Ramaphosa’s stance on US/China trade war may be too close to the fire
South Africa’s President Cyril Ramaphosa has come out in support of China in its trade war with the USA.
Ramaphosa’s stance in support of South Africa’s largest trading partner, China, which is seen as an important partner for his grand economic plans, comes as no surprise. The President is desperate to assist an ailing economy in dire need of growth and job creation.
China’s biggest supporter?
According to the Sunday Times, Ramaphosa’s support followed a call by telecommunications bosses from Cell C, MTN, Vodacom and Telkom who had asked for “help in dealing with the repercussions of an executive order signed by the US President Donald Trump against Huawei”.
Presidency spokesperson Khusela Diko was quoted as saying that Ramaphosa was concerned about the potential effects of the Huawei ban on South Africa’s 5G development.
“The president expressed his concern at any efforts to curtail the efforts of Huawei to deliver a comprehensive and what we believe to be an advanced solution in the telecommunications space,” Diko said.
In May, Donald Trump signed an executive order barring Huawei from selling its equipment in the US and blacklisting the company. Tensions between the US and China have eased since the 28-29 June G20 meeting, with the US saying that additional trade tariffs will be put to the side as the two countries continue negotiating.
SA market share: Huawei
South Africans love the number-two global mobile phone manufacturer. BusinessTech reported that web analytics firm StatCounter said Huawei’s share of the local market grew from 11.26% in 2017 to 16.6% in May 2018 and 22.9% in June 2019.
Money, money, money…
South Africa’s reliance on China is substantial:
- For example, South Africa’s total exports in April 2019 equaled R103.8bn ($7.3bn). China was the number-one destination, taking in 10.8% of that total.
- China has invested almost R200bn in the country.
- China recently rescued the ailing electricity provider, Eskom with a loan of R33bn.
Wheeling and dealing
South Africa views China as a key economic partner. A day after Cyril Ramaphosa delivered his State of the Nation address in Cape Town, newly appointed trade and industry minister Ebrahim Patel said the government had signed 93 trade deals with different Chinese entities.
Patel said the deals were worth in excess of R27bn and would help create jobs for young people and deepen South Africa’s industrial footprint.
“One of the agreements is an additional equity injection into a Chinese auto-assembly plant in Coega. The Beijing Auto Industrial Corporation is building the country’s first new light-vehicle manufacturing plant in more than 45 years, in Coega in the Eastern Cape and this deal reflects our common determination to take our economic relations to greater heights,” Patel said.
At the G20 summit, Ramaphosa and Patel also held bilateral talks with Beijing on the sidelines. In an emailed statement to The Africa Report following the G20 meeting, international relations minister Naledi Pandor outlined the talks.
The dominant issue was the ‘trade impasse’ between the USA and China. While there was a serious atmosphere and seeming tension at times, all leaders spoke with some firmness on a rules-based fair and equitable trade regime.
The trade war was a concern that we, as the smaller countries, maybe be affected very negatively if matters are not resolved speedily: world leaders have to find a solution to the problem.
Bottom Line: An analyst says Ramaphosa is playing with fire
Political economist and China-Africa trade relations expert Patrick Bond is critical of Ramaphosa’s stance.
“Ramaphosa’s kowtowing to China is not only about singing for his super and that of corporate South Africa, it is also about aligning the country to the expansive BRICS partnership and capitalism,” said Bond. “China and India have some of the highest growth rates in the world […] and SA is aligning itself to them. He is playing with fire,” he added.
For now, South Africa is not taking any chances with its trading relationship with China, and if that means going up against the US, that’s it what it will do.