Speaking at Rhodes University in Grahamstown recently, Wamkele Mene, the director of Trade in Services in the Department of Trade and Industry (DTI), said that had trade unions not blocked efforts to free trade between China and South Africa, he could have negotiated a deal that would have seen affected union members retrained into other sectors of the economy.
Speaking at Rhodes University in Grahamstown recently, Wamkele Mene, the director of Trade in Services in the Department of Trade and Industry (DTI), said that had trade unions not blocked efforts to free trade between China and South Africa, he could have negotiated a deal that would have seen affected union members retrained into other sectors of the economy.
This, he says, is the reason why China’s interest in Africa should not be looked at from an emotional perspective, but instead the Southern African region should realise and strengthen the parts of its economy where it has a competitive advantage over China.
Mene, representing the DTI’s International Trade and Economic Development Division, was the last of a number of speakers presenting their views on Africa and China’s economic relations during a week-long colloquium held at Rhodes University in September 2009 as part of a celebration of China Week. Mene gave two talks, the first focusing on China’s role in Africa, and the second focusing on China’s role in the World Trade Organisation (WTO).
At present the Southern African region is a weak negotiating partner in terms of trade negotiations and this, Mene says, cannot be blamed on China. The Southern African region needs to decide on a clear stand point with regards to China. This will require the region to develop a coherent policy from which it can negotiate on an equal footing with China.
While trading with China may present challenges for the region – such as China’s large economies of scale in the production of textiles – there are alternatives that the region, and South Africa in particular, can consider in order to formulate a mutually beneficial trade relationship.
Instead of characterising trade relations between China and Africa as an extractive one – China extracting raw minerals from Africa without the region gaining much – it is important to engage with the opportunities presented by China’s relationship with Africa. Among a plethora of advantages and disadvantage, Mene focused on China’s potential to enhance efforts to integrate the regions own trade relationships through China’s investments, as well as China’s willingness to develop local skills.
China has emerged as one of South Africa’s largest foreign direct investors. In the rest of Africa China has focused on investing in the development of infrastructure which Mene says is very necessary for the region as the lack of infrastructure is one of the main barriers to efficient trade.
\China’s concerted efforts to help Africa develop infrastructure will help the region to integrate its trade relations as it will have the necessary infrastructure to do so. China has shown a willingness to do this through its alignment of the Forum on China – Africa Cooperation (FOCAC) with the values and principles of the New Partnership for Africa’s Development (NEPAD) of making infrastructure development a priority.
Mene warned that although the impact of China has the potential to be beneficial to the region, it still has to be managed properly as it could possibly have a negative effect.
So far China has shown a willingness to have as much local participation as the country’s skills base allows, while still making efforts also to train people in order to develop skills. This is in contrast to how European Union (EU) and United States (US) investments have been handled when it comes to Africa. EU and US investments usually come with conditions that require the use of European or US based researchers for projects, for example, which leave room for very minimal local participation, the effect of which is the slowdown to progress in developing key local skills.
Speaking only in his capacity as representative for the South African government, Mene admitted that the battle to change attitudes towards China’s interest in Africa is one that needs thorough negotiations. He says that South Africa has economies of scale in areas of intellectual property that they could export to China competitively. While he is not proposing that South Africa dump the US and EU as trade partners, he thinks it is time that focus shifts from the West’s saturated economies to “emerging economies where opportunities for new areas of economic growth lie”.
Reason’s why a China–Africa alliance is beneficial on the international trade agenda
China has climbed through the ranks and become one of the world’s biggest exporters of goods, this has put it in a powerful position on the international trade agenda with its long awaited accession to the WTO. A 15-year-long negotiation to accede onto the WTO saw China committing to what Mene described as “very stringent conditions”. Despite this China has managed to increase its trade capacity to the extent that there has been a shift in the balance of power, with emerging economies finally having an influential voice and China leading emerging economies’ influence on the world trade agenda.
China now finds itself with a wide diplomatic net, advanced negotiating capacity and a position as a vocal and influential participant in the DOHA round of trade negotiations.
China needs to improve on some of its sectors such as telecommunications which Mene says need rapid liberalisation. It needs to ensure transparency of its internal trade affairs, remove perceived political difficulties as well as loosen domestic regulations that impede competition.
On the whole, China is an influential power in the international trade arena and Africa has a chance to use this opportunity to enhance its global economic reach.
Amukelani Maphophe is a fourth-year journalism student at Rhodes University.
