China has pledged to assist South Africa,
which is desperately battling with current economic recession, but
details on the assistance are sketchy.
which is desperately battling with current economic recession, but
details on the assistance are sketchy.
A report published recently by the Mail
& Guardian points to President Cyril Ramaphosa securing almost R370
billion in financing from China.
& Guardian points to President Cyril Ramaphosa securing almost R370
billion in financing from China.
Most of the funding is due to aid with government’s planned financial stimulus.
Contracted economic growth in the second quarter has led South Africa into recession; the first of its kind since 2009.
The knock-on effect has had a horrendous
effect on the currency, which has, in turn, resulted in a massive fuel
hike expected to hit motorists in October.
effect on the currency, which has, in turn, resulted in a massive fuel
hike expected to hit motorists in October.
Ramaphosa was in China, on an official
state visit, when the technical recession was first announced. In an
attempt to allay fears of a full-blown economic slump, the president
hinted at ‘stimulus packages’ designed to revitalise
the economy, saying:
state visit, when the technical recession was first announced. In an
attempt to allay fears of a full-blown economic slump, the president
hinted at ‘stimulus packages’ designed to revitalise
the economy, saying:
“I don’t believe that a full recession
will take hold in South Africa. Our economy is facing its own challenges
that we have to respond to [and] government is going to be responding
to the challenges that we’re facing. We’re finalising
a stimulus package that we’ll be announcing to inject impetus and
growth into our economy at a number of levels.”
will take hold in South Africa. Our economy is facing its own challenges
that we have to respond to [and] government is going to be responding
to the challenges that we’re facing. We’re finalising
a stimulus package that we’ll be announcing to inject impetus and
growth into our economy at a number of levels.”
Following Ramaphosa’s announcement, China offered a further $10 billion, which will form part of the ‘stimulus package’.
International Relations and Co-operation
Minister Lindiwe Sisulu commented on China’s role in revitalising South
Africa’s embattled economy, saying:
Minister Lindiwe Sisulu commented on China’s role in revitalising South
Africa’s embattled economy, saying:
“The Chinese are saying it’s about time
that we got our independence … We would like to tap into that. Most of
the infrastructure we [Africa] have has been with the support of the
Chinese government and they have become very adept
and good at it.
that we got our independence … We would like to tap into that. Most of
the infrastructure we [Africa] have has been with the support of the
Chinese government and they have become very adept
and good at it.
If we want to industrialise, at the rate
that we would like to industrialise, we would like to do it on the back
of somebody that we can depend on and we have to industrialise to be
able to grow our economy.”
that we would like to industrialise, we would like to do it on the back
of somebody that we can depend on and we have to industrialise to be
able to grow our economy.”
Is South Africa over-indebting itself?
But these continuous investments have
been a cause for concern among analysts and the local manufacturing
sector. The worry is that, besides defaulting on loan payments, South
Africa may damage its economy more by allowing Chinese
corporations into the industrial manufacturing sector.
been a cause for concern among analysts and the local manufacturing
sector. The worry is that, besides defaulting on loan payments, South
Africa may damage its economy more by allowing Chinese
corporations into the industrial manufacturing sector.
Trade and Industry Minister Rob Davies
denied that China would supply its own materials and workforce, as they
have done in other African countries.
denied that China would supply its own materials and workforce, as they
have done in other African countries.
“They might have that reputation in other
countries but they don’t do that here. They don’t bring a skilled
labour force in South Africa where there are people who are capable of
doing the job.”
countries but they don’t do that here. They don’t bring a skilled
labour force in South Africa where there are people who are capable of
doing the job.”
During the Africa-China conference
earlier this month, the eastern nation pledged a total of $60 billion
for African investment. Much has been written about fears regarding
China’s liberal loans, which have been referred to as
‘debt colonialism’.
earlier this month, the eastern nation pledged a total of $60 billion
for African investment. Much has been written about fears regarding
China’s liberal loans, which have been referred to as
‘debt colonialism’.
