The Coega Development Corporation (CDC), operator of the Coega Special Economic Zone (SEZ), in the Eastern Cape today welcomed a signing ceremony of 87 cooperation agreements between South Africa and the People’s Republic of China (Friday, 21 June 2019).

The event saw approximately 40 major Chinese companies signing 87 cooperation agreements with South African counterparts at the Cape Town International Convention Centre (CTICC) in Cape Town on Friday (21 June, commencing at 15:15).

The trade agreements flow from consensuses reached by President Cyril Ramaphosa and Chinese President Xi Jinping during the 2018 Forum on China–Africa Cooperation (FOCAC) Beijing Summit.

According to Dr. Ayanda Vilakazi, CDC’s head of marketing, brand and communication and analyst, China remains one of South Africa’s strongest and strategic trade, economic and investment partners.
 
“Over the past 10 years, China has been South Africa’s largest trading partner while South Africa, on the other hand, is China’s largest trading partner in Africa.
 
“In 2018, two-way trade between the countries totalled approximately R627 billion ($43.55billion) – a 27-fold increase since the establishment of diplomatic ties between South Africa and China.
 
Dr. Vilakazi believes the trade agreements will further stimulate trade between China and SA.
 
“In general, FOCAC has been designed to reduce costs on the one hand and increase the volume of trade between SA and China. It will also stimulate infrastructure development and support Africa in terms of regional and continental integration.”
 
“In short, these cooperation agreements will solidify and deepen trade and economic relations between our two countries.”
 
Dr. Vilakazi noted that: “FDI from China to SA reached R360 billion ($25 billion) in accumulative terms and it has been estimated that in excess of 400 000 jobs have been created for South Africa.”
 
He said two of the most important strategic policy directions of Beijing were enshrined in FOCAC and the Belt and Road initiative (BRI).
 
China’s BRI is a strategic initiative to improve connectivity and cooperation on a transcontinental scale.
 
“In relation to BRI, a recent World Bank study that looked at transportation corridors across Africa, Asian countries and Europe revealed that China’s BRI initiative could boost trade in BRI corridor countries with 9.7%, and at a global trade with 6.2%.
 
“In particular, South Africa’s special economic zones along the Indian Ocean coast are prime locations for Chinese foreign direct investment, and economic and industrial activity because of their proximity to the BRI corridors.  They provide access to China’s 21st century maritime ‘silk’ road comprising with an emphasis on Africa, and access to the markets of Eurasia through the Middle East.
 
“There has been strong focus on catalytic investment projects by Chinese firms in Eastern Cape, for example. The single largest automotive investment in Africa in the last 40 years is by Global Fortune 500 automotive manufacturer three years ago in the Coega Special Economic Zone with the BAIC SA project. The investment is valued at USD800.00million (USD150.00million for Stage I).  Construction is underway creating in excess of 1800 jobs and is expected to be operational by the end of 2019 and is expected to create another 2300 jobs. The project was also driven by BAIC Group’s Internationalization Strategy, cultivating SA auto market with BAIC Investments SA established in 2014 soon after the establishment of BAIC International, further to the previous BAW business operation in SA. During the milestone celebrations in July 2018, President Ramaphosa congratulated the Coega SEZ when he said, “this is a real milestone and we would like to congratulate you all at Coega and applaud you for the excellent work you have achieved.”
 
Another sizable Chinese investment is First Automotive Works (FAW), SA.  The FAW SA investment of USD50 million was a welcome development by Coega in 2012; an assembly plant opened by former President Jacob Zuma in 2015. FAW SA welcomed its 4000th truck off the assembly line at the end of 2018.
 
Dr. Vilakazi said determinants that drive Chinese investment into South Africa are factors such as labour affordability, competitiveness of the economy, political and policy stability, and ease of cross-border trade.
 
Commenting on the China-US trade war, Dr. Vilakazi said:
 
“It is a difficult situation not only for both the US and China.  We hope resolutions can be reached swiftly between the two countries as trade wars affected all the interlocking chains or countries of a globalized economy.”
 
Vilakazi noted that foreign currency reserves of China were sitting in excess at $3 trillion, and US foreign currency reserves stood at $120 billion.
 
Issued on behalf of the Coega Development Corporation (CDC) by Meropa Communications: