|
 |
|
|
| On South Africa-China affairs |
High stakes but promising signs before World Cup’10. From Lisbon, Daniel Alvarenga
“China is a given, China is one of the powerhouses of the world”
Thierry Weil, FIFA’s Marketing Director
Keep your eyes out for advertising boards behind the goals of this Summer’s World Cup in South Africa and forget about old pale green Fujifilm billboards; be prepared for some brand new names and logos such as those of China’s Yingli Green Energy.
Yingly Green Energy is a photovoltaic solar panel manufacturer which has just paid more than 100 million US dollars to sponsor this Summer’s Fifa World Cup. It is not just the first Chinese company ever to do so, but in fact the first renewable energy company worldwide to put forward such ‘big bucks’, adding its name to the most exciting competition of the ‘great game’.
Nevertheless, Yingli Green energy will not be sounding too exotic or unknown to South Africans, particularly their elites and business communities: the relevance of the South Africa-China affair is today, at least for them, obvious.
China has just become South Africa’s number one trade partner, behind the United States, importing coal and diamonds from Africa and exporting a vast array of industrial and manufacturing goods.
Looking at foreign direct investment (FDI), after the Commercial Bank of China invested 5.5 billion US dollars in Standard Bank, the largest FDI initiative in South Africa’s history, the priority is now for power generation, cars and agriculture.
These are the areas in which South Africa will be most noticing the deepening of its engagement with China, according to Chi Jianxin, the CEO of the China-Africa Development Fund, created in 2006, with a total capital backbone of 5 billion US dollars aiming at straitening economic relations between the two powers.
The target is already quantified -- 15.49 billion dollars -- that is how much foreign direct investment South Africa wants to attract from emerging markets until 2013, according to Trade and Industry Minister, Rob Davies.
This is good news since energy production in particular represents one of the country's most basic, pressing needs. Energy supply is one of South Africa's business environment most obvious ‘Achilles heel’, together with world-famous violence rates (or the exaggerated perception of them) and unemployment.
For a long time now state-owned electricity provider Eskom has recurrently been troubled by blackouts and has recently warned that a more serious power crisis will be coming between 2011and 2013 unless more efforts are done on the supply side. Anyone who has lived in South Africa for a relatively long period of time has gone through at least a handful of annoying power failures, the most damaging recorded in 2008.
Simultaneous with the China Africa Development Fund and the Jidong Development Group’s agreement to build a new cement plant worth 220 million US dollars, and the carmaker Faw Car’s investment of 100 million US dollars in South Africa, China reached the thresholds of buying just under a quarter of South Africa’s coal.
Coal has been an essential component of South Africa’s economy for a long time now and the evolution of China’s weight in sustaining the sector is striking, with its imports doubling in a month, recording 500,000 tonnes in January and over 1 million tonnes in February. This record rise is also a technical adjustment to end of year-sales but it is consensual among analysts and producers that South Africa is more and more looking to the East towards selling its commodities and that the mining sector is one of China’s priorities in South Africa. The country’s still vast reserves in platinum, uranium and manganese look particularly appetising for China and a lot of investment is expected to be coming this way.
Looking at this context, the cooperation and economic interchanges with emerging powers will be determining at a time South Africa has endeavoured some significant economic hardship, culminated in 2009’s first recession in 17 years which cut 900,000 jobs. The country’s manufacturing sector contracted and its export-based industry was penalized by the global downturn.
Since then, the signs coming in at the beginning of 2010 are promising. Although unemployment remains worryingly high at around 25 pct, business confidence has been rising, industrial output improving, inflation lowering and, most importantly, despite ongoing bankruptcy fears lingering in the eurozone, capital has been flowing into the local stock and bond market as financial liquidity worldwide picks up.
It is at this at this stage in time and history that the most important Southern African power becomes the proud host of the World Cup.
Government is estimated to have invested a massive 4 billion euros in the World Cup, which in turn is expected to generate an extra 0,5 pct growth in South Africa's GDPin 2010 and significantly boost the country's tourism profile. For this to happen however there are some considerable safety hurdles that need to be successfully overcome so that the event goes by without any serious accident overshadowing it.
The inner mingling of South African politics will also be determinant of the country's economic health in the near future. To the surprise of a few analysts, Jacob Zuma has kept South Africa business-friendly and in the liberal path of economic openness, but the pressures towards greater nationalization and left-wing politics has been growing. This pressure has been arising out of what used to be some of his grassroots supporters within the ANC (African National Congress) and the trade union COSATU (Congress of South African Trade Unions).
At the end of the day, the agreement between FIFA and Yingli Green Enery is just another instance that epitomizes the Era entered this last decade, one in which emerging powers such as China, India, Brazil and South Africa assume increasing respect, reputation and economic prominence. The arrival to centre stage of these emerging powers is no new announcement but, as a researcher and analyst, the cheer visibility and growing impact of this ‘tectonic’ change in international affairs does not cease to amaze me, not just in its depth and swiftness, but also in such small details such as a plastic rectangle of publicity showcasing in the second largest sporting event in the planet.
|
|
|
|
 |
|
 |
Master in International Studies at the Peace Research Institute of Oslo and Stellenbosch University (South Africa). Graduated in International Relations and Politics at the University of Sussex (UK) and the International School for Humanities and Social Sciences (Netherlands). Worked as an analyst at the Stellenbosch Center of Chinese Studies, as a journalist in the World Investment News and as a freelancer at "The Economist Intelligence Unit" (Ivory Coast). |
|
|
|
