Assessing South Africa’s trading relationship with China
The Economist (2013), in its usual succinct manner, sums up the African trading position as follows: “Africa is a continent rich in minerals and oil. China has an economy that requires them in abundance. Since the mid-1990s the economy of sub-Saharan Africa has grown by an average of 5% a year. At the start of this period Africa’s trade with China was negligible. It is now worth around $200 billion a year. Most of Africa’s exports are raw materials. China sends manufactured goods back in return”.
The objective of this paper is to examine the South African-Chinese trading relationship against this background statement. In particular, the authors assess (a) how consistent the trade data reporting is between the two partners and (b) how well South Africa has been performing in the Chinese market.
The answer to question (a) above is that there are significant differences in the reporting, and especially between South African exports on the one side of the equation and Chinese imports on the other. This difference is not only at the aggregate level but at the detailed level as well where the bilateral data can seldom be reconciled. Contributing to the aggregate level differences on the Chinese side is its reporting of a massive value defined as ‘Special Products’ that does not have an easily available explanation. Notably this data is not universally reported by international trade sources.
The answer to question (b) is equally worrying: South Africa is not competing well in the Chinese market against its major competitors at the detailed level despite appearing to do so by just looking at the increased export trade flows. Similarly, while the reverse flow of Chinese exports/South African imports does reconcile very well at the aggregate level the ‘devil is in the detail’ where the large differences become apparent. Worryingly, these differences are also a feature of the closely monitored South African clothing imports from China. And yes, South Africa is exporting raw materials and importing manufactured goods.
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