South Africa’s exports to China received a boost with the signing of more than 20 cooperation agreements and contracts to the value of US$ 918 million. These agreements and contracts were signed during the China Inward Buying Mission event that took place in Sandton, Johannesburg. More than 16 South African companies signed these purchase and investment agreements with the Chinese companies.

The Inward Buying Mission forms part of the implementation of the Comprehensive Strategic Partnership Agreement (CSPA) signed between South Africa and China. Both countries agreed that China would increase its sourcing of value added products from South Africa in order to improve the structure of trade between the two countries, which is mainly dominated by exports of raw materials from South Africa to China, and imports of value added products from China by South Africa.

Speaking at the event, the Deputy Director-General of the Department of Trade and Industry, Garth Strachan said the Inward Buying Mission served as a symbol of incremental progression as the governments of the two countries had been planning to hold an event of this nature for some time.

“Within this (CSPA) agreement, China has also committed to (1) encourage its enterprises to increase investment in South Africa’s manufacturing industry and promoting the creation of value-adding activities (2)  explore co-operation opportunities in infrastructure projects such as roads, railways, ports, power generation, and airports.  Most importantly, China has agreed to (3) increase its source of value added products from South Africa. Let me emphasize that this inward buying mission is part of the implementation of the third pillar of the CSPA” said Strachan.

Strachan stated that South Africa is concerned about the skewed imports and exports pattern between the two countries that are in favour of the Chinese as over 85% of South Africa’s exports to China comprise raw materials.

“This is a troubling characteristic of our trade given that a Comprehensive Strategic Partnership Agreement (CSPA) has been in implementation for 5 years and has not yet achieved one of its main objectives. It is also concerning in that South Africa and China refer to each other as the developing partners of the 21 century, yet continue to reinforce problematic trade behaviours of the past,” he added.

Deputy Director-General Strachan stated that South Africa would like to see a reduction in the dominance of raw materials in its export basket to China.

“We call on the Chinese government and Chinese private sector to collaborate and send more value added orientated inward buying missions to South Africa. We believe that this action will fastrack the industrialization of our economy and contribute to successful long term industrialization and developmental plans,” indicated Strachan.

Strachan also said that in any healthy economy, the manufacturing sector is a key driver towards accelerating growth and the South African government has key policies to further develop and support the manufacturing sector in order to ensure its sustainability

“Amongst a number of actions, the government plans to expand the current supply measures to attract downstream value adding manufactures. In this regard, we have developed plans to increase the level of beneficiation in the following areas: iron ore and steel; platinum group metals; polymers; titanium; upstream mining inputs and the energy value chain. This development will require major foreign direct investment in the identified priority areas. We welcome China’s participation in the development of these priority sectors which we have identified for beneficiation as well as investment in all the other areas of manufacturing,” he indicated.

The signing of the cooperation agreements and contracts are in line with the Forum on China-Africa Cooperation (FOCAC) which will be held for the first time in this coming week on the African continent.

CAPTION: DDG Garth Strachan witnessing the signing of the cooperation agreements and contracts

 

Issued by The Department of Trade and Industry