technology, innovation, human settlements, small business development, trade, industry and competition, electricity and energy, public works and infrastructure, and higher education.

Held every three years, the FOCAC was established in 2000 to promote relations and collaboration between China and Africa's 54 states. This year, Jinping emphasised elevating China's ties with South Africa to a strategic partnership.

As the world's second-largest economy, China is seeking to tap Africa's vast natural resources, including copper, gold, lithium, and rare earth minerals. Africa's vast control over vital commodities such as cobalt, lithium, and rare earth minerals gives the continent unprecedented leverage.

South Africa also supplies large quantities of citrus and beef to China and is looking to expand the basket of goods it sells and leverage its China trade relationship in a strategic way to benefit South Africa.

China has provided African countries with billions in loans that have helped build infrastructure. However, China has been criticised for leaving projects unfinished and African governments saddled with huge debts. A call for transparency and stringent completion timelines would transform these projects from incomplete ventures into pillars of sustainable development. Critics have questioned whether China's investments and loans to Africa constitute a re-colonisation of the continent or a true partnership, as China claims to be after.

At FOCAC, China pledged $51bn over three years to fund new energy sector and infrastructure projects. However, African nations reported that they wanted to hear of China's plans to fulfil an unfulfilled pledge from the previous Summit in 2021 to buy $300 billion of goods and seek assurances on the progress of incomplete Chinese-funded infrastructure projects, such as a railway designed to link the greater East African region.

Diminishing trade with the US and Europe?

Last year, China overtook the European Union (EU) as South Africa's largest trading partner. Given the studies and data relating to the EU's Carbon Border Adjustment Mechanism (CBAM), which is currently in a transition phase with implementation set to be in 2026, it's likely that South African exports to the EU will fall even further in the years to come.

A working paper commissioned by the Presidential Climate Commission to unpack the implications of the EU's Carbon Border Adjustment Mechanism (CBAM) on South Africa has shown an overall negative impact on the country's exports. This impact is because the country relies on coal-powered electricity in production and other industrial activities.

Furthermore, a country-specific study published in 2022 showed that the CBAM (based on a carbon price of $75 per ton applied to direct emissions) would see South African exports to the EU fall by 4 per cent and GDP reduced by 0.02 per cent. CBAM's implementation could potentially push the country further into the arms of our BRIC partners. However, it's up to African nations to ensure that the terms and fine print of our partnerships with China benefit African citizens.

The US, EU, and Asian nations have invested heavily in manufacturing plants set up in the last two decades to support SA's localisation strategy. These include BMW, Ford, Hyundai, Isuzu, Mahindra, Mercedes-Benz, Nissan, Toyota, and VW. Their manufacturing locations employ thousands and produce a wide range of vehicle models for both the domestic market and for export to foreign markets.

At FOCAC, President Ramaphosa said SA would seek to attract China's electric vehicle manufacturers, including its largest, BYD, which has apparently shown interest in setting up manufacturing plants in South Africa.