China and South Africa sign energy deal

CAPE TOWN - Chinese Vice President Xi Jinping signed an energy deal with resource-rich South Africa on Wednesday in a visit aimed at obtaining minerals the Asian giant needs to fuel its blistering growth.

By (Reuters)

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Published: Wed 17 Nov 2010, 10:48 PM

Last updated: Mon 6 Apr 2015, 11:27 AM

China is South Africa’s biggest bilateral trading partner and the focal point of its plan to divert more trade and investment from traditional markets in Europe and North America to the world’s fastest growing economies.

Xi, touted as China’s next president, on Tuesday began a three-day visit to Africa’s largest economy, which is seeking to reduce a deficit in trade with China that hit $2.7 billion last year, skewed in Beijing’s favour.

South African Deputy President Kgalema Motlanthe and Xi co-chaired the 4th China-South Africa bilateral commission and signed a number of agreements, including an energy deal.

No monetary details were released.

“The Chinese government undertook to encourage more imports from South Africa, especially value added products and will urge Chinese companies to invest in infrastructure development, automotive manufacturing, energy and information and communication technology,” Motlanthe said in a statement.

South Africa has also signed a deal with China’s Yingli Solar to build a $435 million manufacturing plant with a local partner, a senior government official said.

Yingli will partner with a local company and aimed to start building the plant within 12 months.

South African exports about $5.5 billion a year in minerals to the state and has been increasingly a destination of Chinese foreign direct investment.


Beijing sees South Africa, a global mining power and regional financial services leader, as a vital source of commodities and a stepping stone to access other African states.

Motlanthe said the help of countries including China is vital for South Africa’s new economic growth path, which aims to create millions of jobs, mainly in the private sector.

For South Africa, China also serves as a model of state action in the economy, with Pretoria hoping to join it in the BRIC — Brazil, Russia, India and China — group of fast emerging economies.

But a “BRICSA” grouping seems unlikely for now with South African growth projected at 3 percent this year, hardly the blistering pace of the other members. Its economy is also less than a quarter of the size of the smallest BRIC economy.

South Africa’s ruling African National Congress has rolled out plans to tackle a massive unemployment problem, with many ANC officials seeing the success of the BRICs as evidence that the state should intervene more.

But experts said the ANC, in a governing alliance with organised labour, is loath to loosen a rigid labour market to make it easier for its companies to hire and fire staff with the ease of Chinese firms.

“There are things to be learned but that can only come if one is willing to listen. Around labour policy, there is no translatability of a China or U.S. approach to labour and labour flexibility,” said Martyn Davies, CEO of Frontier Advisory and an expert on Africa-China relations.

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