China and South Africa on their way to sustainable trade relations
Over the last decade China has become South Africa’s single biggest trading partner. In this period foreign direct investment from China in South Africa grew as well. Although South Africa benefited from this increased trade and investment, concerns about the sustainability of trade relations with China came to the surface. Exports to China mainly consist of raw materials, while finished consumer goods make up for the majority of imports.
Different solutions are being discussed to address the issue of unsustainability. South Africa at first has to become more competitive and should focus on productivity. In handling the trade relations with China, it has been suggested to impose duties on the export of raw materials and import of manufactured goods.
China’s slowing economic growth and transition to a more mature economy offers South Africa both threats and opportunities. When South African policymakers do the right thing, South Africa can be the gateway to Africa and benefit from its current trade and political relations with China even more.
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The author was a tralac intern at the time of writing. tralac’s Internship Programme provides an opportunity for recent graduates to work on trade-related matters, specifically relevant to countries in eastern and southern Africa.