South African president Jacob Zuma arrived in Beijing on a state visit yesterday, with a large trade delegation in tow. China is Zuma’s last stop on his tour of the BRIC (Brazil, Russia, India, China) countries, where he is trying to drum up investment to create job growth at home. He is scheduled to meet Chinese Premier Wen Jiabao, Vice President and prime ministerial heir apparent Xi Jinping and other Chinese leaders, before flying to Shanghai on Thursday to visit the World Expo.
Among the delegation accompanying Zuma is the CEO of South African petrochemicals company SASOL, Pat Davies. Davies is in China to hear the results of a review assessing SASOL’s $10 billion bid to construct a coal to liquid project in partnership with local company Shenhua Ningxia. The deal is said to be the largest single-project joint venture in Chinese history. SASOL’s technology, developed when sanctions forced South Africa to search for alternatives to oil, has an obvious appeal in China, where coal is plentiful but oil scarce.
South Africa and China have a complicated relationship atypical of Chinese relations with the rest of the continent. China is South Africa’s largest trading partner and last year overtook the United States to become the country’s largest export destination. Although much of South Africa’s exports are unprocessed minerals and other raw materials, the two countries are also competitors and partners in the rest of Africa. Chinese bank ICBC owns a 20% stake in South Africa’s Standard Bank, which operates in 18 African countries. South African mobile network operator MTN is Africa’s largest mobile operator, while Chinese company Huawei sells the continent’s most popular handsets.
Despite the obvious opportunities for strategic partnership, South Africans have questioned the president’s priorities. South Africa is recovering from recession and the country’s unemployment rate, at 25% by some estimates, is extremely high for an economy of its size. Last year, South Africa ran a $2.7 billion trade deficit with China and many in South Africa feel that increased trade with China will only lead to job losses in the manufacturing sector, a concern echoed by Trade and Industry Minister Rob Davies today in Beijing, when, according to AFP, he said his country’s exports were too dependent on primary goods and that he hoped Beijing could buy more “value-added” goods.
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