Xi’s arrival at Johannesburg BRICS summit eclipses Putin’s absence

The BRICS summit is getting underway on Tuesday in Johannesburg as the arrival of China’s Xi Jinping, leader of the world’s second largest economy, somewhat eclipses the controversy over Russian President Vladimir Putin’s absence.

While preparing for the summit, South African President Cyril Ramaphosa sat down with Xi who had arrived in Johannesburg with a slew of gifts.

Xi’s arrival represents an “opportunity we cannot miss”, says an editorial in Business Day, South Africa’s biggest finance newspaper, underscoring the thoughts swirling in the corridors of power in Pretoria.

“Ramaphosa does indeed need to make the best of Xi, who is in any case probably the most powerful world leader of the moment. Casting himself as somehow a leader like Xi is essential to the image Ramaphosa is seeking to create for the elections next year,” says Stephen Chan, a South Africa expert at the University of London.

As the build-up to the summit shifted into high gear, Chinese diplomats in South Africa went overboard, trumpeting the big financial deals that Beijing has carved out in South Africa in the last two decades.

In 2015, the Industrial and Commercial Bank of China acquired a controlling stake in Standard Bank, South Africa’s biggest lender. Additionally, trade between Beijing and Pretoria stands at $56bn, which saw China overtake the West as South Africa’s biggest trade partner.

The icing on the cake was a raft of trade deals worth $2.2bn signed between China and South Africa early this month.

But beneath the glitter of China’s lucrative commercial deals with Pretoria is a host of disputes that Ramaphosa hopes Xi’s senior officials could help soothe.

The long-running saga of South Africa abruptly cancelling a deal to buy 1,064 train locomotives from China’s CRRC Corporation is also one of the issues that ought to be addressed.

China’s CRRC responded in kind, and stopped supplying spare parts to Transnet, the flailing South Africa state owned cargo trains operator. The company has withdrawn hundreds of locomotives from service.

Ramaphosa’s trade aides are hoping that Xi’s arrival could end up with a goodwill agreement to resolve the impasse between Transnet and CRRC.

BRICS rush

The BRICS was originally founded as a club of mainly China, South Africa, Russia, and Brazil, but there is also a rush of emerging powers leaders trooping to Johannesburg.

Notable among them are India’s Narendra Modi, and Iran’s President Ebrahim Raisi. A growing coterie of nations, such as Saudi Arabia, Argentina, Egypt, and the UAE, are clamouring to join BRICS, perhaps seeing it as a potential counterweight to the Western financial hegemony of the US and the World Bank.

Though the deepening debate on a BRICS common currency to counterweight the US dollar has gathered pace in the run-up to this year’s summit, the BRICS contrasting economies, foreign policies, and geography are too far apart to be transacted on one currency.

“Creating a common currency that traders from Johannesburg to Moscow can transact on is just – a financial fantasy,” Carter Mavhiza, an independent economic analyst, tells The Africa Report.

“The demand for and premium placed on US dollars in the emerging economies in 2022 – 23 shows which currency matters most.”

What’s probably of the utmost importance for EM leaders at the BRICS summit is the slowdown in China’s economy, the fluctuating Yuan and Xi’s attempts to jumpstart growth with interest rate cuts, says Mavhiza.

“Emerging economies like South Africa send the bulk of their commodities [oil, platinum] to China. The current slowdown in Beijing’s infrastructure building sector is concerning,” he says.

If possible, they’d probably like to get close, perceive Xi’s plans for the Chinese economy,” adds Mavhiza, pointing to the South African rand’s current fluctuations, mostly triggered by China’s headwinds.