The Political Economy of South Africa–China Trade and Economic Relations

Abstract

In the broader context of fundamental shifts in international trade and economic relations, South Africa’s relations with China take on added significance. Forged in the crucible of the post-apartheid era’s growth and development challenges, the partnership with China has grown in depth, reach, and complexity. Quite crucially, the impulse which drives China’s global engagements is essentially geo-economic in character but with significant political undertones and strategic considerations. China’s historical competitive advantage has been driven by low unit labour costs, a surplus of subsidised credit, and an undervalued exchange rate. As with the rest of Africa, these have had serious implications for South Africa and as one of the more developed economies of the continent, there are risks and opportunities in how it has shaped the contours of its relations with China. This becomes a critical challenge for South Africa in view of the China’s disruptive trade wars with the United States on the one hand; and what policy shifts might be necessary as China recalibrates its economy towards domestic consumption and capital intensity. For its part, South Africa’s economy is in the throes of static growth and confronts serious structural bottlenecks that impede its ability to embark on sustained economic diversification. This chapter will examine the political economy of China–South Africa relations over the last two decades in terms of their strategic interactions. These include the tenor and content of political relations; exponential shifts in trade and investment; cooperation on the African and global stages; and emerging opportunities and challenges.